15 AAC 55.173 - Prevailing value for gas
(a) For gas
delivered in the Alaska North Slope area, the prevailing value is,
(1) repealed 1/1/2022;
(2) for gas produced on or after October 1,
2008 and before the commencement of commercial operation of a regulated
pipeline facility that delivers gas outside of the Alaska North Slope area, the
weighted average sales price of sales from producers of gas to regulated
utilities in the Alaska North Slope area for the three-month period ending one
month before the end of the previous calendar quarter; in the absence of sales
from producers to regulated utilities in the Alaska North Slope area, the
department will determine the prevailing value on another reasonable basis
under
AS
43.55.020(f); the department
will publish on the 15th day of each calendar quarter the prevailing value for
that quarter;
(3) for gas produced
after the commencement of commercial operation of a regulated pipeline facility
that delivers gas outside of the Alaska North Slope area, the prevailing value
determined under (j) of this section, adjusted for differences, if any, in
location, quality, or composition between unprocessed gas delivered into the
pipeline facility and gas delivered in the Alaska North Slope area.
(b) For gas delivered in the Cook
Inlet area during a calendar quarter, the prevailing value is the weighted
average price of significant sales of gas from producers of gas to publicly
regulated utilities in the Cook Inlet area for the three month period ending
one month before the end of the previous calendar quarter. The department will
publish on the 15th day of each calendar quarter the prevailing value for that
quarter. For purposes of this subsection, "significant sales" means sales of
10,000 Mcf per month or more.
(c)
For gas delivered by pipeline to a market in Canada or the Lower 48, the
prevailing value for the month of production of that gas is determined as
follows:
(1) except as provided in (3) of
this subsection, for unprocessed gas delivered in, or downstream of, a first
destination market with reasonable liquidity, the prevailing value is the total
value of the component residue gas and component gas plant products, based on
market price indices for residue gas and gas plant products determined by the
department under (n) of this section, as adjusted for quality or location, for
the first destination market with reasonable liquidity, after deduction of a
downstream gas processing cost allowance;
(2) except as provided in (3) of this
subsection, if gas has been processed in a downstream gas plant and delivered
in, or downstream of, a first destination market with reasonable liquidity, the
prevailing value is the total value of the residue gas and the gas plant
products, based on market price indices for residue gas and gas plant products
determined by the department under (n) of this section, for the first
destination market with reasonable liquidity, after deduction of a downstream
gas processing cost allowance;
(3)
if unprocessed gas, residue gas, or gas plant products are not delivered in, or
downstream of, a first destination market with reasonable liquidity and are not
subject to (k) of this section, or if the department determines that a
methodology set out in (1) and (2) of this subsection cannot practicably be
applied, the department will determine the prevailing value using one of the
following methods:
(A) the weighted average
sales price of all gas produced in the state and sold in arm's length, third
party transactions in the month of delivery in the same destination
market;
(B) the weighted average
sales price of all gas produced in the state and sold in arm's length, third
party transactions in the month of delivery in the same regional
market;
(C) the value of comparable
gas delivered to the same regional market, as adjusted for quality and location
and based on applicable reference prices published by government entities in
Canada or the United States, or any other source of market price information
identified by the department as reasonably reliable for purposes of determining
the value of the gas.
(d) For gas delivered in the United States
outside the state or in a foreign market by means of an LNG transportation
facility, the prevailing value for the month of production of that gas is
determined as follows:
(1) except as provided
in (2) of this subsection, for LNG delivered in or downstream of a first
destination market with reasonable liquidity, prevailing value is the higher of
(A) the total value of the LNG based on the
market price index determined by the department under (n) of this section for
LNG of like kind, quality, and condition for that market;
(B) the total value of the LNG based on the
market price index determined by the department under (n) of this section for
regasified LNG or the market price indices determined by the department under
(n) of this section for residue gas and gas plant products, after deduction of
a regasification cost allowance and, if applicable, a downstream gas processing
cost allowance, and after applying any location or quality differentials
determined by the department;
(2) if the LNG or regasified LNG is not
delivered in, or downstream of, a first destination market with reasonable
liquidity, or if the department determines that the methodology set out in (1)
of this subsection cannot practicably be applied, the department will determine
the prevailing value using one of the following methods:
(A) the weighted average sales price of all
gas produced in the state and sold in arm's length, third party transactions in
the month of delivery in the same destination market;
(B) the weighted average sales price of all
gas produced in the state and sold in arm's length, third party transactions in
the month of delivery in the same regional market;
(C) the value of comparable gas delivered to
the same regional market, as adjusted for quality and location, based on
applicable reference prices published by government entities in the foreign
market or the United States, or any other source of market price information
identified by the department as reasonably reliable for purposes of determining
the value of LNG, regasified LNG, residue gas, or gas plant products for that
same regional market.
