MMS completes first RIK sale of Wyoming gas

The first federal RIK sale of gas from southwestern Wyoming is expected to generate $5-10 million more in revenues than royalties taken as cash payments, the US MMS said.

Nick Snow
Washington Correspondent

WASHINGTON, DC, Feb. 21 -- The first federal royalty in-kind sale of natural gas from southwestern Wyoming is expected to generate $5-10 million more in revenues than royalties taken as cash payments, the US Minerals Management Service said on Feb. 20.

The sale of 36 bcf of gas followed months of analysis of Rocky Mountain gas markets, which led to expansion of the RIK program to royalty gas produced in Wyoming's Jonah and Pinedale fields, MMS Director Johnnie Burton said.

Fourteen companies submitted bids on the four packages sold, according to the US Department of Interior agency. Winning bidders included Sempra Energy Trading Corp., UBS Energy LLC, and Oneok Energy Marketing & Trading Co. LP. Deliveries began in January and continue through Oct. 31.

Federal lease terms and statutes allow MMS to take royalties in kind and then sell the oil or gas on the open market instead of taking royalties as cash payments. Burton said that receipts to the US Treasury through the RIK program were increased by $18 million in fiscal 2004 and $34 million in fiscal 2005 over what would have been received as cash payments.

Contact Nick Snow at nsnow@cox.net.

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