97-4350. Announcement of Minerals Management Service Public Meetings on New Royalty-In-Kind Projects

[Federal Register Volume 62, Number 35 (Friday, February 21, 1997)]
[Notices]
[Pages 8035-8036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4350]


-----------------------------------------------------------------------

DEPARTMENT OF THE INTERIOR
Minerals Management Service


Announcement of Minerals Management Service Public Meetings on 
New Royalty-In-Kind Projects

AGENCY: Minerals Management Service, Interior.

ACTION: Notice of public meetings.

-----------------------------------------------------------------------

SUMMARY: The Minerals Management Service (MMS) will hold a series of 
one-day public meetings to discuss new ways to further utilize Federal 
royalty-in-kind (RIK) oil and gas programs onshore and on the Outer 
Continental Shelf (OCS). The meetings will be open to the public 
without advance registration. Public attendance may be limited to the 
space available. For building security measures, each person may be 
required to present a picture identification to gain entry to the 
meetings in Houston and New Orleans.

DATES: The meetings will be held as follows: Houston, TX, March 18, 
1997 (OCS Oil RIK); Houston, TX, March 19, 1997 (OCS Gas RIK); Casper, 
WY, March 25, 1997 (Onshore Oil RIK); New

[[Page 8036]]

Orleans, LA, April 1, 1997 (OCS Oil RIK); and New Orleans, LA, April 2, 
1997 (OCS Gas RIK). The meetings will commence at 9:30 a.m. on these 
respective dates and should end by 4:30 p.m.

ADDRESSES: The meetings will be held at the following locations:

Minerals Management Service, Houston Area Audit Office, 4141 N. Sam 
Houston Parkway, Houston, Texas 77032-3843, [phone];
Hilton Inn Casper, 800 N. Poplar Rd., Casper, Wyoming 82601, (307) 266-
6000;
Minerals Management Service, Gulf of Mexico Regional Office, Elmwood 
Towers Building, Conference Rooms 111-115, 1201 Elmwood Park Boulevard, 
Jefferson, Louisiana 70123, [phone].

FOR FURTHER INFORMATION CONTACT: Mr. Greg Smith, Minerals Management 
Service, P.O. Box 25165, Mail Stop 9130, Denver, CO, 80401, telephone 
number [phone], fax [phone]; e-mail 
[email protected] or contact Mr. Jim McNamee at the same address 
and fax, telephone number [phone], e-mail [email protected] 
SMTP.MMS.GOV.

COMMENTS: Written comments on the meetings or the issues discussed 
below should be addressed to Mr. Greg Smith at the address given in the 
FURTHER INFORMATION section.

SUPPLEMENTARY INFORMATION: MMS conducted a Royalty Gas Marketing Pilot 
in 1995 in the Gulf of Mexico. The MMS sold its royalty gas to 
competitively selected gas marketers. The MMS had two objectives in 
conducting the pilot: (1) streamline royalty collections, and (2) test 
a process which could result in increased efficiency and greater 
certainty in valuation.
    MMS' assessment of the gas RIK pilot indicated that it was an 
operational success, proving that the concept of MMS taking and selling 
royalty gas in-kind is feasible. However, MMS' analysis of the gas RIK 
revenues, as compared to in-value royalties paid and administrative 
savings realized, was not favorable to MMS.
    Congress has directed MMS to consider additional projects for 
taking oil and/or gas in-kind. MMS is currently considering a variety 
of RIK scenarios that would build on lessons learned from the 1995 
Royalty Gas Marketing Pilot. Any further RIK projects undertaken by MMS 
would be intended to address specific operational and revenue issues 
necessary before any longer-term implementation. The objectives of the 
proposed RIK options are to:
     Simplify the royalty collection process;
     Decrease administrative costs for both MMS and industry;
     Realize fair and equitable market value for the products;
     Provide certainty in royalty valuation;
     Decrease audit burden and appeal actions; and
     Provide MMS with alternative sources of data for use for 
in-value product valuation.
    MMS is developing several options for taking Federal oil and gas 
in-kind. However, any new RIK programs will be separate from the 
current program of providing royalty oil in-kind to small refiners and 
will not involve production from Indian lands. The following are the 
general options being considered:
     Take OCS and onshore oil production in-kind; and
     Take OCS gas in-kind.
    At the public meetings, MMS will present one or several specific 
options for taking royalties in-kind on a project/test basis. MMS will 
solicit public input at the meetings on the workability of these 
option(s). The issues that MMS would like to discuss at the meetings 
are presented below. The listing of issues is not necessarily complete 
but will be used as a starting point for the meetings.
    1. Mandatory or voluntary participation;
    2. Areas/leases to be selected for royalty in-kind projects;
    3. Delivery points for RIK production: at the lease or various 
points away from the lease (e.g., first mainline interconnect, gas 
plant/refinery inlet, gas plant tailgate);
    4. Transportation responsibility away from the lease (e.g., MMS, 
marketer, or lessee);
    5. Aggregation of royalty volumes;
    6. Pricing indicators to be used to assure a fair and equitable 
price for RIK production as well as certainty of price to industry;
    7. Requirements to be placed on lessees (e.g., marketable 
condition, data submitted to MMS, coordination with purchasers); and
    8. Requirements to be placed on purchasers (e.g., transportation of 
product away from the lease, data required by MMS, coordination with 
lessees, balancing, contract provisions concerning breach, payment 
terms).
    MMS will more fully develop the RIK option(s) before the public 
meetings. Interested parties may request this information from the 
contacts listed in the FURTHER INFORMATION section.

    Dated: February 14, 1997.
Robert E. Brown,
Acting Associate Director, Policy and Management Improvement.
[FR Doc. 97-4350 Filed 2-20-97; 8:45 am]
BILLING CODE 4310-MR-P