By OGJ editors
HOUSTON, Mar. 15 -- The US Minerals Management Services issued a final rule outlining changes to the 1988 Federal Gas Valuation Rule, used to determine royalty on production from federal leases.
"These amendments provide greater certainty, clarity, and consistency and will result in more accurate royalty reporting," said MMS Director Johnnie Burton. The rule changes stemmed from a series of public workshops in 2003.
MMS said the final amendments added a provision allowing for future valuation agreements between the MMS and a lessee. This provision is intended to provide flexibility.
The transportation-allowance definition was revised so that the gas rule conforms with similar definitions found in other rules. It provides allowances for reasonable, actual costs of moving gas to a delivery or sale point. The transportation allowance does not include gathering costs.
The transportation allowance revision also said that allowances approved before 1988 no longer are valid, and it changed the 1988 regulations to allow deduction of unused firm demand costs to make it consistent with a recent court decision, MMS said.
Other rule changes included the rate of return calculations, tariffs, and contract definitions.