Federal Register - September 30, 2021
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Source: Federal Register
54066
Federal Register / Vol. 86, No. 187 / Thursday, September 30, 2021 / Rules and Regulations
hourly cost for an industry accountant in a metropolitan area working in oil and gas extraction. The industry labor cost factor for accountants would be
approximately $59.26 per hour =
$42.33 mean hourly wage 1.4
including employee benefits. Using a labor cost factor of $59.26 per hour,
ONRR estimates the annual administrative cost to industry will be approximately $1.1 million if the 2020
Rule is withdrawn.
ANNUAL ADMINISTRATIVE COSTS TO INDUSTRY FROM WITHDRAWAL OF THE 2020 RULE
Electronic Reporting 99%
Manual Reporting 1%
Industry Labor Cost/hour
Total Costs
Cost 2: Administrative Cost of Using Index-Based Valuation Method To Value Residue Gas and NGLs Because of Simplified Processing and Transportation Cost Calculations In the 2020 Rule, ONRR calculated the potential one-time administrative cost savings for industry if a lessee elects to use the index-based valuation method. 86 FR 4641. ONRR slightly modified this calculation and method as described further below. Use of the index-based valuation method eliminates the need to segregate deductible costs of transportation and processing from non-deductible costs of placing production in marketable condition. This segregation or allocation of costs is often referred to as unbundling. Industry would unbundle transportation systems and processing plants one time under the current regulatory scheme i.e., in absence of the 2020 Rule, and then use those unbundled cost allocations for subsequent royalty calculations.
While industry is responsible for calculating these costs, ONRR has published and calculated several unbundling cost allocations. It takes approximately 100 hours of labor per gas plant. ONRR calculated the average number of gas plants reported per lessee
Time burden per line reported minutes
Estimated lines reported using index option 50%
1.5
3.5
710,525
7,177
to be 3.4, across a total of 448 lessees reporting residue gas and NGLs, between 20142018. Using the BLS
labor cost per hour of $59.26 described above and the assumption that 50
percent of lessees will choose the indexbased valuation method, ONRR believed the 2020 Rule would have resulted in a one-time cost savings to industry of $4.5
million dollars. See 86 FR 4641 and 4648.
ONRR updated its analysis for this administrative cost. Given that the 2020
Rule has not gone into effect yet, industry has been unbundling its processing and transportation costs already for gas plants and transportation systems used under the current regulations. Because of this, new unbundling efforts would only occur on newly created gas plants or for gas plants that undergo major technological changes. ONRR looked at all the gas plants reported for Federal gas production since the start of 2020.
ONRR also identified the number of new gas plants companies requested be added to ONRRs system for reporting since the start of 2020. The newly added gas plants represented 5.4 percent of all gas plants reported to ONRR for Federal production. This group represents those plants that would require lessees to
Annual burden hours 17,763
419
$59.26
1,077,000
perform a new unbundling analysis.
ONRR applied this percentage to the total one-time cost savings in the 2020
Rule and now estimates that the withdrawal of the 2020 Rule will result in lessees incurring this one-time administrative cost of $243,000.
State and Local Governments ONRR estimated that, because of the 2020 Rule, States and certain local governments would have received an overall decrease in royalty disbursements based on the category that leases fall under, including OCSLA
section 8g leases. See 43 U.S.C.
1337g, Gulf of Mexico Energy Security Act GOMESA, 43 U.S.C. 1331, et seq., and onshore Federal lands. ONRR
disburses royalties based on where the royalty-bearing oil and gas was produced.
Except for production from Federal leases in Alaska where Alaska receives 90 percent of the distribution, for Section 8g leases in the OCS, and qualified leases under GOMESA in the OCS more information on distribution percentages at https revenuedata.
doi.gov/how-it-works/gomesa/, the following distribution table generally applies:
ONRR DISBURSEMENTS BY AREA
Onshore
LOTTER on DSK11XQN23PROD with RULES1
Federal
State
More information on ONRRs disbursements to any specific State or local government can be found at https revenuedata.doi.gov/explore/
federal-disbursements.
Federal Government
Indian Lessors The provisions in the 2020 Rule and this withdrawal are not expected to affect Indian lessors.
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The impact of the 2020 Rule to the Federal Government will be a decrease in royalty collections. ONRR estimates the impact of the 2020 Rule to the Federal Government detailed in the next table of this section would be a reduction in royalties of $49.7 million per year. The estimated impact to
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Offshore 51%
49%
95.2%
4.8%
royalty collections of the withdrawal of the 2020 Rule would be an increase in royalties of $49.7 million per year.
Summary of Royalty Impacts and Costs to Industry, State and Local Governments, Indian Lessors, and the Federal Government The table below shows the updated net change in royalties expected under
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30SER1
