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Mineral Revenues: Data Management Problems and Reliance on Self-Reported Data for Compliance Efforts Put MMS Royalty Collections at Risk

Description: Correspondence issued by the Government Accountability Office with an abstract that begins "The Department of the Interior's (Interior) Minerals Management Service (MMS) collected the equivalent of over $9 billion in oil and gas royalties in fiscal year 2007, more than $5 billion of which it deposited in the U.S. Treasury; it dispersed the remaining approximately $4 billion to other federal, state, and tribal accounts. These royalties--payments made to the federal government for the right to produce oil and gas from federal lands and waters--represent one of the country's largest nontax sources of revenue. The amount of oil and gas royalties MMS collects may increase if the price of energy increases and industry's demand to drill on lands and in waters controlled by the federal government continues to trend upward. Companies that develop and produce oil and gas resources from federal lands and waters do so under leases obtained from and administered by Interior--BLM for onshore leases and MMS's OEMM for offshore leases. Together, BLM and OEMM are responsible for ongoing oversight of oil and gas operations on more than 28,000 producing leases to help ensure that oil and gas companies comply with applicable laws, regulations, and agency policies. Among other things, BLM (BLM) and OEMM (OEMM) staff inspect leases to verify that oil and gas production is accounted for as required by the Federal Oil and Gas Royalty Management Act of 1982 and agency regulations and policies. These inspections typically include an examination of the meters and their calibration records."
Date: September 12, 2008
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Royalty Revenues: Total Revenues Have Not Increased at the Same Pace as Rising Oil and Natural Gas Prices due to Decreasing Production Sold

Description: Correspondence issued by the Government Accountability Office with an abstract that begins "In fiscal year 2005, federal and Native American lands supplied about 35 percent of the oil and 26 percent of the natural gas produced in the United States. Companies that lease these lands to produce oil and natural gas pay royalties to the Department of the Interior's Minerals Management Service (MMS) based on a percentage (the royalty rate) of the cash value of the oil and natural gas produced and sold. As an alternative to collecting cash royalty payments, MMS has the option to take a percentage of the actual oil and natural gas produced (referred to as "taking royalties in kind") and selling it themselves or using it for other purposes, such as filling the nation's Strategic Petroleum Reserve (SPR). MMS reported collecting $7.4 billion in fiscal year 2001 and $8 billion in fiscal year 2005 in cash royalty payments and in revenue from its own royalty-in-kind sales of oil and natural gas. While these total royalty revenues increased by about 8 percent from 2001 to 2005, oil and natural gas prices rose substantially more--about 90 percent for oil and 30 percent for natural gas. Consequently, Congress asked us why oil and natural gas royalty revenues did not increase at the same pace as the increase in oil and natural gas prices."
Date: June 21, 2006
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Mineral Revenues: Data Management Problems and Reliance on Self-Reported Data for Compliance Efforts Put MMS Royalty Collections at Risk

Description: Testimony issued by the Government Accountability Office with an abstract that begins "Companies that develop and produce federal oil and gas resources do so under leases administered by the Department of the Interior (Interior). Interior's Bureau of Land Management (BLM) and Offshore Minerals Management (OMM) are responsible for overseeing oil and gas operations on federal leases. Companies are required to self- report their production volumes and other data to Interior's Minerals Management Service (MMS) and to pay royalties either "in value" (payments made in cash), or "in kind" (payments made in oil or gas). GAO's testimony will focus on whether (1) Interior has adequate assurance that it is receiving full compensation for oil and gas produced from federal lands and waters, (2) MMS's compliance efforts provide a check on industry's self-reported data, (3) MMS has reasonable assurance that it is collecting the right amounts of royalty-in-kind oil and gas, and (4) the benefits of the royalty-in-kind program that MMS has reported are reliable. This testimony is based on ongoing work. When this work is complete, we expect to make recommendations to address these and other findings. To address these issues GAO analyzed MMS data, reviewed MMS, and other agency policies and procedures, and interviewed officials at Interior. In commenting on a draft of this testimony, Interior provided GAO technical comments which were incorporated where appropriate."
Date: March 11, 2008
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department