More than 76 Bcf of natural gas was sold to six companies earlier this month in a royalty in kind (RIK) Gulf of Mexico (GOM) gas sale conducted by the Department of Interior’s Minerals Management Service (MMS). About 241,000 MMBtu/d was sold in the sale under five- or 12-month contracts. Delivery is scheduled to begin Saturday (Nov. 1).

ConocoPhillips, Shell Energy North America, United Energy Trading LLC, JPMorgan Chase, Williams Gas Marketing Co. and National Energy and Trade LP were the winning bidders, MMS said.

If gas prices were to be around $7/MMBtu, the sale would equate to more than $537 million in total gross revenues, according to the federal agency. Actual sales will vary based on gas prices over the life of the contracts. The gas sold in the sale is based on average volumes produced before Hurricane Ike stormed through the GOM in early September. Actual volumes sold may vary because gas that was shut in because of the hurricane is to be restored to production and delivered to market centers.

MMS recently said that 76 Bcf was sold to four companies — Constellation Energy Commodities Group Inc., Oneok Energy Services Co., Sempra Energy Trading and Shell Energy North America — in a RIK onshore gas sale (see Daily GPI, Oct. 10).

RIK sales aggregate gas royalties from production taken “in kind” in the form of product rather than “in value” or through cash payments. MMS then sells the gas competitively on the open market with a goal to increase revenues, improve government efficiencies and shorten the compliance cycle.

The RIK program, which began as a pilot program more than 10 years ago, is designed to ensure a fair return on the public’s royalty assets. In fiscal year (FY) 2007, the program was credited with providing taxpayers and the U.S. government an additional $63 million in benefits. From FY 2004 through 2007, the program generated about $150 million.

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