MMS, Louisiana Team Up for Joint RIK Crude Oil Sale
A crude oil sale conducted by the U.S. Department of the Interior's Minerals Management Service, in partnership with the State of Louisiana Department of Natural Resources, resulted in the award this month of approximately 14,670 barrels per day of Royalty-in-Kind crude oil to several major companies.
The commercial sale included Royalty-in-Kind oil from producing leases located within the Federal 8(g) zone offshore Louisiana as well as RIK oil produced from Federal leases. The Federal 8(g) zone offshore Louisiana is the three-mile wide zone that lies adjacent to the state's seaward boundary.
MMS awarded contracts for the Federal 8(g) crude oil and the Federal non-8(g) volume to ChevronTexaco Products Company, ExxonMobil Oil Corporation, Shell Trading, and Plains Marketing. Physical deliveries are scheduled to begin April 1, 2005, and will continue for six months.
The February sale is the fourth RIK oil sale conducted by MMS in partnership with the State of Louisiana following a March 2003 Memorandum of Understanding. That MOU solidified a Federal-State relationship that provides the State of Louisiana with a more active role in managing its oil resources while protecting State and taxpayer interests.
While the MMS has historically collected royalties "in value," in the form of cash, it has in recent years been collecting its royalties "in kind," in the form of product, to more efficiently manage the nation's royalty assets. Among the objectives of the effort are maximization of taxpayer assets, reduction of regulatory costs and reporting requirements, and improvement of overall business efficiencies.