Clajon Gas Co., L.P., Aquila Gas Pipeline Corp., Tax Matters Partner - Page 17

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          asset guideline classes set forth in Rev. Proc. 87-56, supra).              
          Although petitioner has not specifically conceded (nor has it               
          been stipulated) that Clajon is not a producer of natural gas,              
          counsel for petitioner tacitly admitted as much during the trial            
          and, again, during the posttrial oral argument.  Similarly,                 
          petitioner’s expert witness acknowledged that a gas gatherer is             
          not a producer of natural gas.  Therefore, we find that Clajon              
          was not a producer as that term is commonly used in the natural             
          gas industry.  Authorities in the oil and gas field agree.  See             
          Williams & Meyers, Manual of Oil and Gas Terms 846 (11th ed.                
          2000), generally defining a producer as “[a]n operator who owns             
          wells that produce * * * gas.”7                                             
                    2.  The Relevant “Use” Under 13.2 and 46.0 Is That of             
                    the Taxpayer, Clajon                                              
                    a.  Introduction                                                  
               In Duke Energy Natural Gas Corp. v. Commissioner, supra, the           
          Court of Appeals focused upon industry (rather than taxpayer)               
          usage of Duke Energy’s gathering system.  It concluded:  “Within            
          the industry and in the functional and contractual relationship             
          between producers and nonproducer gathering system owners, Duke’s           
          gathering systems are literally used by producers for gas                   

               7  The parties have stipulated that Clajon owns no oil or              
          natural gas reserves, nor does it own an economic interest in the           
          wells connected to the Texas gathering systems.                             

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