Je veux savoir à propos de…

54064

Federal Register / Vol. 86, No. 187 / Thursday, September 30, 2021 / Rules and Regulations
3 multiplied the royalty volume by the applicable transportation deduction identified for each area calculated in step 2;
4 totaled the estimated royalty impact based off both transportation deductions calculated in step 3;
5 calculated the annual average royalty impact for both methods
calculated in step 4 by dividing by five number of years in this analysis; and 6 subtracted the difference between the totals calculated in step 5.
Because ONRR identified the universe of 56.4 percent of lessees that will likely elect this method, ONRR reduced the total estimated impact to royalty collections by 43.6 percent. ONRR

estimated the change would result in a decrease in royalty collections of approximately $8 million per year if the 2020 Rule went into effect, and an increase in royalty collections of like amount if the 2020 Rule is withdrawn, as reflected in the table below.

ANNUAL ROYALTY IMPACT DUE TO TRANSPORTATION DEDUCTION MODIFICATION FOR NON-ARMS-LENGTH SALES OF
NATURAL GAS FROM WITHDRAWAL OF THE 2020 RULE

Current Regulations Transport Deduction
Estimate using 2020 Rule Transport Deduction
Change
56.4% universe of leases

Change in Royalties 5: Extraordinary Gas Processing Cost Allowances for Federal Gas The 2020 Rule allows a lessee to request an extraordinary processing cost allowance. Below, ONRR uses the same calculation method for these royalty impacts as it did in the 2020 Rule. Using the approvals ONRR granted prior to the 2016 Valuation Rule, ONRR identified the 127 leases claiming an extraordinary processing allowance for residue gas, sulfur, and CO2 for calendar years 2014
2018. The total processing costs are reported across all three products for these unique situations. For these leases, ONRR reviewed all form ONRR
2014 royalty lines with a processing allowance reported by lessees. For CO2
and sulfur produced from these leases, ONRR then calculated the annual average processing allowances, which exceeded the 66 23 percent limit and
Gulf of Mexico
Other areas
$5,387,000
10,346,000
4,959,000

$16,375,000
25,659,000
9,284,000

found that only two years exceeded the 66 23 percent limit. Under these unique approved exceptions, the processing allowances are also reported against residue gas. To account for this, ONRR
added the average annual processing allowances taken from those same leases for residue gas.
Based on these calculations, ONRR
previously estimated the royalty impact of the 2020 Rules reinstatement of extraordinary processing allowances as decreasing royalties by $11.1 million per year, and ONRR now estimates the royalty impact of withdrawing this provision of the 2020 Rule at an increase in royalties of $11.1 million per year. However, ONRR recognizes that these estimates of decrease from the 2020 Rule and increase from this final rule likely undervalue actual impacts for the reasons discussed in Section III.D., abovei.e., hard caps rather than
Total $21,762,000
36,005,000
14,243,000
8,033,000

soft caps on processing allowances may result in more lessees applying for extraordinary processing allowances than did when they could apply to exceed soft caps instead. As a result, there could be an increase in the number of requests submitted to ONRR
for extraordinary processing allowances under the 2020 Rule and a larger-thanquantified impact upon withdrawal of the 2020 rule. But there is little data available to identify the number or magnitude of incremental requests possible under the 2020 Rule, and there is not enough information to determine how many of these requests would be approved or denied by ONRR. For these reasons, ONRR is unable to more precisely estimate the royalty impact of reinstating extraordinary processing allowances under the 2020 Rule or withdrawing those allowances under this final rule.

ESTIMATED ANNUAL CHANGE IN ROYALTY COLLECTIONS FROM WITHDRAWAL OF THE 2020 RULE
Annual Average Sulfur Allowances in Excess of 66 23%
Annual Average Residue Gas Allowance
Estimated Annual Impact on Royalties

LOTTER on DSK11XQN23PROD with RULES1

Change in Royalties 6: Transportation Allowances for Certain OCS Gathering for Federal Oil and Gas In the 2020 Rule, ONRR adopted regulatory changes that would allow an OCS lessee to take certain gathering costs as part of its transportation allowance. ONRR adjusted its method for calculating this royalty impact in response to comments received on the Proposed 2020 Rule and published a corrected method in the 2020 Rule.
ONRR will continue to use the adjusted method here to estimate the royalty impact of the 2020 Rule, whether it goes into effect or is withdrawn.

VerDate Sep<11>2014

17:35 Sep 29, 2021

Jkt 253001

As previously discussed, the Deepwater Policy was in effect from 1999 through December 31, 2016. Under the Deepwater Policy, ONRR allowed a lessee to treat certain costs for subsea gathering as transportation expenses and to deduct those costs in calculating its royalty obligations. The 2016
Valuation Rule rescinded the Deepwater Policy, but the 2020 Rule codified a deepwater gathering allowance similar to the Deepwater Policy. To analyze the impact to industry of the 2020 Rules deepwater gathering allowance, ONRR
used data from BSEEs Technical Information Management System database to identify 113 subsea pipeline
PO 00000

Frm 00036

Fmt 4700

Sfmt 4700

$348,000
10,783,000
11,131,000

segments, and 169 potentially eligible leases, which might qualify for a deepwater gathering allowance. ONRR
assumed that all segments were similar in other words, no adjustments were made to account for the size, length, or type of pipeline and considered only the pipeline segments that were active and supporting producing leases. To determine the range shown in the tables at the end of this section as low, mid, and high estimates of changes to royalties, ONRR estimated a 15 percent error rate in the identification of the 113
eligible pipeline segments. This resulted in a range of 96 to 130 eligible pipeline segments. ONRRs audit data is
E:FRFM30SER1.SGM

30SER1