MMS Nets Estimated $537 Million in Gulf of
Mexico RIK Gas Sale
DENVER – More than
76 billion cubic feet of natural gas was sold to six companies as
part of a Royalty in Kind (RIK) Gulf of Mexico gas sale conducted
this month by the Department of the Interior’s Minerals Management
Service (MMS).
Approximately 76
billion cubic feet of natural gas, or 241,000 Million British
Thermal Units (MMBtu) per day, was sold under five- or 12-month
contracts with delivery scheduled to begin Nov. 1, 2008.
The 76 billion
cubic feet of gas is enough to supply the average gas needs of
nearly 1 million U.S. homes for one year.
If natural gas
prices in the Gulf remain in the area of $7 per MMBtu, the sale will
equate to more than $537 million in total gross revenues. Actual
revenues will vary based on natural gas prices over the life of the
contracts.
The gas sold in
the RIK sale involves an aggregation of royalties taken “in kind” in
the form of product, rather than “in value” or cash payments, from
gas production in the Gulf of Mexico. MMS then sells the gas
competitively on the open marketplace with the goals of increasing
revenues, improving government efficiencies, and shortening the
compliance cycle.
Winning bidders on
the gas are ConocoPhillips Co., Shell Energy North America, US LP,
United Energy Trading LLC, J.P. Morgan Chase, Williams Gas Marketing
Co., and National Energy and Trade, LP.
The Royalty in
Kind Program began as a pilot program more than 10 years ago and is
designed to ensure a fair return on the public’s royalty assets. In
Fiscal Year 2007, the program was credited with providing taxpayers
and the Federal Government an additional $63 million in benefits.
From Fiscal Years 2004 through 2007, the program has generated
additional benefits to the Government of approximately $150 million.
The approximately
76 billion cubic feet of gas sold during this sale is based on
average volumes of gas produced prior to Hurricane Ike. Actual
volumes sold may vary as gas that was shut-in because of the
hurricane is restored to production and delivered to market centers.
Contact:
Eileen Angelico
504-736-2595
Caryl Fagot 504-736-2590
MMS: Securing Ocean Energy & Economic Value for America
U.S. Department of the Interior
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Last Updated:
10/27/2008,
01:15 PM
Central Time