[Federal Register Volume 62, Number 81 (Monday, April 28, 1997)]
[Pages 22964-22965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10784]



Minerals Management Service

Announcement of Minerals Management Service Public Meeting on New 
Royalty-In-Kind Project

AGENCY: Minerals Management Service, Interior.

ACTION: Notice of public meeting.


SUMMARY: The Minerals Management Service (MMS) will hold a one-day 
public meeting to discuss new ways to further utilize Federal royalty-
in-kind (RIK) gas programs onshore. The meetings will be open to the 
public without advance registration. Public attendance may be limited 
to the space available.

DATES: The meeting will be held on May 14, 1997, 9:30 a.m. to 4:30 p.m.

ADDRESSES: The meeting will be held at the following location: Holiday 
Inn--Animas Room, 600 E. Broadway, Farmington, NM 87401, (505)327-9811.

Mr. Greg Smith, Minerals Management Service, P.O. Box 25165, Mail Stop 
9130, Denver, CO, 80401, telephone number (303) 275-7102, fax (303) 
275-7124; e-mail [email protected] or contact Mr. Jim McNamee at the 
same address and fax, telephone number (303) 275-7126, e-mail 
[email protected]

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

[[Page 22965]]

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; and
     Decrease administrative burdens and litigation.
    At the public meeting, MMS will present several specific options 
for taking RIK 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 in 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 RIK projects;
    3. Types of gas to be taken in-kind (e.g., conventional, coalbed 
    4. Aggregation of royalty volumes;
    5. Delivery points for RIK production: at the lease or various 
points away from the lease (e.g., first mainline interconnect, gas 
plant inlet, gas plant tailgate);
    6. Transportation responsibility away from the lease (e.g., MMS, 
marketer, or lessee);
    7. Pricing indicators to be used to assure a fair and equitable 
price for RIK production as well as certainty of price to industry;
    8. Requirements to be placed on lessees (e.g., marketable 
condition, data submitted to MMS, coordination with purchasers); and
    9. 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 
    MMS will more fully develop the RIK option(s) before the public 
meeting. Interested parties may request this information from the 
contacts listed in the FURTHER INFORMATION section.

    Dated: April 21, 1997.
Robert E. Brown,
Acting Associate Director, Policy and Management Improvement.
[FR Doc. 97-10784 Filed 4-25-97; 8:45 am]