Alaska Administrative Code
Title 11 - Natural Resources
Part 3 - Oil and Gas
Chapter 25 - Royalty Election Under Alaska Gasline Inducement Act
11 AAC 25.230 - Processing costs

(a) In calculating the monthly value of the state's royalty share of qualified gas, a lessee may deduct processing costs only to the extent authorized by 11 AAC 25.060 - 11 AAC 25.090 and 11 AAC 25.230 - 11 AAC 25.260. Processing costs will be allowed only if they are the actual and reasonable processing costs incurred and paid by the lessee or its affiliate and not refunded to the lessee or its affiliate for processing qualified gas between the inlet to the Alaska mainline and destination.

(b) A processing allowance may not be deducted from the value of unprocessed gas, residue gas, methane, or condensate in calculating the monthly value of the state's royalty share of qualified gas.

(c) If the commissioner establishes a quality differential under 11 AAC 25.140(b) that a lessee may elect to take in lieu of a processing allowance, a lessee may not take both the quality differential and a processing allowance in calculating the monthly value of the state's royalty share of qualified gas.

(d) For purposes of 11 AAC 25.230 - 11 AAC 25.260, a processing plant is an affiliate of a lessee if the lessee and the processing plant are affiliated at any time during the royalty reporting period, or were affiliated when the contract for processing was executed or an agreement for processing was made.