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Agency: Department of Interior

Title: Royalty Gas Marketing Pilot

Background Information

The Interior Department's Minerals Management Service (MMS) has accepted the challenge to test a redesign of one of its major programs -- mineral royalty collections. The MMS has acknowledged that the gas marketplace has changed in certain areas and it can no longer do business in its traditional manner. The project will test for the first time the concept of MMS taking the Federal Government's royalty share of gas production in kind at or near the lease and immediately selling it to a competitively chosen gas marketer.

The pilot program is the result of discussions between MMS officials and some of the agency's customers in the natural gas industry. The intent is to test whether this approach to royalty collection will reduce the administrative burdens and simplify the process of royalty collection for both MMS and industry.

"This project represents the true spirit of MMS's answer to the President's call for reinventing government," Acting Director Cynthia Quarterman said. "We are encouraged by industry's willingness to work with us in this endeavor. We'll be working with industry to design an efficient program that honors market accounting and serves both their needs and ours. We are open to suggestions and will be flexible as we go forward with this project.

Over 20 companies have volunteered approximately 200,000 MMBTU's per day for the pilot. This represents approximately 10 percent of the royalty share from federal leases in the Gulf of Mexico. MMS will take title of the gas at the first available measurement point and simultaneously pass title to the competitively chosen marketer. Both wet and dry gas will be included in a program that focuses on volume verification.

The pilot will run from January 1, 1995, through December 31, 1995. The MMS, in conjunction with industry participants, will evaluate the results in early 1996, and MMS will decide whether, and to what extent, the program will be expanded.

Main NPR category: Cutting Back to Basics

Related NPR Categories: Customer Service

Contact Person: Ben Dillon

Contact Phone: (202) 208-4869

Contact Person: Jim McNamee

Contact Phone: (303) 275-7126

Contact Address:

Minerals Management Service Mail Stop 9210 1849 C Street N.W.

Washington, D.C. 20240

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