Current through August 30, 2024
(a) A qualified
person that elects under
11 AAC 25.040(b)
to calculate royalties under this chapter may deduct a share of its actual and
reasonable costs of unused capacity on the Alaska mainline and Canada mainline,
if in the royalty reporting period the qualified person's total shipments on a
mainline are less than the total of its firm transportation capacity held that
month on that mainline. Any deduction for unused capacity may be allowed only
as provided in this section.
(b) In
calculating unused capacity for purposes of this section, a qualified person
shall combine quantities specific to that qualified person and any affiliates.
A qualified person shall base calculations under this section on amounts
specific to the qualified person and its affiliates, and may not base a
calculation on the total amount of
(1) all
shippers' firm transportation capacity for a mainline; or
(2) all shippers' production from leases, all
shippers' gas from other sources, or all shippers' gas from all
sources.
(c) A qualified
person's unused capacity for a mainline must be calculated using the same
billing determinants used in calculating the applicable recourse rate for the
appropriate mainline.
(d) Except as
provided in (e) of this section, a qualified person's unused capacity for a
month equals AC - AS, where
(1) AC equals
allocated capacity; allocated capacity is determined by multiplying FOSFT, as
described in (3) of this subsection, by the fraction,
(A) the numerator of which is the shipments
of production from leases on the Alaska mainline or Canada mainline, as
applicable, on and after the date of commencement of commercial operations and
before the month for which the calculation is made; and
(B) the denominator of which is the shipments
from all sources on the Alaska mainline or Canada mainline, as applicable, on
and after the date of commencement of commercial operations and before the
month for which the calculation is made;
(2) AS equals allocated shipments; the figure
for allocated shipments is the greater of
(A)
shipments of production from leases during the month for which the calculation
is made; or
(B) AC multiplied by a
fraction, the numerator of which is total shipments from all sources during the
month for which the calculation is made, and the denominator of which is TFT,
as described in (4) of this subsection;
(3) FOSFT equals firm transportation capacity
(A) held in the royalty reporting period for
which the calculation is made; and
(B) acquired through a commitment made in the
first binding open season for the Alaska mainline or Canada mainline, as
applicable;
(4) TFT
equals total firm transportation capacity
(A)
held in a royalty reporting period for which the calculation is made;
and
(B) acquired through
commitments made in the first and subsequent binding open seasons for the
Alaska mainline or Canada mainline, as applicable.
(e) Allocated capacity, as
calculated under (d) of this section, becomes fixed at the value for the
preceding royalty reporting period in the first month beginning after not less
than five years of commercial operations of the Alaska mainline if, for that
mainline, the qualified person's shipments from all sources for the month for
which the calculation is made are less than 95 percent of total firm
transportation capacity, as calculated under (d) of this section. The shortfall
in shipments must be for reasons other than a temporary reduction in shipments
caused by maintenance, pipeline expansion, or force majeure.
(f) In determining a deduction for unused
capacity under this section, a qualified person shall make appropriate
adjustments to the calculations made under (d) and (e) of this section to
account for commitments to firm transportation capacity for some but less than
all segments of a mainline and for shipments on some but less than all segments
of a mainline.
(g) Actual and
reasonable costs of unused capacity under this section do not include the cost
of
(1) capacity other than capacity acquired
through a commitment to firm transportation capacity made in the first binding
open season for the project;
(2)
capacity in excess of the volume or duration specified in a commitment to firm
transportation capacity specified in a bid submitted under
11 AAC 25.020(a) (1) or its equivalent for the Canada
mainline, excluding any option for extension of the term of years;
(3) capacity released to another shipper,
except to the extent that the other shipper pays less for that capacity than
the lessee or its affiliate is required to pay for that capacity, in which case
the quantity released for purposes of this paragraph is calculated as the total
quantity released multiplied by a fraction, the numerator of which is the
amount the other shipper pays for the capacity, and the denominator of which is
the amount the lessee or its affiliate would be allowed to claim as a
transportation deduction under this chapter for the same capacity if it
transported qualified gas in that capacity;
(4) capacity acquired from another shipper,
except for capacity acquired in connection with the acquisition of
substantially all of the releasing shipper's North Slope assets;
(5) unused capacity for which the person is
entitled to a deduction in calculating royalties due any royalty owner other
than the state;
(6) reservation
charges for or attributable to pipeline, measurement, compression, and other
permanent and temporary facilities existing before the date of sanction by the
licensee for the Alaska mainline; or
(7) expenses other than a reservation charge
paid for unused capacity, net of any proceeds, refund, credit, or compensation
for the unused capacity.
(h) Amounts deductible under this section for
unused capacity are deducted proportionately from destination values calculated
under 11 AAC 25.100 -
11 AAC 25.120 by applying the same
principles for attributing used capacity to individual leases and to
unprocessed gas, residue gas, gas plant products, and LNG.
(i) Royalty payments due the state may be
reduced only by the royalty-in-value share of the costs of unused capacity
calculated under this section.
(j)
The lessee shall set out the unused capacity deductions calculated under this
section as separate entries on royalty reports filed with the department and
may not use these deductions to reduce the royalty value of unprocessed gas,
residue gas, gas plant products, or LNG below zero.
(k) In this section,
(1) "sanction" has the meaning given in
AS
43.90.900;
(2) "shipments of production from leases" and
"total shipments from all sources" on the Alaska mainline or Canada mainline,
as applicable, include shipments of production on firm transportation capacity,
interruptible capacity, authorized overrun service, or any other type or level
of transportation service.
Authority:AS
38.05.020
AS 38.05.180
AS
43.90.310
