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29, the 179,000 mcf of gas sold by S/V is equal to 49,337 BOE of
qualified fuels: 32,410 BOE of gas produced from a tight
formation and 16,927 BOE of gas produced from Devonian shale.
The sale of this gas meets the requirements of two different
categories of qualified fuels (i.e., gas produced from a tight
formation and gas produced from Devonian shale), and section 29
does not provide that the BOE's of dual qualified gas are counted
only once. While subsections (b) and (e) list limitations
relating to the credit, none of these limitations are applicable.
2. The Inflation Adjustment
All of the gas sold by S/V was derived from rock formations
that qualified as both Devonian shale and a tight formation. The
majority holds that a portion of S/V’s credit is calculated
(i.e., adjusted for inflation) pursuant to the rules applicable
to gas produced from Devonian shale. This holding, however, is
contrary to section 29(b)(2), which explicitly provides that “In
the case of gas from a tight formation, the $3 amount in
subsection (a) shall not be adjusted.” (Emphasis added.) If the
credit is to be based on 32,410 BOE of gas, I agree with Judge
Vasquez that S/V is entitled to a credit of only $97,230 (i.e.,
$3 x 32,410 BOE) rather than the $143,964 allowed by the
majority.
The majority sidesteps this issue by “[considering]
respondent to have conceded” that the credit should be indexed.
This is an inaccurate characterization of respondent’s position.
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