11 AAC 25.080 - Allocation of gas and costs downstream of inlet to the Alaska mainline

(a) Unless otherwise provided in this chapter, a lessee calculating the monthly value of the state's royalty share of qualified gas under this chapter shall allocate gas and costs at and downstream of the inlet to the Alaska mainline as provided in this section.

(b) Based on its characteristics at destination, as destination is determined under this section and 11 AAC 25.100(b), qualified gas shall be characterized as one of the following:

(1) unprocessed gas;

(2) residue gas;

(3) one of the following gas plant products:

(A) NGL mix;

(B) fractionated gas plant products.

(c) If the lessee or its affiliate delivers into the Alaska mainline or a pipeline downstream of the inlet to the Alaska mainline both qualified gas from a lease and non-qualified gas from the same lease or from another source, the lessee shall allocate unprocessed gas, residue gas, and gas plant products between the qualified gas from the lease and the non-qualified gas as follows:

(1) the lessee shall account for unprocessed gas delivered from a pipeline downstream of the inlet of the Alaska mainline on the basis of the quantity of each component of unprocessed gas delivered from the pipeline; the lessee shall allocate, on a component-by-component basis, unprocessed gas between the qualified gas from the lease and non-qualified gas; the allocation to a lease must be based on a percentage for the lease representing a ratio, the numerator of which is the quantity of the component of qualified gas from the lease that the lessee or its affiliate delivered into the pipeline during the royalty reporting period and the denominator of which is the total quantity of the same component that the lessee or its affiliate delivered into the pipeline from other sources during the royalty reporting period;

(2) residue gas resulting from processing by the lessee or its affiliate in any processing plant serviced by a pipeline downstream of the inlet to the Alaska mainline must be allocated between the qualified gas from the lease and non-qualified gas on the basis of MMBtus; the allocation to a lease must be based on the percentage for the lease representing a ratio, the numerator of which is the quantity of a 100 percent share of the methane plus the quantity of a fractional share of the ethane in the qualified gas from the lease that the lessee or its affiliate delivered into the pipeline during the royalty reporting period, and the denominator of which is the quantity of all the methane plus the quantity of a fractional share of all the ethane that the lessee or its affiliate delivered into the pipeline from other sources during the royalty reporting period; the fractional share of ethane to be used for purposes of allocation under this paragraph is the weighted average extraction plant recovery rate for ethane in residue gas for all processing plants serviced by the pipeline and used by the lessee or its affiliate in the royalty reporting period;

(3) the NGL mix resulting from processing by the lessee or its affiliate in any processing plant serviced by a pipeline downstream of the inlet to the Alaska mainline shall be allocated by the lessee between qualified and non-qualified gas from the lease; an allocation must be made for each component in the NGL mix; the allocation to a lease must be based on the percentage for the lease representing a ratio, the numerator of which is the quantity of the component in the qualified gas from the lease that the lessee or its affiliate delivered into the pipeline during the royalty reporting period, and the denominator of which is the quantity of the component the lessee or its affiliate delivered into the pipeline from other sources during the royalty reporting period;

(4) the lessee shall allocate between qualified gas from a lease and non-qualified gas a fractionated gas plant product resulting from processing by the lessee or its affiliate in a processing plant serviced by a pipeline downstream of the inlet to the Alaska mainline; the allocation to a lease must be based on the percentage for the lease representing a ratio, the numerator of which is the quantity of a component in the qualified gas from the lease that the lessee or its affiliate delivered into the pipeline during the royalty reporting period, and the denominator of which is the quantity of the same component that the lessee or its affiliate delivered into the pipeline from other sources during the royalty reporting period; the component to be used for purposes of allocation under this paragraph is the component that corresponds with the fractionated gas plant product.

(d) If a lessee or its affiliate transports both qualified and non-qualified gas from a lease or from another source between the same receipt and delivery points for a pipeline under more than one agreement with the pipeline, and if the agreements contain different charges for the same service, the lessee shall allocate the qualified and non-qualified gas from the lease or from another source between the agreements based on MMBtus. However, qualified gas transported on the Alaska mainline or Canada mainline shall be allocated only to firm transportation capacity acquired through a commitment made in the first binding open season for the mainline.

(e) The actual and reasonable costs allowed for transportation under 11 AAC 25.060 - 11 AAC 25.090 and 11 AAC 25.160 - 11 AAC 25.210 must be allocated between unprocessed gas, residue gas, gas plant products, and LNG by destination according to the methodology set out in the applicable transportation services agreement. If the transportation services agreement does not set out a methodology, allocation must be based on MMBtus and mileage of haul.

(f) If a lessee or its affiliate processes both qualified and non-qualified gas from a lease or from another source at a processing plant downstream of the inlet to the Alaska mainline under more than one agreement with that plant for processing, and if the agreements contain different charges for the same service, the qualified gas from the lease and non-qualified gas must be allocated proportionately between the agreements.

(g) In allocating under this section the value of unprocessed gas, residue gas, gas plant products, and LNG between qualified and non-qualified gas from a lease or to another source, a lessee may either adjust volume for a pipeline, plant, and tanker in-kind fuel requirement, for gain, and for loss for all gas from any source using the method set out in 11 AAC 25.090 or not make an adjustment for gas from any source for that purpose under this subsection. After a lessee chooses whether to adjust volumes for the purpose of this subsection, it cannot change its choice without the commissioner's approval.

Notes

11 AAC 25.080

Eff. 5/29/2010, Register 194

Authority:AS 38.05.020

AS 38.05.180

AS 43.90.310