Alaska Administrative Code
Title 11 - Natural Resources
Part 3 - Oil and Gas
Chapter 25 - Royalty Election Under Alaska Gasline Inducement Act
11 AAC 25.210 - Non-allowable transportation costs
Universal Citation: 11 AK Admin Code 11 AAC 25.210
Current through August 30, 2024
(a) A lessee may not include the following costs in calculating an arm's length transportation allowance under 11 AAC 25.170 or a non-arm's length transportation allowance under 11 AAC 25.180 - 11 AAC 25.200:
(1) the cost of transportation of qualified
gas downstream of destination;
(2)
the cost of transportation of residue gas or gas plant products after
processing of qualified gas is complete at destination;
(3) a cost or fee incurred for storage,
except that a lessee may deduct
(A) a charge
by a pipeline for storage for no more than 30 days if the storage is required
under the applicable transportation services agreement and is necessary for
pipeline operations;
(B) a cost or
fee for the storage as part of LNG transportation, if the fee or cost is
allowed under
11 AAC 25.200;
(4) an intra-hub transfer fee paid
to a pipeline hub operator for administrative services, including accounting
for the sale of qualified gas within a hub and title transfer
tracking;
(5) a fee paid to a
scheduling service provider;
(6)
internal costs to schedule, nominate, and account for the sale or movement of
qualified gas, if incurred by a lessee or its affiliate other than a
transportation affiliate; those costs include salaries and related costs, rent
and space costs, office equipment costs, and legal fees;
(7) an aggregator or marketer fee, including
a fee a lessee or its affiliate pays an affiliate or another person to market,
purchase, or resell qualified gas, or find or maintain a market for qualified
gas;
(8) a fee paid to a broker,
including a fee paid to a person that arranges marketing or
transportation;
(9) a penalty
incurred as a shipper, including
(A) an
over-delivery cash-out penalty, including the difference between the price the
pipeline pays for over-delivered volumes outside the tolerances and the price
received for over-delivered volumes within the tolerances;
(B) a scheduling penalty, including a penalty
incurred for differences between daily volumes delivered into the pipeline and
volumes scheduled or nominated at a receipt or delivery point;
(C) an imbalance penalty, including a penalty
incurred for differences between volumes delivered into the pipeline and
volumes scheduled or nominated at a receipt or delivery point;
(D) an operational penalty, including fees
incurred for violation of the pipeline's curtailment or operational orders
issued to protect the operational integrity of the pipeline;
(10) the cost of pipeline
transportation within the unit of production, unless
(A) the pipeline is regulated by FERC or the
Regulatory Commission of Alaska; or
(B) for Prudhoe Bay gas covered by the 1980
Prudhoe Bay Royalty Settlement Agreement, the cost is allowed under that
agreement;
(11) the cost
of pipeline transportation within a state unit other than the unit of
production where the gas was reinjected into a reservoir, unless
(A) the pipeline is regulated by FERC or the
Regulatory Commission of Alaska; or
(B) for Prudhoe Bay gas covered by the 1980
Prudhoe Bay Royalty Settlement Agreement, the cost is allowed under that
agreement;
(12) the cost
of a gathering pipeline or a pipeline in the state that is not subject to
regulation by FERC or the Regulatory Commission of Alaska;
(13) as provided in
11 AAC 25.070(d),
the cost of transporting carbon dioxide in a pipeline upstream of the Alaska
mainline in excess of quantities allowed in the specification of conditions for
acceptance into the Alaska mainline;
(14) the cost of transporting a gas or
associated substance that is not royalty-bearing, except that lessees may
include in a transportation allowance the costs of transporting carbon dioxide
in quantities not to exceed the quantities allowed in the specification of
conditions for acceptance into the Alaska mainline;
(15) other costs a lessee incurs for services
it is required to provide at no cost to the state as lessor or
otherwise;
(16) costs of
arbitration, litigation, or other dispute resolution activity that involves the
state or concerns the rights or obligations
(A) among owners of a transportation entity;
or
(B) between an owner of a
transportation entity and a shipper.
(b) In addition to the costs set out in (a) of this section, a lessee may not include the following costs in determining a non-arm's length transportation allowance under 11 AAC 25.180 - 11 AAC 25.200:
(1) payments, either volumetric or in value,
for actual or theoretical losses of qualified gas;
(2) costs of a surety.
Authority:AS 38.05.020
AS 38.05.180
AS 43.90.310
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