2011-16125. Update to Indian Index Zone Price Points

AGENCY:

Office of Natural Resources Revenue, Interior.

ACTION:

Notice.

SUMMARY:

The Office of Natural Resources Revenue (ONRR, formerly Minerals Management Service's (MMS) Minerals Revenue Management) is announcing an update to Indian index zone price points that will remove certain natural gas index prices from the Indian Index Zone calculation. These changes will impact Oklahoma-Zone 1, Oklahoma-Zone 2, and the Central Rocky Mountain Zone. The ONRR State and Indian Outreach Program held three Indian Tribal Consultation meetings seeking input and comments on several changes that could affect the valuation of mineral production on Indian lands, including this Federal Register Notice. The meetings took place in Albuquerque, NM on May 19; Denver, CO on May 26; and Oklahoma City, OK on June 9, 2011. The ONRR did not receive any negative comments from the various Indian Tribes on this Federal Register Notice.

DATES:

Effective August 1, 2011.

FOR FURTHER INFORMATION CONTACT:

For questions on technical issues, contact Jason Boroos, Economic and Market Analysis, ONRR, telephone [phone]; e-mail [e-mail]. For other questions, contact Armand Southall, Project Management Office-Regulations, ONRR, telephone [phone], or e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

The ONRR (formerly MMS) published a final rule, regarding amendments to gas valuation regulations for Indian leases, in the Federal Register on August 10, 1999 (64 FR 43506). The ONRR also published additional information in the Federal Register on November 30, 1999 (64 FR 66771) and March 8, 2007 (72 FR 10522), which listed the Index Zones Eligible for the Index-Based Valuation Method and the acceptable publications and indices. The ONRR has recently completed an analysis to examine the designated indices contained in each Index Zone from the standpoint of market liquidity, transparency, and value and has concluded three index zones need to be revised pursuant to section 1206.172 (d)(6) of title 30 of the Code of Federal Register. This document lists those revisions.

The ONRR analyzed the trading volume and number of deals from January 2005 through August 2010 for indices in all the Index Zones. As a result, ONRR determined that two indices, CenterPoint West in Oklahoma-Zones 1 and 2, and Questar in the Central Rocky Mountain Zone were very thinly traded and unrepresentative of the market. Beginning with production on the first day of the second month following the publication date, ONRR will no longer use these indices in the Index Zone calculation. Additionally, we have removed Northern NG TX, OK, KS, CenterPointWest (Platts), Enogex, and Northern Natural Mid 10-13, which are no longer published by either the Platts or Natural Gas Intelligence. Lessees must value gas production for Oklahoma-Zone 1, Oklahoma-Zone 2, and the Central Rocky Mountain Zone on the index-based valuation formula at § 1206.172(d) using the updated list of ONRR approved publications and indices for the affected Index Zones to determine the Index Zone price; or lessees may obtain the index-based values from the ONRR Web site at: http://onrr.gov/​SIC/​allzones.htm.

The approved publications and index pricing points for the Index Zones are shown in the following table:

Approved Publications and Index Pricing Points

Index zone	ONRR approved publications		Index-pricing points
	Platts Inside FERC	NGI bidweek survey
Oklahoma-Zone 1	X		ANR Pipeline Co. for Oklahoma.
	X		Natural Gas Pipeline Co. of America for Mid-continent.
	X		Panhandle Eastern Pipe Line Co. for Texas, Oklahoma (mainline).
	X		Southern Star Natural Gas Pipeline Inc. for Texas, Oklahoma, Kansas (formerly Williams Gas Pipelines Central Inc. Texas, Oklahoma, Kansas).
		X	ANR SW.
		X	NGPL Midcontinent.
		X	Panhandle Eastern.
		X	Southern Star.
Oklahoma-Zone 2	X		ANR Pipeline Co. for Oklahoma.
	X		Natural Gas Pipeline Co. of America for Mid-continent.
	X		Panhandle Eastern Pipe Line Co. for Texas, Oklahoma (mainline).
	X		Southern Star Natural Gas Pipeline Inc. for Texas, Oklahoma, Kansas.
		X	ANR SW.
		X	NGPL Midcontinent.
		X	Panhandle Eastern.
		X	Southern Star.
Oklahoma-Zone 3	X		Natural Gas Pipeline Co. of America Texok.
	X		Southern Star Natural Gas Pipeline Inc. for Texas, Oklahoma, Kansas.
	X		CenterPoint Energy Gas Transmission East (formerly Reliant Energy Gas Transmission Co. East).
		X	NGPL Texok.
		X	CenterPoint East.
		X	Southern Star.
Central Rocky Mountains	X		Kern River Gas Transmission for Wyoming.
	X		Northwest Pipeline Corp. for Rocky Mountains.
	X		Colorado Interstate Gas for Rocky Mountains.
		X	CIG.
		X	Kern River.
		X	Northwest Domestic.
Northern Rocky Mountains	X		Colorado Interstate Gas for Rocky Mountains.
		X	CIG.
San Juan Basin	X		El Paso Natural Gas Co. San Juan.
	X		Transwestern Pipeline Co. San Juan (effective August 1st, 2010).
		X	El Paso Non-bondad.
		X	Transwestern San Juan.

The ONRR State and Indian Outreach Program completed the three Indian Tribal Consultation meetings in Albuquerque, NM; Denver, CO; and Oklahoma City, OK, required under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, dated November 9, 2000. The ONRR did not receive any negative comments from the Indian Tribes.

Dated: June 23, 2011.

Gregory J. Gould,

Director for Office of Natural Resources Revenue.