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MMS Offers 25 MMcf/d MOPS Royalty Gas

MMS Offers 25 MMcf/d MOPS Royalty Gas

The Minerals Management Service (MMS) is soliciting bids for about 25 MMcf/d or its royalty share of gas produced from certain offshore leases in the Matagorda Island Offshore Operating System (MOPS). Bids are due by July 24 at 1 p.m. ET and the winner will be chosen within the following 24 hours.

The initial contract term for the pilot royalty-in-kind (RIK) program will be from Aug. 1 through Oct. 31, 2000. Subsequent offers are expected to be made for November to March and April to October. Some 15,000 MMBtu/d is being offered as base gas and another 10,720 MMBtu/d as swing.

It is the first time the Interior Department agency has negotiated a transportation agreement for its royalty gas. The successful bidder, acting as agent for MMS, will assume all responsibilities of the MMS transportation contract for MOPS as a shipper of royalty gas, including receiving and paying the invoice of MOPS operator, Northern Natural Gas. MMS will reduce the monthly royalty gas invoice by the NNG invoiced transportation expense. The buyer will not be responsible for costs upstream of the NNG point of injection.

The specified delivery points are the inlet flange or weld of the applicable NNG metering facilities; either from any lateral line or a direct connection to the platform. The MOPS services the Tivoli Gas Plant area. Pipeline interconnections at Tivoli are Florida Gas Transmission, Houston Pipeline, Coral Pipeline, Midcon Pipeline, NGPL and Koch.

The operators of the leases providing the royalty gas will deliver it daily or at the same frequency as it is produced from the property. The winning bidder will assume all the MMS responsibilities for arrangements regarding production with the leaseholders.

The MMS offer purposely does not specify what type of bid pricing --- fixed or indexed --- it will accept. "This is a new program and we were very, very quiet on that subject," said Karen Bigelow, from the MMS' Denver office. "We wanted to see what people would come up with - some creativity." Interested bidders may contact Bigelow at 303-275-7411 to determine if they pre-qualify or can become pre-qualified for this sale. The bid invitation may be found at www.rmp.mms.gov/RIKweb/DocumentsDoc/documents.html.

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