CFR > Title 30 - Mineral Resources > CHAPTER VII—OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT, DEPARTMENT OF THE INTERIOR > SUBCHAPTER A—GENERAL (parts 700 to 707) > PART 1206—PRODUCT VALUATION > SUBPART H—Geothermal Resources (§1206.350 to §1206.366) > 1206.356—How do I calculate royalty or fees due on geothermal resources I use for direct use purposes?

1206.356—How do I calculate royalty or fees due on geothermal resources I use for direct use purposes?

If you use the geothermal resource for direct use:
(a) For Class I leases, you must determine the royalty due on geothermal resources in accordance with the first applicable of the following three paragraphs.
(1) The weighted average of the gross proceeds established in arm's-length contracts for the purchase of significant quantities of geothermal resources to operate the lessee's same direct-use facility multiplied by the royalty rate in your lease. In evaluating the acceptability of arm's-length contracts, the following factors will be considered: time of execution, duration, terms, volume, quality of resource, and such other factors as may be appropriate to reflect the value of the resource.
(2) The equivalent value of the least expensive, reasonable alternative energy source (fuel) multiplied by the royalty rate in your lease. The equivalent value of the least expensive, reasonable alternative energy source will be based on the amount of thermal energy that would otherwise be used by the direct use facility in place of the geothermal resource. That amount of thermal energy (in Btu) displaced by the geothermal resource will be determined by the equation:

Code of Federal Regulations

Where hin is the enthalpy in Btu/lb at the direct use facility inlet (based on measured inlet temperature), hout is the enthalpy in Btu/lb at the facility outlet (based on measured outlet temperature), density is in lbs/cu ft based on inlet temperature, the factor 0.113681 (cu ft/gal) converts gallons to cubic feet, and volume is the quantity of geothermal fluid in gallons produced at the wellhead or measured at an approved point. The efficiency factor of the alternative energy source will be 0.7 for coal and 0.8 for oil, natural gas, and other fuels derived from oil and natural gas, or an efficiency factor proposed by the lessee and approved by ONRR. The methods of measuring resource parameters (temperature, volume, etc.) and the frequency of computing and accumulating the amount of thermal energy displaced will be determined and approved by BLM under 43 CFR 3275.13-3275 .17.
(3) A royalty determined by any other reasonable method approved by ONRR or the Assistant Secretary, Policy, Management and Budget of the Department of the Interior, under § 1206.364 of this part.
(b) For geothermal resources produced from Class II and Class III leases, you must multiply the appropriate fee from the schedule in subparagraph (b)(1) of this section by the number of gallons or pounds you produce from the direct use lease each month.
(1) You must use the following fee schedule to calculate fees due under this section:
Direct Use Fee Schedule
[Hot water]
If your average monthly inlet temperature ( °F) is Your fees are . . .
At least . . . But less than . . . ($/million gallons) ($/million pounds)
130 140 2.524 0.307
140 150 7.549 0.921
150 160 12.543 1.536
160 170 17.503 2.150
170 180 22.426 2.764
180 190 27.310 3.379
190 200 32.153 3.993
200 210 36.955 4.607
210 220 41.710 5.221
220 230 46.417 5.836
230 240 51.075 6.450
240 250 55.682 7.064
250 260 60.236 7.679
260 270 64.736 8.293
270 280 69.176 8.907
280 290 73.558 9.521
290 300 77.876 10.136
300 310 82.133 10.750
310 320 86.328 11.364
320 330 90.445 11.979
330 340 94.501 12.593
340 350 98.481 13.207
350 360 102.387 13.821
(i) For direct use geothermal resources with an average monthly inlet temperature of 130 °F or less, you must pay only the lease rental.
(ii) The ONNR, in consultation with BLM, will develop and publish a revised fee schedule in the Federal Register, as needed.
(iii) ONRR, in consultation with BLM, will calculate revised fees schedules using the following formulas:
Where:
RV = Royalty due as a function of produced volume in the fee schedule, expressed as dollars per million (106) gallons;
Rm = Royalty due as a function of produced mass in the fee schedule, expressed as dollars per million (106) pounds;
ρ[rho] = Water density at inlet temperature expressed as lbs per gallon;
Tin = Measured inlet temperature in °F (as required by BLM under 43 CFR part 3275);
Tout = Established assumed outlet temperature of 130° F;
e = Boiler Efficiency Factor for coal of 70 percent;
Pprbc = The 3-year historical average of Powder River Basin spot coal prices, as published by the Energy Information Administration, or other recognized authoritative reference source of coal prices, in dollars (per MMBtu);
Frr = The assumed Lease Royalty Rate of 10 percent.
(2) The fee that you report is subject to monitoring, review, and audit.
(3) The schedule of fees established under this paragraph will apply to any Class III lease with respect to any royalty payments previously made when the lease was a Class I lease that were due and owing, and were paid, on or after July 16, 2003. To use this provision, you must provide ONRR data showing the amount of geothermal production in pounds or gallons of geothermal fluid to input into the fee schedule (see 43 CFR part 3276 ).
(i) If the royalties you previously paid are less than the fees due under this section, you must pay the difference plus interest on that difference computed under § 1218.302 of this chapter.
(ii) If the royalties you previously paid are more than the fees due under this section, then you are entitled to a refund or credit from ONRR of 50 percent of the overpaid royalties. You are also entitled to a refund or credit of any interest that you paid on the overpaid royalties.
(c) For geothermal resources other than hot water, ONRR will determine fees on a case-by-case basis.