FOR RELEASE:  August  17, 1994           CONTACT:  John Barclay
                                                 (202) 208-5890

          MMS' GAS MARKETING PILOT PROJECT GOES FORWARD (#40059)

     The Interior Department's Minerals Management Service (MMS)
will move forward with an innovative Royalty Gas Marketing Pilot
Project, according to Acting Director Cynthia Quarterman. The pilot
will run for a year beginning Jan. 1, 1995. 

     MMS recently solicited firms to volunteer for the program, and
the agency has received favorable responses from industry.  As of
August 5, the equivalent of more than 220,000 million British
Thermal Units per day had been volunteered by 20 gas producers. 
This response will give MMS adequate quantities to measure the
administrative burdens and economic impacts of directly marketing
royalty gas versus collecting royalties on it under existing
reporting and valuation procedures.

     The pilot program is the result of discussions between MMS
officials and some of the agency's customers in the natural gas
industry.  Its intent is to reduce paperwork and simplify the
process of royalty collection for both MMS and industry.

     The project will test, for the first time, the concept of MMS
taking the Federal Government's royalty share of gas production in
kind, at or near the lease, and immediately selling it to
competitively chosen gas marketer(s).  MMS expects to select the
pilot leases from those volunteered by early next month.  Later in
September, the agency will issue a public Invitation for Bids to
gas marketers.  MMS will enter into a contract with the successful
company, or companies, in November.

     "This project represents the true spirit of MMS's answer to
the President's call for reinventing government," Quarterman said. 
"We are encouraged by industry's willingness to work with us in
this endeavor.  We'll be working with industry to design an
efficient program that honors market accounting and serves both
their needs and ours.  We are open to suggestions and we'll be
flexible as we go forward with this project."

     MMS plans a question-and-answer forum on the project for
interested gas producers later this month in Houston, TX., she
said.  The meeting will be from 10 a.m. - noon in the agency's
Houston Area Audit Office, 4141 N. Sam Houston Parkway E., Suite
104, Houston, 77032-3843.  Industry representatives will be allowed
to add or withdraw nominated leases for the project until September
9; producers in the Gulf of Mexico can still volunteer to be in the
pilot program. 

     Marketers with questions about the program may call Jim
Mackay, (703) 787-1354.  Producers and other interested parties can
call John Bratland at (202) 208-3979, or Jim McNamee at (303)
275-7126.

                              -MMS-

Subject: PR-8/17/94 Gas Marketing/MMS' Gas Marketing Pilot Program
Goes Forward (#40059)