MMS TO SELL ROYALTY GAS FROM GULF

Jan. 2, 1995

The U.S. Minerals Management Service has chosen winning bidders in a pilot program to sell the federal royalty share of natural gas production from Gulf of Mexico leases. Acting MMS Director Cynthia Quarterman said, "We're extremely pleased with the number of bidders and quality of bids. Because participation in this pilot project is voluntary, industry's willingness to test new approaches to royalty collections is most gratifying."

The U.S. Minerals Management Service has chosen winning bidders in a pilot program to sell the federal royalty share of natural gas production from Gulf of Mexico leases.

Acting MMS Director Cynthia Quarterman said, "We're extremely pleased with the number of bidders and quality of bids. Because participation in this pilot project is voluntary, industry's willingness to test new approaches to royalty collections is most gratifying."

MMS received 24 bids for about 170,800 MMBTU/day of royalty gas from 75 leases. Winning bidders were Amerada Hess Corp., Anadarko Trading Co., Chevron USA Inc., CNG Energy Services Corp., Coastal Gas Marketing Co., Conoco Inc., Enron Gas Marketing Inc., Mobil Natural Gas Inc., Natural Gas Clearinghouse, Oryx Gas Marketing Ltd., Texaco Gas Marketing Inc., and Vastar Resources Inc.

MMS said the goal of the I year pilot project, which began this week, is to see whether taking federal gas royalties in kind will improve the process of royalty collection for MMS and the gas industry (OGJ, July 18, 1994, p. 27).

In cooperation with producers and marketers, MMS will evaluate the potential cost savings and benefits of the project to decide whether to continue it. MMS also will analyze revenues received to ensure fair market value.

Quarterman said, "By simplifying procedures, we expect to eliminate a lot of paperwork associated with gas valuation. As a result, MMS shouldn't have to expend as much effort for audits, and that will lower costs."