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The NewsRoom
Release: #3796
Date: March 24, 2008
RIK Gas Sales
Expected to Gross $1 Billion
Ten Companies Awarded Contracts for Natural
Gas
DENVER
– The Department of the Interior’s Minerals Management Service (MMS)
sold more than 124.7 billion cubic feet of natural gas in three
Royalty in Kind (RIK) gas sales conducted this month.
The three sales offered royalty
gas from the Jonah and Pinedale areas and the Madden Field in Wyoming;
from the Cliffside Helium Enrichment Unit located in Potter County,
Texas, near the city of Amarillo; and offshore in the Gulf of Mexico.
The more than 124.7 billion cubic feet of royalty gas, or
approximately 388,500 Million British Thermal Units (MMBtu) per day,
were sold under seven- or 12-month contracts with delivery scheduled
to begin April 1.
Assuming a natural gas price of $8
per MMBtu, the sales would equate to more than $1 billion in total
gross revenues. Actual revenues will vary based on natural gas prices
over the life of the contract.
The 124.7 billion cubic feet of
gas is enough to supply the average gas needs of more than 1.5 million
U.S. homes for one year.
All told, 10 companies were
awarded contracts. Winning bidders were Tenaska Marketing Ventures,
Constellation Energy Commodities Group Inc., Sequent Energy Management
LP, Cheniere Energy Inc., Coral Energy Resources, Magnus Energy
Marketing, Ltd., Mieco Incorporated, Total Gas & Power North America
Inc., UBS Energy LLC, and Williams Power Company.
The gas sold in the RIK sales
involves an aggregation of gas royalties taken “in kind” in the form
of product, rather than “in value” or cash payments, from gas
production in Wyoming, from gas extracted from the Cliffside Helium
Enrichment Unit in Texas, operated by the Bureau of Land Management,
and offshore in the Gulf of Mexico. MMS then sells the gas
competitively in the open marketplace.
Begun as a pilot program more than
10 years ago, the Royalty in Kind Program is designed to ensure a fair
return on the public’s royalty assets, improve government
efficiencies, reduce regulatory costs and reporting requirements, and
shorten the compliance cycle.
The state of Wyoming will receive
49 percent of the revenues generated by the sale of Wyoming gas, since
the gas production occurs within that state’s borders. Receipts from
the Cliffside Helium Enrichment Unit sale are returned to the Bureau
of Land Management.
Contact:
Patrick Etchart
303-231-3162
MMS: Securing Ocean Energy & Economic Value for America
U.S. Department of the Interior
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Last Updated:
05/27/2008,
03:38 PM
Central Time
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