(e) Repealed 5/3/2007.
(f) Repealed 5/3/2007.
(g) A producer that sells gas that has been
produced from a lease or property in the state shall, as part of its monthly
report under
AS
43.55.030(f), file with the
department a copy of the sales invoice for each sales transaction for the month
covered by the report and a copy of any contract to sell gas produced from a
lease or property in the state that the producer entered into during the month
covered by the report.
(h) Repealed
1/1/2000.
(i) repealed
9/20/2020.
(j) For gas sold at the
inlet to a gas treatment plant or at the inlet to a regulated gas pipeline
facility capable of transporting gas to areas of the state outside of the
Alaska North Slope area, the prevailing value for the month of production of
that gas is the prevailing value determined in (c) of this section for the
first destination market with reasonable liquidity for residue gas and gas
plant products, or if there is more than one first destination market with
reasonable liquidity, the weighted average of the prevailing values determined
under (c) of this section, minus the volume-weighted average of all applicable
filed pipeline tariff rates for gas produced from the lease or property and
transported to the destination market and, if applicable, minus the cost of gas
treatment at the gas treatment plant. In calculating a volume-weighted average
of pipeline tariff rates under this subsection, the department may use data
from an appropriate prior tax period as necessary to allow for a more
contemporaneous determination of prevailing value. For purposes of this
subsection, the cost of gas treatment is
(1)
if the gas treatment plant is regulated, the applicable tariff rate for the gas
treatment plant or, if there is more than one applicable filed tariff rate, the
weighted average of all of those rates;
(2) if the gas treatment plant is not
regulated, the cost determined by the department using the methodology under
15 AAC 55.197 for current or prior tax periods.
(k) For North Slope gas delivered
at an offtake point or other point downstream from the inlet to a regulated gas
pipeline facility in an area of the state outside of the Alaska North Slope
area or in Canada or the Lower 48 but upstream from a first destination market
with reasonable liquidity, the prevailing value for the month of production of
that gas is the prevailing value determined in (c) of this section for the
first destination market with reasonable liquidity for residue gas and gas
plant products, or if there is more than one first destination market with
reasonable liquidity, the weighted average of the prevailing values determined
under (c) of this section, minus the volume-weighted average of all applicable
filed pipeline tariff rates for gas transported from that offtake or other
point to the first destination market. In calculating a volume-weighted average
of pipeline tariff rates under this subsection, the department may use data
from an appropriate prior tax period as necessary to allow for a more
contemporaneous determination of prevailing value.
(l) For North Slope gas delivered to and sold
at the inlet to the liquefaction plant of an LNG transportation facility
located in or near Valdez, Alaska, by use of a pipeline facility that does not
also deliver gas to Canada or the Lower 48, the prevailing value is the
prevailing value determined by the department in (d) of this section for LNG
deliveries to the destination market or if there is more than one destination
market, the weighted average of the prevailing values determined under (d) of
this section, minus the volume-weighted average costs of transportation,
determined under
15 AAC 55.193, between the inlet of the liquefaction
facility and the destination markets. In calculating a volume-weighted average
cost of transportation under this subsection, the department may use data from
an appropriate prior tax period as necessary to allow for a more
contemporaneous determination of prevailing value.
