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Office of Natural Resources Revenue U.S. Department of the Interior

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Standardized Unbundling Cost Allocations (UCAs)

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ONRR is developing Standardized Unbundling Cost Allocations (UCAs) that a lessee may use to calculate and report Federal arm’s-length processing allowances where a plant-specific UCA does not currently exist. Standardized UCAs are specific to both location and technology, and may only be applied to gas produced in the same geographical area where a Standardized UCA has already been established. Lessees may not substitute Standardized UCAs for plant-specific UCAs that ONRR has already published. In addition, a lessee may not continue to use a Standardized UCA if ONRR subsequently publishes a plant-specific UCA for the plant used by that lessee. Standardized (and plant-specific) UCAs are not applicable to Indian gas.

In summary, a lessee may use a Standardized UCA if

  1. The lessee is producing gas from a Federal lease.
  2. ONRR has not published a plant-specific UCA for a processing plant.
  3. The processing contract is arm’s-length only.
  4. Gas is produced in the same area as the Standardized UCA.

Like plant-specific UCAs, lessees are not required to use Standardized UCAs. ONRR provides them as a convenience to simplify reporting. Lessees may calculate their allowances within the terms of their lease and the Federal Oil and Gas Royalty Simplification and Fairness Act of 1996. The unbundled processing fee that lessees claim may be subject to ONRR’s review and audit.

Location Technology Standardized Plant UCA (Allowed) Standardized Plant UCA (Disallowed) Standardized Fuel UCA (Allowed) Standardized Fuel UCA (Disallowed) Publication Date Example
San Juan Basin N/A 42% 58% 31% 69% 9/13/2018 San Juan Basin Example
Green River Basin N/A 52% 48% 55% 45% 9/13/2018 Green River Basin Example
Offshore (GOM)* Cryogenic 65% 35% 25% 75% 10/18/2016 Cryo Example
Offshore (GOM)* Lean-Oil 80% 20% 80% 20% 10/18/2016 Lean Oil Example

* The Standardized UCA may not be applicable to leases that fall under Section 6 of the Outer Continental Shelf Leasing Act. Lessees are responsible for understanding what is deductible under the terms of their leases.