Alaska Administrative Code
Title 11 - Natural Resources
Part 3 - Oil and Gas
Chapter 25 - Royalty Election Under Alaska Gasline Inducement Act
11 AAC 25.260 - Non-allowable processing costs
Universal Citation: 11 AK Admin Code 11 AAC 25.260
Current through August 30, 2024
(a) A lessee may not include the following costs in determining an arm's length processing allowance under 11 AAC 25.240 or a non-arm's length processing allowance under 11 AAC 25.250:
(1) a cost not directly related to processing
of qualified gas;
(2) a cost for
processing qualified gas downstream of destination;
(3) a cost greater than the consideration
transferred, either directly or indirectly, from the lessee or its affiliate to
the processor, regardless of the cost or fee identified in a processing
contract;
(4) a cost incidental to
marketing;
(5) a cost for a
processes that normally take place on or near the lease or unit of production,
including natural pressure reduction, mechanical separation, heating, cooling,
dehydration, compression, and other acts undertaken to put gas in marketable
condition.
(b) A lessee may not include the following capital costs in determining a non-arm's length processing allowance under 11 AAC 25.250:
(1) a cost for capital improvement or
equipment that is not an integral part of the processing facility;
(2) nondepreciable property, including land
and a pipeline right-of-way;
(3) a
facility used to store, deliver, or otherwise dispose of residue gas or gas
plant products after extraction.
(c) A lessee may not include the following noncapital costs in determining a non-arm's length processing allowance under 11 AAC 25.250:
(1) operating and maintenance cost not
directly related to processing;
(2)
a cost associated with a capital improvement or equipment if the cost of the
capital improvement or equipment is disallowed under (b) of this
section;
(3) federal, state, or
other income taxes;
(4) production
or severance taxes;
(5) royalty
payments.
Authority:AS 38.05.020
AS 38.05.180
AS 43.90.310
Disclaimer: These regulations may not be the most recent version. Alaska may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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