Valuation

Overview

If you claim allowances against your royalty value, you must unbundle those costs. Unbundling is the process of determining the allowed and disallowed costs included in bundled gas transportation and/or processing fees. You may not claim allowances for costs to place gas into marketable condition or other disallowed services that may be included in bundled fees.

Standardized Unbundling Cost Allocations (UCAs)

ONRR publishes Standardized Unbundling Cost Allocations (UCAs) that a lessee may use to calculate and report Federal arm’s-length processing allowances. Standardized UCAs are specific to both location of gas production and processing technology. Lessees may not use a Standardized UCA when there is an ONRR published plant-specific UCA available. A lessee may not continue to use a Standardized UCA if ONRR later publishes a plant-specific UCA for the plant used by that lessee. Standardized (and plant-specific) UCAs are not applicable to gas produced from Indian leases.

In summary, you may use a standardized UCA for processing allowances if:

1. Gas production is from a federal lease and not from an Indian (Tribal or allotted) lease.

2. We have not published a plant-specific UCA for the gas plant that processes your gas.

3. The processing contract is arm’s-length.

4. Gas production is in the geographical area and uses the technology specific to the Standardized UCA.

Like plant-specific UCAs, you are not required to use standardized UCAs. We provide them as a courtesy, and your use of a standardized UCA does not limit ONRR’s right to audit and requires strict compliance with ONRR regulations.

* The standardized UCA may not be applicable to leases that fall under Section 6 of the Outer Continental Shelf Leasing Act. You are responsible for determining allowances under the terms of your leases.

Specific Transportation System/Gas Plant UCAs

We calculate UCAs for specific transportation systems and gas plants. ONRR published UCAs are not applicable to gas produced from Indian (Tribal or allotted) leases. 

When filing reports, use the most recent published UCA to estimate allowances. For example, use 2010 UCAs to estimate 2011, 2012, and 2013.

When we publish a new UCA, replace the estimated values for years that have new UCAs. For example, if we published new UCAs for 2011 and 2012, you would update values for 2011 and 2012. You would leave the previous estimate for 2013.

Unbundling Methods

Examples of how to unbundle bundled fees are provided. These are not the only unbundling methods. You can use other methods that follow ONRR regulations. Regardless of the method used to unbundle, you are still subject to audit.

Examples

• How to Calculate a Transportation UCA
• How to Calculate a Processing UCA
• List of Engineering Data Needs
• List of Accounting and Cost Data Needs

See the Standardized UCAs and Plant-Specific UCAs pages for examples of applying UCAs. There are also Reporter Letters that apply to UCAs.

Federal Reporting

Indian Reporting