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3. Respondent’s Argument
Respondent contends that S/V is entitled to a credit under
section 29 equal to the larger of (a) $3 times 32,410 or (b) $3
(indexed) times 16,927. Respondent points out that section
101(b)(5) of the NGPA of 1978 provided that if any natural gas
qualified under more than one provision of the NGPA, the
provision which allowed the highest price applied. S/V would be
entitled to a larger credit if the credit were based on 16,927
times $3 (indexed) than if it were based on 32,410 times $3
(unindexed). Thus, respondent contends that allowing a credit
based only on S/V’s gas production from Devonian shale is
consistent with the NGPA. Respondent offers no explanation for
the fact that under that theory S/V would, in effect, be entitled
to a credit for only 16,927 BOE’s of gas.
We disagree with respondent and conclude that S/V is
entitled to a credit for all of the qualified fuel that
petitioner produced and sold; i.e., 32,410 BOE’s of gas.
4. Whether the $3 Credit for the 16,927 BOE’s of Natural
Gas S/V Produced From a Tight Formation and Devonian
Shale Is Indexed Under Section 29(b)(2)
Section 29(b)(2) indexes the $3 credit for gas produced from
Devonian shale, but it does not index the credit for gas produced
from a tight formation. Since S/V produced 16,927 BOE’s of gas
from both a tight formation and Devonian shale, question may
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Last modified: May 25, 2011