(m) For gas delivered by pipeline to any
location outside of the Alaska North Slope area other than those locations
provided for in (c), (d), (k), and (l) of this section, the
prevailing value of the gas is the higher of
(1) the prevailing value determined under (k)
of this section at the applicable offtake point from the pipeline facility
originating in the Alaska North Slope area, plus the volume-weighted average of
all applicable filed pipeline tariff rates, if any, between the offtake point
and the sales delivery point; or
(2) the weighted average sales price of all
gas produced in the state and sold in arm's length, third party transactions in
the month of delivery in the same regional market.
(n) For purposes of determining prevailing
value under this section,
(1) a first
destination market with reasonable liquidity is a destination market that the
department determines satisfies the following criteria:
(A) for residue gas,
(i) the average daily volume of residue gas
sold in arm's length transactions exceeds 100,000 MMBTUs; and
(ii) there is sufficient market price
information reasonably available in that market for the department to establish
a market price index under (2) of this subsection and, if applicable, an
adjustment under (3) of this subsection for residue gas for that
market;
(B) for LNG,
(i) the average daily volume of LNG or
regasified LNG sold in arm's length transactions is substantial; and
(ii) there is sufficient market price
information reasonably available in that market for the department to establish
a market price index under (2) of this subsection and, if applicable, an
adjustment under (3) of this subsection for LNG for that market;
(C) for gas plant products,
(i) gas plant products are either extracted
or fractionated in the market for purposes of sale;
(ii) the market is designated as a first
destination market for residue gas under (A) of this paragraph; and
(iii) there is sufficient market price
information reasonably available either in that destination market or in
another market for gas plant products connected by pipeline to that destination
market for the department to establish a market price index under (2) of this
subsection and, if applicable, an adjustment under (3) of this subsection for
gas plant products for that market;
(2) for residue gas, LNG, or gas plant
products, the department will determine a market price index, if appropriate,
based on information published on a regular basis in reliable and widely
available industry trade publications, applicable reference prices published by
government entities in Canada or the United States, or any other source of
market price information identified by the department as reasonably reliable
for purposes of determining a value of residue gas, LNG, or gas plant products
for that location or area, as adjusted for quality and location differentials
and if applicable, any adjustment under (3) of this subsection;
(3) for residue gas, LNG, or gas plant
products, the department may determine an appropriate adjustment between
component residue gas and component gas plant products, and among actual or
potential component gas plant products, based on BTU content, NGL content, or
any other characteristic of the producer's gas that is required to determine a
prevailing value under this section.
(o) The department will determine a
reasonable downstream gas processing cost allowance, or in the case of LNG, a
reasonable regasification cost allowance to be used in the calculation of
prevailing value under this section, using one of the following methods as
applicable:
(1) downstream gas processing
costs or regasification costs published by an industry trade journal, a
governmental entity, or any other reliable source of this information, adjusted
for quality, location, and any service charges embedded in the published cost
and not directly related to processing or regasification; for purposes of this
paragraph, service charges include marketing allowances;
(2) for a gas processing cost allowance, a
weighted average of downstream gas processing cost deductions determined by the
department under
15 AAC 55.140(b) (2) and
15 AAC 55.141, for current or prior tax periods, as
adjusted for quality or location;
(3) for a regasification cost allowance, a
weighted average of actual transportation costs for regasification facilities
determined under
15 AAC 55.193(b) (4)(B) and
15 AAC 55.196 for current or prior tax periods, as
adjusted for quality or location;
(4) a weighted average of arm's length
downstream gas processing costs or regasification costs for current or prior
tax periods, as adjusted for quality or location.
(p) In this section,
(1) "Alaska North Slope area" means that part
of the state that lies north of 68 degrees North latitude;
(2) "offtake point" means a point of delivery
along the length of a long-distance integrated pipeline facility that is
capable of providing connections to other lateral pipelines for delivery to
markets separate from the mainline or to local gas distribution lines for
residential or commercial use, or to both;
(3) "unprocessed gas" means gas that has not
been subject to downstream gas processing.
Notes
Authority:AS 43.05.080
AS 43.55.020
AS 43.55.030
AS 43.55.040
AS 43.55.110
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