The Minerals Management Service (MMS) is soliciting bids forabout 25 MMcf/d or its royalty share of gas produced from certainoffshore leases in the Matagorda Island Offshore Operating System(MOPS). Bids are due by July 24 at 1 p.m. ET and the winner will bechosen 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. Subsequentoffers are expected to be made for November to March and April toOctober. Some 15,000 MMBtu/d is being offered as base gas andanother 10,720 MMBtu/d as swing.

It is the first time the Interior Department agency hasnegotiated a transportation agreement for its royalty gas. Thesuccessful bidder, acting as agent for MMS, will assume allresponsibilities of the MMS transportation contract for MOPS as ashipper of royalty gas, including receiving and paying the invoiceof MOPS operator, Northern Natural Gas. MMS will reduce the monthlyroyalty gas invoice by the NNG invoiced transportation expense. Thebuyer will not be responsible for costs upstream of the NNG pointof injection.

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

The operators of the leases providing the royalty gas willdeliver it daily or at the same frequency as it is produced fromthe property. The winning bidder will assume all the MMSresponsibilities for arrangements regarding production with theleaseholders.

The MMS offer purposely does not specify what type of bidpricing — fixed or indexed — it will accept. “This is a newprogram and we were very, very quiet on that subject,” said KarenBigelow, from the MMS’ Denver office. “We wanted to see what peoplewould come up with – some creativity.”Interested bidders maycontact Bigelow at 303-275-7411 to determine if they pre-qualify orcan become pre-qualified for this sale. The bid invitation may befound at www.rmp.mms.gov/RIKweb/DocumentsDoc/documents.html.

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