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RULE §8.4Review Criteria for All Contracts

GLO will review all new and existing contracts entered into by a state agency for the acquisition of an average volume of 100 Mcf (or the MMBtu equivalent thereof) or more per day of natural gas, calculated on an annual basis, to ensure that the agency is using natural gas produced from state lands for the production of energy to the greatest extent practical.

  (1) GLO will not approve a contract using non-state gas if it determines that it can provide gas at the same, or a lower price.

    (A) The cost of transporting state gas from the point of production to the agency's service address (or other mutually agreed point) shall be considered part of the cost of state gas.

    (B) The amortized cost of constructing a pipeline or installing other equipment in order to deliver state gas shall be part of the cost of gas.

    (C) Where applicable, the cost of dehydrating, compressing, processing, and/or treating shall be part of the cost of state gas.

    (D) Any applicable filing fees payable to federal regulatory agencies shall be part of the cost of state gas.

  (2) GLO will not approve a contract if it determines that the purchasing agency leases land for mineral development through a board for lease authorized by the Natural Resources Code, Chapter 34, and such agency is not using, to the greatest extent practical, resources produced from land owned by the agency to meet its energy requirements.

  (3) The final decision regarding the practicality of using gas provided by GLO to meet the agency's energy requirements will be with GLO.

Source Note: The provisions of this §8.4 adopted to be effective September 30, 1992, 17 TexReg 6450; amended to be effective December 19, 2005, 30 TexReg 8439

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