Clajon Gas Co., L.P., Aquila Gas Pipeline Corp., Tax Matters Partner - Page 34

                                       - 34 -                                         
          me, dispositive) economic sense in which any such producer firm             
          uses a gathering system; this is irrespective of whether the                
          producer owns and operates the system itself, or instead, as in             
          the case at hand, sells its gas to petitioner at a fixed price at           
          the wellhead, enters into any one of the various ultimate sale              
          proceeds sharing arrangements with petitioner (also described in            
          Duke Energy Natural Gas Corp. v. Commissioner, 172 F.3d 1255                
          (10th Cir. 1999), revg. 109 T.C. 416 (1997)), or has its gas                
          processed through petitioner’s system for a fee and then sold for           
          the producer’s account from the processing plant after the last             
          stage of the productive process has been completed.                         
               As shown by the opinion of the Court of Appeals for the                
          Tenth Circuit in Duke Energy Natural Gas Corp., with which Judge            
          Foley and I agree, the question under Rev. Proc. 87-56, supra, of           
          who a gathering system is “used by” turns neither on who owns the           
          producers or the system, nor on who owns the gas processed                  
          through the system.  The gathering system is “used by * * *                 
          producers for * * * production of * * * natural gas”, id.,                  
          irrespective of the effects on legal ownership and refinements of           
          title of the terms of the contracts they use to have the gas from           
          their wells processed through the system.                                   
               FOLEY and VASQUEZ, JJ., agree with this dissenting opinion.            

Page:  Previous  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  Next

Last modified: May 25, 2011