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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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