Opinion ID: 2509156
Heading Depth: 1
Heading Rank: 31

Heading: The Point of Valuation Statute

Text: 93. The statute determines the point of valuation for natural gas by reference to the production process: The production process for natural gas is completed after extracting from the well, gathering, separating, injecting and any other activity which occurs before the outlet of the initial dehydrator. When no dehydration is performed, other than within a processing facility, the production process is completed at the inlet to the initial transportation related compressor, custody transfer meter or processing facility, whichever occurs first. Wyo. Stat. Ann. งXX-XX-XXX(b)(iv) (hereafter, the point of valuation statute). 94. Williams takes two conflicting positions that reach the same result. On the one hand, Williams argues that both the header and the screw compressor were dehydrators, so that the custody transfer meter located between them was an acceptable point of valuation. See Findings of Fact, ถถ 48, 49, 68-70. On the other hand, Williams argues that if the glycol dehydrator was the only piece of equipment in which dehydration was performed, then the glycol dehydrator was located in a processing facility operated by Western, and the custody transfer meter is the point of valuation. See Findings of Fact, ถถ37-39. If either theory were correct, Barrett's original deduction for expenses would likewise be correct, since Barrett reported its taxes using the custody transfer meter as the point of valuation. See Findings of Fact, ถ27. 95. The Department takes the position that the glycol dehydrator is the only dehydrator, and that there is no processing facility. Findings of Fact, ถ72. Under this theory, the point of valuation is the outlet of the glycol dehydrator. Findings of Fact, ถ72. 96. We must construe the point of valuation statute in light of all of statutory language relating to the same subject matter, as found in the Oil and Gas Article of Chapter 14 of the Wyoming Statutes. Petra Energy, Inc., v. Department of Revenue, State of Wyoming, 6 P. 3d 1267, 1270 (Wyo. 2000). This is a complex set of sections in which some words have been defined. The defined words include dehydrator, Wyo. Stat. Ann. งXX-XX-XXX(a)(vii); natural gas, Wyo. Stat. Ann. งXX-XX-XXX(a)(xv) ; processing, Wyo. Stat. Ann. งXX-XX-XXX(a)(xviii) ; separating, Wyo. Stat. Ann. งXX-XX-XXX(a)(xxii) ; compressor, Wyo. Stat. Ann. งXX-XX-XXX(a)(v) ; and gathering, Wyo. Stat. Ann. งXX-XX-XXX(a)(ix). Other significant words and phrases are not defined, including process, production process, processing facility, dehydration, compression, and separation. In view of the care with which the legislature has both defined and employed these words, we conclude that settled interpretations of earlier versions of the point of valuation statute provide little guidance. E.g., Chevron U. S. A., Inc. v. State, 918 P. 2d 980 (Wyo. 1996).
97. The point of valuation statute provides two possible avenues to determine when and where the production process is completed. Wyo. Stat. Ann. งXX-XX-XXX(b)(iv). The first avenue turns on the existence of an initial dehydrator. 98. We determine the meaning of the word initial by reference to its plain and ordinary meaning. Campbell County School District v. Catchpole, 6 P.3d 1275, 1285 (Wyo. 2000). It is an adjective which means having to do with, indicating or occurring at the beginning. Webster's New World College Dictionary (4 th Edition 2001) p. 735. We will therefore be concerned with the first dehydrator to occur in the sequence of equipment. 99. On behalf of Williams, Rhinesmith directed our attention to three possible dehydrators: the header; the screw compressor; and the glycol dehydrator. Findings of Fact, ถถ56-59. We will consider whether the statute enables us to determine whether one or more of these pieces of equipment is a dehydrator. We note that Williams' Hearing Brief asserts that  dehydration occurs at the header and was performed at the screw compressor. Petitioner's Hearing Brief, pp. 8-9. We conclude the plain language of the first sentence of Wyo. Stat. Ann. งXX-XX-XXX(b)(iv) directs our attention to a dehydrator, not to dehydration. 100. The statute defines dehydrator as a device which removes water vapor that is commonly associated with raw natural gas. Wyo. Stat. Ann. ง 39-14-201(a)(vii).