[Code of Federal Regulations] [Title 30, Volume 2] [Revised as of July 1, 2002] From the U.S. Government Printing Office via GPO Access [CITE: 30CFR220.002] [Page 192-193] TITLE 30--MINERAL RESOURCES DEPARTMENT OF THE INTERIOR PART 220--ACCOUNTING PROCEDURES FOR DETERMINING NET PROFIT SHARE PAYMENT FOR OUTER CONTINENTAL SHELF OIL AND GAS LEASES--Table of Contents Sec. 220.002 Definitions. For purposes of this part 220: Allowance for capital recovery means the amount calculated according to procedures specified in Sec. 220.020. This amount allows a premium for risk initially undertaken by the lessee and a return on investment made during the capital recovery period. It is provided in lieu of interest on equipment and materiel charged to the NPSL capital account. Capital recovery period means the period of time that begins on the date of issuance of the NPSL and ends on the last day of the month during which the sooner of the following occurs: (1) The lessee completes the last well on the first platform specified in the development and production plan originally approved by the MMS, with any approved amendments thereto, and installation of wellhead equipment. In the event the last well is dry, then the capital recovery period shall be deemed to have ended with the determination that the last well is non-productive; (2) The balance in the NPSL capital account changes from a debit balance to a credit balance; or (3) The lessee, at his election, chooses to terminate the capital recovery period. A decision to terminate the capital recovery period prior to the events specified in paragraphs (a) (1) and (2) of this definition shall be communicated in writing to the Director and shall be irrevocable. Controllable materiel means materiel which at the time is so classified in the Materiel Classification Manual as most recently recommended by the Council of Petroleum Accountants Societies of North America. Cost means an expenditure or an accrual incurred by a lessee in conducting NPSL operations. Cost pool means a grouping of costs identified with more than one OCS lease, whether the leases are NPSLs or other types of leases. Credit means a payment, rebate, reimbursement to a lessee, or other reduction in cost or increase in revenue attributable to NPSL operations. Direct cost means any cost listed in Sec. 220.011 that benefits only NPSL operations. Director means the Director of MMS, Washington, DC, or his delegate. Field employee means an employee below a first level supervisor who is directly employed in the NPSL project area. First level supervisor means an employee whose primary function in NPSL operations is the direct supervision of other employees and/or contract labor directly employed on the NPSL project area in a field operating capacity. G & G means geological, geophysical, geochemical and other similar investigations carried out on the NPSL tract. Joint cost means any cost listed in Sec. 220.011 that benefits NPSL operations and one or more other operations of the lessee or an outside party. Lessee means a person authorized by an OCS lease, or an approved assignment thereof, to develop and produce oil and gas, including all parties holding such authority by or through the lessee, and the person designated to conduct NPSL operations. Lessee's cost of allowed employee absence means the lessee's cost of holiday, vacation, sickness, disability benefits, jury duty and other customary excused allowances. Materiel means equipment, apparatus, and supplies. Net profit share base means the end of the month credit balance in the NPSL capital account determined pursuant to Sec. 220.021. The net profit share base is the production revenue remaining after subtracting all allowable costs and adding all allowable credits (including production revenue) in accordance with the procedures established by this part 220. [[Page 193]] Net profit share payment means the portion of the net profit share base payable to the United States. Net profit share rate means the percentage share of the net profit share base payable to the United States. The percentage share may be fixed in the notice of OCS lease sale or be the bid variable, depending upon the bidding system used, as established by Sec. 260.110(a) of this chapter. NPSL means a net profit share lease, which is an OCS lease that provides for payment to the United States of a percentage share of the net profits for production of oil and gas from the tract. This percentage share may be fixed in the notice of OCS lease sale or be the bid variable, depending on the bidding system used, as established by Sec. 260.110(a) of this chapter. NPSL operations means all activities subsequent to issuance of the NPSL necessary and proper for the exploration, development, operation, maintenance, and final abandonment of the NPSL property. NPSL project area means the NPSL tract, offshore facilities, and shore base facilities. NPSL property means the NPSL tract, and materiel and offshore facilities acquired for use in NPSL operations and that are installed and/or used on the NPSL tract. NPSL tract means a tract subject to an NPSL. OCS lease means a Federal lease for oil and gas issued under the OCSLA. OCS lease sale means the DOI proceeding by which leases for certain OCS tracts are offered for sale by competitive bidding and during which bids are received, announced, and recorded. Offshore facilities means platform and support systems located offshore that are necessary to conduct NPSL operations, e.g., oil and gas handling facilities, living quarters, offices, shops, cranes, electrical supply equipment and systems, fuel and water storage and piping, heliport, marine docking installations, communication facilities, and navigation aids. Outside party means any person who is not a lessee. Person means person as defined in part 260 of this chapter. Personal expenses means travel and other reasonable reimbursable expenses of lessee's employees. Production means all oil, gas, or other hydrocarbon products produced, removed, saved, or sold from the NPSL property. Gas and liquids of all kinds are included in production. Production includes the allocated share of production from a unit of which the NPSL is a part. Production revenue means the value of all production attributable to an NPSL property, which value is determined in accordance with Sec. 260.110(b) of this chapter. Railway receiving point or recognized barge terminal means the location that a vendor would use in determining the sale price to the lessee of new materiel to be delivered to the NPSL project area. Reliable supply store means a recognized source or common stock point for the particular materiel involved. Shore base facilities means onshore facilities necessary for NPSL operations, including: (1) Shore base support facilities, e.g., a receiving and trans- shipment point for materiel, staging area for shuttling personnel to and from the NPSL tract, a communication, scheduling, and dispatching center; and (2) Shore base production facilities, e.g., pumps, separating facilities, gas plants, and tankage for production from the NPSL tract. Technical employees means those employees having special and specific engineering, geological or other professional skills, and whose primary function in NPSL operations is the handling and resolution of specific operating conditions and problems for the benefit of NPSL operations. Tract means land located on the OCS that is offered for lease through an OCS lease sale and that is identified by a leasing map or an official protraction diagram prepared by DOI. [45 FR 36800, May 30, 1980, as amended at 46 FR 29689, June 2, 1981. Redesignated and amended at 48 FR 1182, Jan. 11, 1983. Redesignated at 48 FR 35642, Aug. 5, 1983] [[Page 194]]