WAC 332-12-320
Production royalties. (1) Production
royalty payments shall be payable to the department for oil
and gas produced from the lease premises, or in the case of
gas products from gas produced but not sold, the products
manufactured. Royalty rates shall be not less than twelve and
one-half percent of the gross value at the point of production
as defined in WAC 332-12-330. In the case of production of
gas from coal deposits by "in situ" or other newly developed
technology for which there is little or no leasing experience,
the commissioner may set applicable royalty rates.
(2) The state reserves the right that, in lieu of
receiving royalty payment for the market value of the state's
royalty share of oil or gas, the department may elect that
such royalty share of oil or gas be delivered in kind at the
mouth of the well into tanks or pipelines provided by the
department.
(3) On lands which the state owns less than the entire
fee simple mineral rights in common tenancy (undivided
interests), the lessee shall pay production royalties in the
proportion which the state's interests bear to the undivided
whole or an amount established by agreement between cotenants.
(4) Payments shall be in an amount to cover all royalties
due the state from production. The department may approve the
use of payment bonds, savings account assignments, or other
security which guarantees payment to the state. Production
royalty payments shall be scheduled in the lease and plan of
operations. The lessee shall furnish the department a sworn
statement showing production for accounting periods required
by the department and pay any royalties due.
(5) The lessee shall not sell or deliver any oil and gas
or manufactured products to any person who does not agree to
file purchase invoices with the department stating the price,
quantity, origin of oil and gas purchased from a state lease
and to allow an audit as provided by these rules. The
department may require and prescribe any other methods
necessary to insure a full accounting of oil and gas produced
from the premises. Noncompliance with any accounting
requirements may cause suspension of operation or termination
as provided in WAC 332-12-400.
(6) Any past due royalty payment shall bear interest at
the rate of one percent per month, compounded monthly, on the
unpaid balance.
[Statutory Authority: RCW 79.14.120. 82-23-053 (Order 387),
§ 332-12-320, filed 11/16/82.]