The US Minerals Management Service plans a third royalty-in-kind (RIK) pilot program, using a competitive auction to take up to 260 MMbtu/day of gas from Gulf of Mexico federal leases.
Pilot projects are under way in Wyoming and off Texas. The third pilot will involve federal properties off western Louisiana and is expected to include a large number of operators, lessees, and potential purchasers.
MMS Director Walt Rosenbusch said, "I believe RIK has advantages for both the federal government and industry. Our goal is to realize the potential for revenue enhancement as well as increase administrative efficiency."
The pilot program
The Wyoming pilot is testing competitive sales of crude oil at the lease. MMS and the state recently held their third sale of royalty oil from both federal and state leases.
The offshore Texas gas pilot includes leases in which both the state and federal governments have a revenue interest. MMS is managing this pilot in cooperation with the Texas General Land Office.
In the offshore Louisiana program, bidders will offer a quantity of gas at a specific market center in return for royalty gas from specified locations at or near the leases.
The RIK pilot will begin Dec. 1 and run 4 months.
MMS said future Gulf RIK sales will offer additional royalty gas and test additional methods of disposal.
