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produced from property qualifying both as a tight formation and
Devonian shale, at a rate of $3, indexed as provided in the first
sentence of section 29(b)(2).
Since the latter amount is larger than the former,
respondent’s position, in effect, is that S/V is entitled to a
credit based on only 16,927 BOE’s.
We agree and disagree in part with both parties.
A. Credit for the 15,483 BOE’s of Natural Gas S/V Produced From
a Tight Formation That Was Not Devonian Shale
S/V produced 15,483 BOE’s of natural gas from a tight
formation which was not Devonian shale. Section 29(b)(2) (second
sentence) provides that the $3 credit is not indexed for natural
gas produced from a tight formation. Thus, S/V is entitled to a
credit of $3 per BOE on the 15,483 BOE’s of natural gas it
produced from a tight formation that was not Devonian shale.
B. Credit for the 16,927 BOE’s of Natural Gas S/V Produced From
Both a Tight Formation and Devonian Shale
1. Section 29
S/V produced 16,927 BOE’s of fuel from a tight formation
that was also Devonian shale. Section 29(a) limits the credit
for producing fuel from a nonconventional source to a fixed
dollar amount per BOE. Section 29(d)(5) defines a BOE of fuel as
fuel with Btu content of 5.8 million.
The Senate committee report accompanying enactment of
section 29 also clearly limits the credit to $3 per barrel of oil
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Last modified: May 25, 2011