11 AAC 25.160 - Transportation costs

(a) In calculating the monthly value of the state's royalty share of qualified gas, a lessee may deduct transportation costs as provided in 11 AAC 25.060 - 11 AAC 25.090 and 11 AAC 25.160 - 11 AAC 25.220. Only actual and reasonable transportation costs are allowed under this section that are incurred and paid by the lessee or its affiliate and not refunded to the lessee or its affiliate for transporting qualified gas between the boundary of the unit of production and destination, or, if the lease of production is not within a unit, between the lease of production and destination.

(b) If a lessee, its marketing affiliate, or any affiliate other than a transportation affiliate transports qualified gas on a transportation affiliate, transportation costs for the lessee must be reported on the basis of the actual and reasonable costs of the transportation affiliate, unless the lessee, its marketing affiliate, or affiliate other than the transportation affiliate pays the transportation affiliate a lower amount or has an agreement or contract with the transportation affiliate for a lower amount, in which case the lower amount must be used.

(c) For purposes of 11 AAC 25.060 - 11 AAC 25.090 and 11 AAC 25.160 - 11 AAC 25.220, a marketing entity, pipeline entity, LNG transportation entity, or other entity is an affiliate of the lessee if the lessee and the other entity are affiliated during the royalty reporting period, or were affiliated when the contract for sale, marketing, transportation, or other service was executed or an agreement for sale, marketing, transportation, or other service was made.

(d) If a lessee or an affiliate receives a payment or credit from a transportation entity, the lessee shall reduce the cost or deduction claimed in reporting and paying royalties on qualified gas by the amount of the payment or credit attributable to that gas.

Notes

11 AAC 25.160

Eff. 5/29/2010, Register 194

Authority:AS 38.05.020

AS 38.05.180

AS 43.90.310