Natural gas valuation.

08LSO-0041.C1

                                                         

FISCAL NOTE

 

 

FY 2009

FY 2010

FY 2011

NON-ADMINISTRATIVE IMPACT

 

 

 

Anticipated Revenue Increase:

 

 

 

AD VALOREM TAX

0

0

11,496,261

BUDGET RESERVE ACCOUNT

1,901,403

3,802,806

3,802,806

GENERAL FUND

950,702

1,901,403

1,901,403

PERM. MINERAL TRUST FUND

2,037,218

4,074,435

4,074,435

 

Source of revenue increase:

 

Changing the method used to calculated taxable value for producer processed gas from current Proportionate Profits method to the Modified Netback method

 

Assumptions:

 

1)  All of the Department of Revenue’s valuation decisions for natural gas using the proportionate profits method that are currently under appeal are upheld.  There will be a dramatic impact on the above revenue if any or all of the Department of Revenue’s decisions are overturned.

2)  Volumes of natural gas, as well as the makeup of the gas stream stay relatively constant.

3)  Methane prices remain as forecasted by the Consensus Revenue Estimating Group (CREG) at $5.00 in calendar years 2009-2012. Taxpayers currently reporting using other statutory methods continue to report using those same methods.

4)  Return on Investment (ROI) remains constant. (11.3%) Some fluctuation in the rate of return is to be expected from year to year.

 

 

 

 

 

 

Prepared by:   Matthew Sachse/Craig Grenvik, DOR Phone: 777-5310/5237