[Federal Register Volume 64, Number 229 (Tuesday, November 30, 1999)]
[Rules and Regulations]
[Pages 66771-66775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30991]
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DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Parts 202 and 206
RIN 1010-AB57
Amendments to Gas Valuation Regulations for Indian Leases--
Additional Information Related to Valuing Indian Gas Produced From
Leases Located in Index Zones
AGENCY: Minerals Management Service (MMS), Interior.
ACTION: Notice of Eligible Index Zones.
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SUMMARY: On August 10, 1999, MMS published a final rule titled
``Amendments to Gas Valuation Regulations for Indian Leases,'' (64 FR
43506) with an effective date of January 1, 2000. The gas regulations
apply to all gas production from Indian (tribal or allotted) oil and
gas leases (except leases on the Osage Indian Reservation). The new
regulations resulted from a negotiated rulemaking between Indian tribes
and allottees, oil and gas industry, and Government. The rule requires
that MMS publish additional information related to valuing Indian gas
produced from leases located in index zones. This document lists: the
Index Zones Eligible
[[Page 66772]]
for the Index-Based Valuation Method; the Acceptable Publications and
Indices to Use for the Index-Based Method; the lease prefixes
associated with each MMS-Designated Area; and the new MMS-Designated
Areas.
EFFECTIVE DATE: January 1, 2000.
ADDRESSES: Address all comments concerning this document to David S.
Guzy, Chief, Rules and Publications Staff, P.O. Box 25165, MS 3021,
Denver, Colorado, 80225-0165.
FOR FURTHER INFORMATION CONTACT: David S. Guzy, Chief, Rules and
Publications Staff; telephone (303) 231-3432; FAX, (303) 231-3385; E-
mail David.Guzy@mms.gov; mailing address, Minerals Management Service,
Royalty Management Program, Rules and Publications Staff, P.O. Box
25165, MS 3021, Denver, Colorado, 80225-0165.
SUPPLEMENTARY INFORMATION: The intent of the amendments to the
valuation regulations is to ensure that Indian mineral lessors receive
the maximum revenues from mineral resources on their land consistent
with the Secretary of the Interior's (Secretary) trust responsibility
and lease terms. It is also our desire to improve the regulatory
framework so that information is available which would permit lessees
to comply with the regulatory requirements at the time that royalties
are due.
Under the rule, the lessee will determine the value of gas
production based upon whether the gas is produced from an index zone or
not produced from an index zone. MMS defines an index zone as a field
or area with an active spot market and published indices applicable to
that field or area that are acceptable to MMS.
The rule requires that MMS publish the following: the index zones
that are eligible for the index-based valuation method; leases that MMS
excluded from index-based valuation; and any index zones that MMS
disqualified. If market conditions change so that an index-based method
for determining value is no longer appropriate for an index zone, MMS
will hold a technical conference to consider disqualification of an
index zone. Under the rule, if an index is disqualified, then
production from leases under that index zone cannot be valued under the
index-based valuation method. At this time, MMS has not disqualified
any index zones.
The rule also requires that MMS periodically publish a list of MMS-
approved publications and indices to use in computing the index-based
formula price and the lease prefixes associated with each MMS-
designated area (including any new MMS-designated areas.) MMS will
publish future notices in the Federal Register announcing any changes
to the index zones, changes to the acceptable publications and indices,
and any new MMS-designated areas.
Table No. 1 below provides a list of the index zones that are
eligible for the index-based valuation method.
Table No. 1.--MMS-Designated Areas and Index Zones
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MMS-Designated areas Index zones
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Unitah and Ouray Reservation.................... Central Rocky Mountains
Alabama-Coushatta............................... East Texas
Wind River Reservation.......................... Northern Rocky Mountains
Jicarilla Apache Reservation, Navajo San Juan Basin
Reservation, Southern Ute Reservation, Ute
Mountain Ute Reservation.
Counties: Alfalfa, Beaver, Cimarron, Cleveland, Oklahoma-Zone 1.
Creek, Garfield, Grant, Harper, Kay, Lincoln,
Noble, Nowata, Oklahoma, Pawnee, Payne,
Pottawatomie, Rogers, Texas, Tulsa, Washington,
Woods.
Counties: Beckham, Blaine, Caddo, Canadian, Oklahoma-Zone 2.
Comanche, Cotton, Custer, Dewey, Ellis, Garvin,
Grady, Greer, Harmon, Jackson, Jefferson,
Kingfisher, Kiowa, Logan, Major, McClain, Roger
Mills, Stephens, Tillman, Washita, Woodward
Counties: Adair, Atoka, Bryan, Carter, Cherokee, Oklahoma-Zone 3
Choctaw, Coal, Craig, Delaware, Haskell,
Hughes, Johnston, Latimer, Le Flore, Love,
Marshall,Mayes, McCurtain, McIntosh, Murray,
Muskogee, Okfuskee, Okmulgee, Ottawa,
Pittsburg, Pontotoc, Pushmataha, Seminole,
Sequoyah, Wagoner.
