00-15498. Market Centers for Use in Applying Revised Royalty Valuation Regulations for Federal Oil

AGENCY:

Minerals Management Service, Interior.

ACTION:

Notice of market centers.

SUMMARY:

As required by revised Federal oil valuation regulations, the Minerals Management Service (MMS) has identified the market centers that royalty payors should use to value oil produced from Federal leases.

EFFECTIVE DATE:

June 1, 2000.

ADDRESSES:

See for further information contact section below.

FOR FURTHER INFORMATION CONTACT:

David Domagala, Royalty Valuation Division, Royalty Management Program, Minerals Management Service, P.O. Box 25165, Mail Stop 3151, Denver, Colorado 80225, telephone number [phone] or fax number [phone].

SUPPLEMENTARY INFORMATION:

MMS published its revised regulations establishing oil value for royalty due on Federal leases in the Federal Register on March 15, 2000 (65 FR 14022), effective June 1, 2000. The primary changes in the revised regulations affect Federal lessees who value oil not sold at arm's length. The rule provides that the primary means of valuing crude oil not sold at arm's length is an adjusted spot price, except in the Rocky Mountain Region, where use of an adjusted spot price for valuation purposes is the third valuation benchmark (30 CFR 206.103(b)(4)) (65 FR 14091). The applicable spot price is the one for the oil most closely representing the lease production in terms of physical proximity and quality parameters.

On June 13, 2000, MMS published a list of approved publications from which a lessee may select the appropriate spot price (65 FR 37043). These publications provide spot prices for various types of oils at specific market centers.

Under § 206.113 of the final rule for establishing oil value for royalty due on Federal leases (65 FR 14095), MMS must also identify and publish a list of appropriate market centers using the following factors and conditions:

(1) Points where MMS-approved publications publish prices useful for index purposes;

(2) Markets served;

(3) Input from industry and others knowledgeable in crude oil marketing and transportation;

(4) Simplification; and

(5) Other relevant matters.

These market centers and the oil types at each location are listed below:

Market center location	Oil types at that location
Cushing, Oklahoma	West Texas Intermediate.
Midland, Texas	West Texas Intermediate.
	West Texas Sour.
Saint James, Louisiana	Light Louisiana Sweet.
	Eugene Island.
	Bonito Sour.
Empire, Louisiana	Heavy Louisiana Sweet.
Clovelly, Louisiana	Mars Blend.
Houma, Louisiana	Poseidon.
Los Angeles, California	Alaska North Slope.
San Francisco, California

MMS will monitor market activity and, if necessary, add to or modify the list of market centers and will publish such modifications in the Federal Register.

Dated: June 15, 2000

R. Dale Fazio,

Acting Associate Director for Royalty Management.