|
The NewsRoom
Release: #3820
Date: September 8, 2008
RIK Report
Details $63 Million Gain
MMS Delivers FY
2007 Results to Congress
DENVER
– More than $63 million in additional benefits was achieved for the
Federal Government and American taxpayer in Fiscal Year 2007 through
the Royalty in Kind (RIK) Program administered by the Department of
the Interior’s Minerals Management Service (MMS).
The $63 million
gain is detailed in an annual report to Congress prepared by MMS
that examines the FY 2007 performance of the Royalty in Kind
Program.
“This report demonstrates that the RIK Program continues to deliver
solid and measurable benefits through increased financial returns to
the American public, decreased administrative costs, and shortened
compliance cycles,” said MMS Director Randall Luthi. He added that
the program’s performance continues to outpace its goals.
Luthi noted the objectives of the program are to improve government
efficiencies, reduce regulatory costs and reporting requirements,
shorten the compliance cycle, and ensure a fair return on the
public’s royalty assets. “The program is meeting those objectives,”
Luthi said.
Begun as a pilot program more than 10 years ago, the RIK Program
allows MMS to take its royalties in kind, in the form of oil or gas,
instead of in value as a cash payment, and then competitively sell
the product in the open marketplace. The program is designed to
ensure a fair market return on the public’s royalty assets, and
improve government efficiencies.
A
MMS analysis of the Fiscal Year 2007 results reveals that of the $63
million in benefits gained during the fiscal year, $56.5 million in
additional revenue was achieved through open and competitive sales
of the oil and natural gas, compared to what would have been
received if MMS had taken its royalties in value, or as cash
payments; $3.5 million was achieved through administrative savings;
and $3 million was gained through what is called the “Time Value of
Money,” attributed to receiving receipts several days earlier
compared to royalty-in-value cash payments.
Additionally, this year’s report updates the figures from previous
years to reflect the administrative cost savings attributed to the
RIK program. The updated numbers for Fiscal Years 2006, 2005, and
2004 are $31.2 million, $36 million and $19.5 million respectively.
That translates into a more than $150 million gain achieved by the
RIK program since it became fully operational four years ago.
Looking to the future, Luthi said MMS will continue to use RIK sales
in tandem with royalty-in- value cash payments, depending upon the
particular business case, to ensure a fair return on the public’s
royalty assets.
The full report will be posted later today on the MMS Web site:
http://www.mms.gov
Relevant Web
Site:
MMS
RIK Report: Energy Policy Act of 2005 - Section 342
(672.21 KB PDF file)
Contact:
Patrick Etchart 303-231-3162
MMS: Securing Ocean Energy & Economic Value for America
U.S. Department of the Interior
Privacy |
Disclaimers |
Accessibility |
Topic Index | FOIA
Last Updated:
09/11/2008,
07:02 AM
Central Time
|