FOR RELEASE: November 7, 1995                CONTACT: Tom DeRocco
                                                   (202) 208-3983
                                               Michael L. Baugher
                                                  (303) 231-3162


                           MMS PUBLISHES NOTICE
             OF PROPOSED RULEMAKING FOR FEDERAL GAS VALUATION


     The U.S. Department of the Interior's Minerals Management
Service (MMS) has proposed amendments to regulations governing
the valuation for royalty purposes of natural gas produced from
federal leases.  A Notice of Proposed Rulemaking was published in
the November 6, 1995 Federal Register.

     "Secretary of the Interior Bruce Babbitt chartered last year
the MMS Federal Gas Valuation Negotiated Rulemaking Committee to
address the valuation of gas produced from federal leases," said
MMS Director Cynthia Quarterman.

     "The Committee was faced with a new gas marketing
environment which resulted from deregulation of natural gas
production and open access, particularly with the issuance of the
federal Energy Regulatory Commission (FERC) Order No. 636
directing the unbundling of natural gas and the transportation
system that moves it.

     "The Committee proposed an unprecedented move towards using
a market based index price in valuing production for royalty
purposes.  The proposal also creates simplified reporting
requirements and the elimination of several federal forms.

     "The MMS commends the Committee's ability to develop a
proposal that would simplify royalty payments on natural gas
produced from federal leases, while reducing administrative
costs, decreasing litigation costs and maintaining revenue
neutrality.  This is the first time in the history of the
Department of the Interior that we have had a negotiated
rulemaking committee reach consensus," she said. 

     The proposals do not apply to Indian leases.

     The MMS is the federal agency that manages the Nation's
natural gas, oil and other mineral resources on the OCS, and
collects, accounts for and disburses about $4 billion yearly in
revenues from offshore federal mineral leases and from onshore
mineral leases on federal and Indian lands.

                                   -MMS-