Minerals

The federal government will begin accepting royalty-in-kind(RIK) for some Gulf of Mexico gas production beginning Dec. 1 inwhat will be the Minerals Management Service’s (MMS) third ongoingRIK pilot.

The Department of the Interior’s Minerals Management Service(MMS) is beginning its third royalty-in-kind (RIK) pilot, puttingit in the business of selling Gulf of Mexico (GOM) gas productionit accepts in place of cash royalties. The pilot is intended totest a different approach to RIK, using a competitive auction tomove up to 260 MMBtu/d initially.

With at least 800 MMcf/d and potentially more than 1 Bcf/d of gas supply to sell, the Minerals Management Service (MMS) will be a major force in the gas market come October when its Gulf of Mexico Royalty In-Kind (RIK) pilot program begins. MMS’ total royalty share of Gulf production is about 2.5 Bcf/d, and by next spring it expects at least a third of that will be taken in kind in lieu of cash payments.

With at least 800 MMcf/d and potentially more than 1 Bcf/d ofgas supply to sell, the Minerals Management Service (MMS) will be amajor force in the gas market come October when its Gulf of MexicoRoyalty In-Kind (RIK) pilot program begins. MMS’ total royaltyshare of Gulf production is 2.5 Bcf/d and it expects at least athird of that will be taken in kind by next spring.

The Interior Department’s Minerals Management Service hasscheduled a meeting in Houston to discuss implementation of itsGulf of Mexico Royalty In-Kind pilot program, which is slated tobegin in October. The three-year program will involve thecollection and sale of as much as 800 MMcf/d of royalty gas fromfederal leases in the Gulf. It is the MMS’s third RIK pilot, all ofwhich are being conducted to determine the feasibility andeconomics of accepting royalties in kind rather that as a cashpayment from lessees. The meeting on the Gulf RIK will begin at 10a.m. on July 20 at the MMS Houston Compliance Division Office RM104, 4141 Sam Houston Parkway East. It is open to the publicwithout reservation. Lessees, operators, payers and potentialpurchasers are encouraged to attend.

In a letter to U.S. Interior Secretary Bruce Babbitt this weekSen. Dianne Feinstein (D-CA) urged Interior’s Minerals ManagementService to shutdown exploration on 40 offshore California leases,for which producers paid $1.25 billion initially.

The Department of the Interior’s Minerals Management Serviceannounced plans last week to begin selling royalty gas productioncollected in its offshore Texas royalty in-kind (RIK) pilotprogram. The two-year joint initiative between the MMS and theTexas General Land Office will use an auction process that willtake place during the regular bidweek period each month, withdeliveries starting June 1.

The U.S. Department of the Interior’s Minerals ManagementService (MMS) doesn’t expect Sale 172 in the Central Gulf of Mexico(GOM) scheduled for March 17, 1999 in New Orleans to set anyrecords.

The U.S. Department of the Interior’s Minerals ManagementService (MMS) served official notice Tuesday of its intentions tohold lease sale 181 for 5.949 million acres in the eastern Gulf ofMexico. The MMS issued a Call for Interest and Information and aNotice of Intent (NOI), which gives interested parties 60 days tocomment on the proposed sale. The MMS tentatively scheduled thesale for December 2001. An MMS spokesperson said no minimum bid hasbeen set.