30 CFR 1206.356 - How do I calculate royalty or fees due on geothermal resources I use for direct use purposes?
If you use the geothermal resource for direct use:
(a) For Class I leases, you must determine the royalty due on geothermal resources in accordance with the first applicable of the following three paragraphs.
(1) The weighted average of the gross proceeds established in arm's-length contracts for the purchase of significant quantities of geothermal resources to operate the lessee's same direct-use facility multiplied by the royalty rate in your lease. In evaluating the acceptability of arm's-length contracts, the following factors will be considered: time of execution, duration, terms, volume, quality of resource, and such other factors as may be appropriate to reflect the value of the resource.
(2) The equivalent value of the least expensive, reasonable alternative energy source (fuel) multiplied by the royalty rate in your lease. The equivalent value of the least expensive, reasonable alternative energy source will be based on the amount of thermal energy that would otherwise be used by the direct use facility in place of the geothermal resource. That amount of thermal energy (in Btu) displaced by the geothermal resource will be determined by the equation:
(b) For geothermal resources produced from Class II and Class III leases, you must multiply the appropriate fee from the schedule in sub paragraph (b)(1) of this section by the number of gallons or pounds you produce from the direct use lease each month.
(1) You must use the following fee schedule to calculate fees due under this section:
Direct Use Fee Schedule
|If your average monthly inlet temperature (°F) is||Your fees are . . .|
|At least . . .||But less than . . .||($/million gallons)||($/million pounds)|
(2) The fee that you report is subject to monitoring, review, and audit.
(3) The schedule of fees established under this paragraph will apply to any Class III lease with respect to any royalty payments previously made when the lease was a Class I lease that were due and owing, and were paid, on or after July 16, 2003. To use this provision, you must provide ONRR data showing the amount of geothermal production in pounds or gallons of geothermal fluid to input into the fee schedule (see 43 CFR part 3276).
(i) If the royalties you previously paid are less than the fees due under this section, you must pay the difference plus interest on that difference computed under § 1218.302 of this chapter.
(ii) If the royalties you previously paid are more than the fees due under this section, then you are entitled to a refund or credit from ONRR of 50 percent of the overpaid royalties. You are also entitled to a refund or credit of any interest that you paid on the overpaid royalties.