Summary

Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) actions to correct Naval Petroleum Reserve No. 1 (NPR-1) production data inaccuracies which GAO believed: (1) resulted from a lack of effective internal controls; (2) caused incorrect computation of NPR-1 maximum efficient production rates; and (3) could result in the government's not receiving its entire share of remaining recoverable reserves if NPR-1 were sold.

GAO found that DOE promptly initiated actions to correct data inaccuracy problems, including: (1) rewriting computer programs; (2) conducting tests of corrected data to validate the production accounting system's accuracy; (3) developing new allocation factors for the production accounting system; (4) establishing standards for developing new allocation factors; and (5) validating all historical monthly production data. GAO also found that DOE: (1) will take almost a year to complete all corrective actions and will require additional time to measure the effectiveness of its newly implemented internal controls; (2) did not detect certain errors in allocation factors that had cleared its review process; and (3) has not exercised a study contract option that would provide it with the specific geological data it needs to protect the government's interests if it should choose to sell or manage the reserve.