11 AAC 25.210 - Non-allowable transportation costs

(a) A lessee may not include the following costs in calculating an arm's length transportation allowance under 11 AAC 25.170 or a non-arm's length transportation allowance under 11 AAC 25.180 - 11 AAC 25.200:

(1) the cost of transportation of qualified gas downstream of destination;

(2) the cost of transportation of residue gas or gas plant products after processing of qualified gas is complete at destination;

(3) a cost or fee incurred for storage, except that a lessee may deduct

(A) a charge by a pipeline for storage for no more than 30 days if the storage is required under the applicable transportation services agreement and is necessary for pipeline operations;

(B) a cost or fee for the storage as part of LNG transportation, if the fee or cost is allowed under 11 AAC 25.200;

(4) an intra-hub transfer fee paid to a pipeline hub operator for administrative services, including accounting for the sale of qualified gas within a hub and title transfer tracking;

(5) a fee paid to a scheduling service provider;

(6) internal costs to schedule, nominate, and account for the sale or movement of qualified gas, if incurred by a lessee or its affiliate other than a transportation affiliate; those costs include salaries and related costs, rent and space costs, office equipment costs, and legal fees;

(7) an aggregator or marketer fee, including a fee a lessee or its affiliate pays an affiliate or another person to market, purchase, or resell qualified gas, or find or maintain a market for qualified gas;

(8) a fee paid to a broker, including a fee paid to a person that arranges marketing or transportation;

(9) a penalty incurred as a shipper, including

(A) an over-delivery cash-out penalty, including the difference between the price the pipeline pays for over-delivered volumes outside the tolerances and the price received for over-delivered volumes within the tolerances;

(B) a scheduling penalty, including a penalty incurred for differences between daily volumes delivered into the pipeline and volumes scheduled or nominated at a receipt or delivery point;

(C) an imbalance penalty, including a penalty incurred for differences between volumes delivered into the pipeline and volumes scheduled or nominated at a receipt or delivery point;

(D) an operational penalty, including fees incurred for violation of the pipeline's curtailment or operational orders issued to protect the operational integrity of the pipeline;

(10) the cost of pipeline transportation within the unit of production, unless

(A) the pipeline is regulated by FERC or the Regulatory Commission of Alaska; or

(B) for Prudhoe Bay gas covered by the 1980 Prudhoe Bay Royalty Settlement Agreement, the cost is allowed under that agreement;

(11) the cost of pipeline transportation within a state unit other than the unit of production where the gas was reinjected into a reservoir, unless

(A) the pipeline is regulated by FERC or the Regulatory Commission of Alaska; or

(B) for Prudhoe Bay gas covered by the 1980 Prudhoe Bay Royalty Settlement Agreement, the cost is allowed under that agreement;

(12) the cost of a gathering pipeline or a pipeline in the state that is not subject to regulation by FERC or the Regulatory Commission of Alaska;

(13) as provided in 11 AAC 25.070(d), the cost of transporting carbon dioxide in a pipeline upstream of the Alaska mainline in excess of quantities allowed in the specification of conditions for acceptance into the Alaska mainline;

(14) the cost of transporting a gas or associated substance that is not royalty-bearing, except that lessees may include in a transportation allowance the costs of transporting carbon dioxide in quantities not to exceed the quantities allowed in the specification of conditions for acceptance into the Alaska mainline;

(15) other costs a lessee incurs for services it is required to provide at no cost to the state as lessor or otherwise;

(16) costs of arbitration, litigation, or other dispute resolution activity that involves the state or concerns the rights or obligations

(A) among owners of a transportation entity; or

(B) between an owner of a transportation entity and a shipper.

(b) In addition to the costs set out in (a) of this section, a lessee may not include the following costs in determining a non-arm's length transportation allowance under 11 AAC 25.180 - 11 AAC 25.200:

(1) payments, either volumetric or in value, for actual or theoretical losses of qualified gas;

(2) costs of a surety.

Notes

11 AAC 25.210

Eff. 5/29/2010, Register 194

Authority:AS 38.05.020

AS 38.05.180

AS 43.90.310