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Table No. 2 below contains the MMS-approved publications that
establish index prices that accurately reflect the value of production
in the field or area where the production occurs.
Table No. 2.--MMS-Approved Publications
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MMS-approved publications Which issue? Which table? Which spot gas prices?
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Inside F.E.R.C.'s Gas Market Use the issue containing Use the table labeled Use the high end of the
Report. the spot gas prices for ``Prices of Spot Gas range of the applicable
the first of the month. Delivered to spot gas price.
Pipelines''.
Natural Gas Intelligence Weekly Use the issue containing Use the table labeled Use the high end of the
Gas Price Index. the Bidweek Range for ``Spot Gas Prices.''. range of the applicable
the month. Bidweek price.
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Under the rule, any publication may petition MMS to be added to the
list of acceptable publications by writing to: Minerals Management
Service, Royalty Valuation Division, P.O. Box 25165, Mail Stop 3150,
Denver, Colorado 80225-0165.
As stated in 30 CFR 206.172 (64 FR 43517), an Indian tribe may ask
MMS to exclude some or all of its leases from valuation under the
index-based valuation method. After consulting with the Bureau of
Indian Affairs (BIA), MMS may also exclude any Indian allotted leases
from valuation under the index-based valuation method. If MMS approves
any requests for exclusion from an index zone, the lessee must value
the production under the non-index-based valuation method.
Revenue analysis indicated that some Indian leases would receive
less revenue under the index methodology than under gross proceeds
methodology. As a result of this analysis and after consulting with
BIA, MMS excluded the Ute allotted leases in the Uintah and Ouray
Reservation and the Navajo allotted leases in the Navajo Reservation
from valuation under the index-based method. MMS also approved the Ute
Indian Tribe's request to exclude the Ute Tribal leases in the Uintah
and
[[Page 66773]]
Ouray Reservation from valuation under the index-based method.
Because of these exclusions, MMS also terminated the previously
defined designated areas for Uintah and Ouray Reservation and the
Navajo Reservation. MMS designated these two areas for royalty
computation purposes in the August 10, 1999, final rule (64 FR 43506).
Accordingly, we created the following four new MMS-designated areas:
1. Ute Tribal Leases in the Uintah and Ouray Reservation;
2. Ute Allotted Leases in the Uintah and Ouray Reservation;
3. Navajo Tribal Leases in the Navajo Reservation; and
4. Navajo Allotted Leases in the Navajo Reservation.
Table No. 3 below contains the index zones with the associated MMS-
designated areas and also includes the list of acceptable publications
and the indices to use for the index-based valuation method. Lessees
should use this table when calculating the value of gas produced from
leases from an index zone.
Table No. 3.--Index Zones, MMS-Designated Areas, and Indices
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MMS-approved publications for index zones
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Index zone Natural
Inside gas intel. Spot gas prices
FERC's report
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East Texas...................... X Natural Gas Pipeline Co. of America
Includes: Alabama-Coushatta. Louisiana Zone
X Texas Eastern Transmission Corp.
East Texas Zone
South Texas Zone
X Tennessee Gas Pipeline Co.
Texas (zone 0)
X Transcontinental Gas Pipe Line Corp.
Zone 2 (pooling point)
X Trunkline Gas Co.
Texas
X East Texas
NGPL Texok
Tennessee
Texas Eastern E. TX
Trunkline
Houston Pipeline
MidCon Texas
X South Texas
Florida Gas Zone 1
Texas Eastern S. TX
Tennessee
Northern Rocky Mountains........ X Colorado Interstate Gas Co.
Rocky Mountains
Includes: Wind River X Rocky Mountains
Reservation.
CIG
San Juan Basin.................. X El Paso Natural Gas Co.
San Juan Basin
Includes: Jicarilla Apache X Rocky Mountains
Reservation. El Paso non-Bondad
Transwestern San Juan
Navajo Tribal Leases in the
Navajo Reservation
Southern Ute Reservation
Ute Mountain Ute Reservation
Oklahoma--Zone 1
Includes the following X ANR Pipeline Co.
counties: Alfalfa, Beaver, Oklahoma Natural Gas Pipeline Co. of America
Cimarron, Cleveland, Creek, X Mid-Continent Zone
Garfield, Grant, Harper,
Kay, Lincoln, Noble,
Nowata, Oklahoma, Pawnee,
Payne, Pottawatomie,
Rogers, Texas, Tulsa,
Washington, Woods.
X Northern Natural Gas Co.
Texas, Oklahoma, Kansas
X Panhandle Eastern Pipe Line Co.
Texas, Oklahoma (mainline)
X Reliant Energy Gas Transmission Co.
West
X Williams Gas Pipelines Central Inc.
