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Federal Register / Vol. 86, No. 187 / Thursday, September 30, 2021 / Rules and Regulations
Belvieu non-TET for the Gulf of Mexico, Big Horn, Green River, Permian, Piceance, Powder River, San Juan, and Uinta basins. In ONRRs audit experience, OPIS prices are used to value NGLs in contracts more frequently
at Mont Belvieu, and Platts prices are used more frequently at Conway;
2 calculated NGL basket prices weighted average prices to group the individual NGL components, which were compared to the imputed price
Platts Conway basket
Percent
Ethane-propane EP mix
Propane
Isobutane
Normal Butane
Natural Gasoline

3 subtracted the current processing deductions, as well as fractionation costs and transportation costs
from the monthly royalty report. The baskets illustrate the difference in the gas composition between Conway, Kansas and Mont Belvieu, Texas. The NGL basket hydrocarbon allocations are:

OPIS Mont Belvieu basket 40
28
10
7 15

Percent
Ethane
Non-TET Propane
Non-TET Isobutane
Normal Butane
Natural Gasoline

referenced in ONRR regulations without amendment by the 2020 Rule see 30
CFR 1206.142d2ii, as shown in the
42
28
6 11
13

table below from the NGL basket price calculated in step 2:

NGL DEDUCTION
$/gal Gulf of Mexico
New Mexico
Other areas
Processing
Transportation and Fractionation

$0.10
0.05

$0.15
0.07

$0.15
0.12

Total $/gal

0.15

0.22

0.27

4 compared the reported monthly price for each lease inclusive of any reported transportation or processing allowances to the applicable index price for the lease calculated in step 3 for all months in the first year of reported royalty data in the dataset;
5 identified all leases in step 4
where the reported price exceeded the price calculated in step 3 for seven or more months in the time period;
6 used the lease list created in step 5 as the base universe of leases that would elect to use the index-based valuation method if available;
7 compared the actual reported price for each month for each lease in the universe identified in step 6, inclusive
of transportation and processing allowances reported, to the calculated price in step 3 to identify the difference between what was reported as actual royalties and what would have been reported as royalties under the terms of the index-based valuation method;
8 performed this calculation and comparison for the next two sets of twoyear time periods in the remaining four years of royalty reporting in the dataset;
and 9 calculated the total difference in the four years between the original reported royalty prices and the royalties if the identified lease universe elected
the index-based valuation method, then divided that total by four to get an annual estimated royalty impact.
This new method of identification of the lease universe that would elect the index-based valuation method is the basis for the difference between the estimated royalty impact published in the 2020 Rule and the estimated royalty impact included in this final rule.
ONRR estimates the index-based valuation method in the 2020 Rule would have decreased royalty payments on arms-length NGLs by approximately $660,000 per year, and that withdrawing the 2020 Rule will increase royalty payments by $660,000 annually.

ANNUAL CHANGE IN ROYALTIES PAID USING INDEX-BASED VALUATION METHOD FOR ARMS-LENGTH NGL SALES FROM
WITHDRAWAL OF THE 2020 RULE
Gulf of Mexico
LOTTER on DSK11XQN23PROD with RULES1

Annualized Reported Royalties from Identified Lease Universe
Royalties Estimated Using Index-Based Valuation Method for Lease Universe
Annual Net Change in Royalties Paid Using Index-Based Valuation Method for NGLs

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New Mexico
Other areas
Total
$4,990,000

$350,000

$9,100,000

$14,440,000

3,470,000

290,000

10,020,000

13,780,000

1,520,000

60,000

920,000

660,000

Sfmt 4700

E:FRFM30SER1.SGM

30SER1