Alaska Administrative Code
Title 11 - Natural Resources
Part 3 - Oil and Gas
Chapter 25 - Royalty Election Under Alaska Gasline Inducement Act
11 AAC 25.120 - Destination value in absence of reliable published prices
Current through August 30, 2024
(a) If the destination for qualified gas is not a first destination market, and the commissioner has not designated an applicable location differential for that destination under 11 AAC 25.130 for purposes of adjusting a published price from a first destination market to the destination, destination value is determined under (b) or (c) of this section, as applicable.
(b) The destination value of qualified gas sold by a lessee or an affiliate under an arm's length contract is the gross proceeds accruing to the lessee or affiliate, except as provided in this subsection. To claim the benefit of this section, the lessee shall demonstrate that its contract is arm's length. The commissioner may require a lessee to certify in writing that its arm's length contract provisions include all of the consideration to be paid by the buyer, either directly or indirectly. If an arm's length contract does not set out the consideration actually transferred either directly or indirectly from the buyer to the seller, the commissioner may require that the qualified gas sold under that contract be valued at destination under (c) of this section. If the commissioner determines that the gross proceeds accruing under an arm's length contract to the lessee or an affiliate of the lessee do not represent the reasonable value of the qualified gas because of misconduct by the contracting parties, or because the lessee breached its duty to the state to market the qualified gas for the mutual benefit of the lessee and the state, the commissioner may require the lessee to value the qualified gas under (c) of this section.
(c) If qualified gas is not sold under an arm's length contract, or if the lessee is required under (b) of this section to determine destination value under this subsection, the destination value of qualified gas is the fair market value for the qualified gas as determined by the commissioner based on prices received in arm's length spot sales, other reliable sources of price or market information, and comparable arm's length contracts for purchases, sales, or other dispositions of like-quality gas. In evaluating the comparability of an arm's length contract for purposes of this subsection, the commissioner will consider
(d) In this section,
Authority:AS 38.05.020
AS 38.05.180
AS 43.90.310