11 AAC 83.295 - Definitions

Unless the context clearly requires a different meaning, in 11 AAC 83.201 - 11 AAC 83.295

(1) "abandonment cost" means those costs that will be incurred by the lessee to meet state and/or federal requirements to satisfactorily restore the lease, to plug and abandon the well and remove personal property within a reasonable time;

(2) "Btu-equivalent" means a barrel of oil or six Mcf of gas; except if the Btu-equivalents of the proved reserves of oil originally in place in the field that includes a particular NPSL, do not exceed 20 percent of the Btu-equivalents of the proved reserves of gas originally in place in that field, or vice versa, then "Btu-equivalent" will be understood to refer to the unit of production (barrel of oil or Mcf of gas) of the dominant reserve of that field for purposes of this chapter; however, if a lessee uses a similar but different unit of production for its unit-of-production amortization or depreciation for financial accounting purposes, the "Btu-equivalent" will be understood to refer to the unit of production used in that amortization or depreciation;

(3) "capital lease" means a lease classified as a capital lease from the standpoint of the lessee under FASB-13;

(4) "CDS vessel" means a United States flag vessel built for use in foreign trade which receives (while it is so used) a subsidy for the differential in construction costs between building it in the United States and building it elsewhere;

(5) "CDS/ODS vessel" means a United States flag vessel built for use in foreign trade which receives (while it is so used) both the subsidy for a CDS vessel and the subsidy for an ODS vessel;

(6) "commissioner" means the commissioner of the Department of Natural Resources, State of Alaska, or his designee;

(7) "commercial production" means the production of oil and gas for purposes of sale or other beneficial use, except when the sale or beneficial use is incidental to the testing of an unproved well or unproved completion interval;

(8) "credit" means an entry used within the context of generally accepted accounting procedures;

(9) "debit" means an entry used within the context of generally accepted accounting procedures;

(10) "department" means the Department of Natural Resources, State of Alaska;

(11) "entitlements treatment" refers to the issuance, purchase, sale or use of whole and/or fractional entitlements associated with refining a particular run of oil pursuant to 10 CFR 211 and 212, or to the treatment of that oil under any other program having a similar effect that the United States Department of Energy may adopt or administer as a replacement or continuation of the present entitlements program;

(12) "FASB" means the Financial Accounting Standards Board;

(13) "FASB 13" means FASB's Statement of Financial Accounting Standards No. 13, "Accounting for Leases" (November 1976), as amended or interpreted by FASB's Statement of Financial Accounting Standards No. 17, "Accounting for Leases - Initial Direct Costs" (November 1977); FASB's Statement of Financial Accounting Standards No. 22, "Changes in the Provisions of Lease Agreements Resulting from Refundings of Tax-Exempt Debt" (June 1978); FASB's Statement of Financial Accounting Standards No. 23, "Inception of the Lease" (August 1978); FASB Interpretation No. 19, "Lessee Guarantee of the Residual Value of Leased Property" (October 1977); and FASB Interpretation No. 21, "Accounting for Leases in a Business Combination" (April 1978);

(14) "FERC" means the Federal Energy Regulatory Commission of the United States Department of Energy, or the agency succeeding to its regulatory functions;

(15) "gross share" means the volume of production attributable to a production interest before any deductions for royalty in-value and royalty in-kind due the state that may be chargeable to that production interest;

(16) "Jones Act vessel" means a United States flag vessel built for use in domestic trade;

(17) "lessee" means an individual or individuals, a corporation, or, collectively, two or more corporations or individuals, that hold a working interest in a NPSL;

(18) "LNG" means a cryogenic liquid formed from normally gaseous hydrocarbons, chiefly methane;

(19) "LNG transportation facility" means any or all of the following when they are parts of a system to transport LNG: the LNG liquefaction plant, gathering lines to that plant, loading and unloading facilities for LNG tankers, LNG tankers themselves and facilities to regasify the LNG;

(20) "Mcf" or "Mcf of gas" means one thousand cubic feet of gas measured at 60 degrees Fahrenheit and 14.65 pounds per square inch (absolute);

(21) "ODS vessel" means a United States flag vessel built for use in foreign trade, that receives (while it is so used) a subsidy for the differential in operating costs between being manned by United States crews and being manned by foreign crews;

(22) "oil and gas" may, if appropriate, refer to either oil or gas, as well as meaning both of them in other contexts;

(23) "point of production" means

(A) for oil, the automatic custody transfer meter or unit through which the oil enters into the facilities of a carrier pipeline or other transportation carrier; and, in the absence of an automatic custody transfer meter or unit, the "point of production" for oil is the outlet flange of the tank gauge (or, in the absence of an automatic transfer meter or a tank gauge, another mechanism or device to measure the quantity of oil that has been approved by the department for this purpose) through which the oil is tendered and accepted into the facilities of a carrier pipeline or other transportation carrier;

(B) for gas recovered in association with oil, the meter on or nearest (measured along the course taken by the gas) to the NPSL from which the gas is recovered, at which meter the sales stream of gas is measured with sufficient accuracy and at appropriate temperature, pressure and other condition for purposes of sale, regardless of whether the particular gas in question is actually sold at that meter;

(C) for gas not recovered from or in association with oil, the point where it is accurately metered or measured, or if the gas is sold on the NPSL premises from which it is recovered, then the point of such sale;

(24) "positioning costs" is defined in 11 AAC 83.229(i);

(25) "produced," in the sense of oil and gas produced from a NPSL, includes oil, and gas attributed (pursuant to the terms of a pooling agreement, unit agreement, lease-line well agreement, drainage agreement or other similar agreement between the production-interest owner(s) of the lease and the production-interest owner(s) of an adjacent lease, or pursuant to the terms of an order or decision by an appropriate regulatory agency or by a court) to that NPSL from one or more wells bottomed on the adjacent lease, as well as oil and gas from wells bottomed on the NPSL itself;

(26) "production interest" means a royalty interest or a working interest;

(27) "royalty" or "royalty interest" means a basic royalty or overriding royalty in the production of oil and gas;

(28) "sales delivery point" means

(A) for a lessee's oil and gas sold in a bona fide arm's-length sale to a third party, the point of delivery specified under the terms of the contract or agreement for that sale;

(B) for a lessee's oil not sold in a bona fide, arm's-length sale to a third party, the inlet of the refinery or comparable facility to which that oil is ultimately transported; and

(C) for a lessee's gas not sold in a bona fide, arm's-length sale to a third party, the point of delivery under the terms of the sales contract being used as the reference for the calculation of sales price of the lessee's gas under 11 AAC 83.226;

(29) "voyage and port costs" are defined in 11 AAC 83.229(g);

(30) "working interest" means any interest (including fee title) in the production of oil and gas that is not a royalty interest;

(31) "NPSL" is defined in 11 AAC 83.201.

(32) "division" means the division of oil and gas in the Department of Natural Resources;

(33) "NPSL report" means a NPSL volume value report (VV form), NPSL account report (AC form), NPSL petroleum production tax lease allowance report (PT form), and royalty or NPSL payment summary report (S1 form) for a NPSL.

Notes

11 AAC 83.295

Eff. 11/9/79, Register 72; am 8/15/82, Register 83; am 1/9/2014, Register 209, April 2014

As of Register 193 (April 2010), the regulations attorney made a technical revision under AS 44.62.125(b)(6), to the definition of "Btu-equivalent" in 11 AAC 83.295.

Authority:AS 38.05.020

AS 38.05.180