Texas, Oklahoma, Kansas
X Mid-Continent
ANR SW
NGPL Mid-Continent
Northern Natural Mid 10-13
Panhandle Eastern
Enogex
Reliant West (NorAm)
Williams
[[Page 66774]]
Oklahoma--Zone 2
Includes the following X ANR Pipeline Co.
counties: Beckham, Blaine, Oklahoma
Caddo, Canadian, Comanche, X Natural Gas Pipeline Co. of America
Cotton, Custer, Dewey, Mid-Continent Zone
Ellis, Garvin, Grady,
Greer, Harmon, Jackson,
Jefferson, Kingfisher,
Kiowa, Logan, Major,
McClain, Roger Mills,
Stephens, Tillman, Washita,
Woodward.
X Reliant Energy Gas Transmission Co.
West
X Northern Natural Gas Co.
Texas, Oklahoma, Kansas
X Panhandle Eastern Pipe Line Co.
Texas, Oklahoma (mainline)
X Williams Gas Pipelines Central Inc.
Texas, Oklahoma, Kansas
X Mid-Continent
ANR SW
NGPL Mid-Continent
Reliant West (NorAm)
Northern Natural Mid 10-13
Panhandle Eastern
Enogex
Williams
Oklahoma--Zone 3
Includes the following X Natural Gas Pipeline Co. of America
counties: Adair, Atoka, Texok Zone
Bryan, Carter, Cherokee, X Reliant Energy Gas Transmission Co.
Choctaw, Coal, Craig, East
Delaware, Haskell, Hughes, X Williams Gas Pipelines Central Inc.
Johnston, Latimer, Le Texas, Oklahoma, Kansas
Flore, Love, Marshall,
Mayes, McCurtain, McIntosh,
Murray, Muskogee, Okfuskee,
Okmulgee, Ottawa,
Pittsburg, Pontotoc,
Pushmataha, Seminole,
Sequoyah, Wagoner.
X East Texas
NGPL Texok
X Mid-Continent
Reliant East (NorAm)
Williams
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Most Indian lease terms require accounting for comparison (dual
accounting) when gas produced from the lease is processed. Under the
rule, the lessee may elect to perform actual dual accounting or
alternative dual accounting. The rule requires that MMS publish a list
of the lease prefixes associated with each MMS-designated area for the
purpose of the dual accounting election. The dual accounting election
for a designated area must apply to all of the lessee's Indian leases
in that area.
Table No. 4 contains the lease prefixes and associated MMS-
designated areas:
Table No. 4.--Lease Prefixes and MMS-Designated Areas
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MMS-designated areas Lease prefixes
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Alabama-Coushatta...................... 615.
Blackfeet Reservation.................. 507, 512, 513, 514, 515, 517, 526.
Crow Reservation....................... 520, 619.
Fort Belknap........................... 538.
Fort Berthold.......................... 528, 529, 540.
Fort Peck Reservation.................. 506, 523, 533, 536, 622.
Oklahoma Counties:
Alfalfa, Beaver, Cimarron, 503, 505, 510, 511, 518, 521, 601, 602, 607, 615, 714.
Cleveland, Creek, Garfield, Grant,
Harper, Kay, Lincoln, Noble,
Nowata, Oklahoma, Pawnee, Payne,
Pottawatomie, Rogers, Texas,
Tulsa, Washington, Woods.
Oklahoma Counties:
Beckham, Blaine, Caddo, Canadian, 503, 505, 518, 601, 602, 607.
Comanche, Cotton, Custer, Dewey,
Ellis, Garvin, Grady, Greer,
Harmon, Jackson, Jefferson,
Kingfisher, Kiowa, Logan, Major,
McClain, Roger Mills, Stephens,
Tillman, Washita, Woodward.
Oklahoma Counties:
Adair, Atoka, Bryan, Carter, 503, 505, 511, 601, 602, 607, 615.
Cherokee, Choctaw, Coal, Craig,
Delaware, Haskell, Hughes,
Johnston, Latimer, Le Flore, Love,
Marshall, Mayes, McCurtain,
McIntosh, Murray, Muskogee,
Okfushee, Okmulgee, Ottawa,
Pittsburg, Pontotoc, Pushmataha,
Seminole, Sequoyah, Wagoner.
Navajo Allotted Leases in the Navajo 516, 525, 527, 621, 623.
Reservation.
Navajo Tribal Leases in the Navajo 415, 516, 525, 527, 620, 621, 623.
Reservation.
[[Page 66775]]
Northern Cheyenne Reservation.......... None.
Rocky Boys Reservation................. 053, 154, 537, 889.
Southern Ute Reservation............... 519, 522, 524, 614, 750.
Turtle Mountain Reservation............ 610.
Ute Mountain Ute Reservation........... 519, 522, 524, 614, 750.
Ute Allotted Leases in the Uintah and 509, 531, 532.
Ouray Reservation.
Ute Tribal Leases in the Uintah and 509, 531, 532.
Ouray Reservation.
Wind River Reservation................. 502, 535, 634.
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Dated: November 23, 1999.
Lucy Querques Denett,
Associate Director for Royalty Management.
[FR Doc. 99-30991 Filed 11-29-99; 8:45 am]
BILLING CODE 4310-MR-P
