Clajon Gas Co., L.P., Aquila Gas Pipeline Corp., Tax Matters Partner - Page 24

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          regulations and by Rev. Proc. 87-56, supra.  Petitioner is not a            
          gas producer and, therefore, has no claim on 13.2.                          
               The point is aptly illustrated by the treatment of drilling            
          equipment under Rev. Proc. 87-56, supra.  Asset class 13.1                  
          (13.1), entitled “Drilling of Oil and Gas Wells”, provides a                
          6-year class life and 5-year recovery period for “assets used in            
          the drilling of onshore oil and gas wells”, e.g., an oil or gas             
          drilling rig.  The same assets “used by petroleum and natural gas           
          producers” fall within 13.2, which, as noted above, provides a              
          14-year class life and 7-year recovery period.  Just as a                   
          drilling rig may have two different class lives and recovery                
          periods, depending upon the asset class within which it is                  
          includable, so too may gathering pipelines be subject to                    
          different class lives and recovery periods depending upon the               
          user and the asset class appropriate to that user.                          
                    (3)  Asset Class 46.0                                             
               Petitioner argues that 46.0 is intended to encompass only              
          transmission pipelines.  In support of its argument, petitioner             
          states that, within the natural gas industry, “the term                     
          ‘transportation pipeline’ is synonymous with ‘transmission                  
          pipeline’”, and that the Federal Energy Regulatory Commission               
          (FERC) distinguishes between gathering, over which it lacks                 
          jurisdiction, and the interstate transportation of natural gas,             
          over which it has jurisdiction, a distinction upon which the                

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