The Bureau of Land Management plans to propose a rule to make producers responsible for verifying purchaser measurements of oil and gas run from federal and Indian leases.
BLM is establishing procedures for oil theft reports and investigations and changing its policies to require its inspectors to witness more purchaser measurements and make more inspections on Indian leases.
The action stems from a BLM review of its procedures undertaken largely as a result of preliminary findings of 1988-89 investigations by a subcommittee of the Senate select committee on Indian affairs, Office of the Inspector General, and General Accounting Office. The subcommittee report accused Koch Industries Inc., Wichita, Kan., of stealing millions of dollars worth of oil from Indians (OGJ, May 15, 1989, p. 20).
But BLM and the tribal council of the Osage Nation, Pawhuska, Okla., found no evidence that Koch significantly underpaid for crude oil purchased from Indian leases. About 85% of the oil Koch buys from Indian interests is from the Osage tribe in Osage County, Okla.
BLM, TRIBAL FINDINGS
BLM identified 917 federal and Indian leases on which Koch is involved as interest owner or oil buyer.
Among other things, BLM conducted independent gaugings on at least one shipment of oil from 25% of leases with Koch involvement. Only three minor production accountability discrepancies in Koch's current measurement activities were identified.
The tribal council's review, covering 1987, 1988, and January-May 1989 found Koch owed the tribe a net $29,700.44, including about $7,000 in interest. That is less than 0.1% of the total volume of business.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
