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Current Program |
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- MMS provides
approximately 50,000 bbls/day of crude oil in the Gulf and 10,000 bbls/day
in the Pacific for the Small Refiner Program.
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- Contracts are
issued under competitive bid to eligible small refiners for 6 month or 1
year term contracts.
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| Background |
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| The purpose of the small refiner program is to provide
small refiners with access to adequate supplies of crude oil at equitable prices. The
program is authorized by the Mineral Leasing Act of 1920 (MLA) and the Outer Continental
Shelf Lands Act of 1953 (OCSLA).
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| Recently many improvements have been made in the RIK
program:
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- Selling the royalty oil through a competitive bid process
provides price certainty for refiners by eliminating valuation challenges during audit.
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- Selling the royalty oil through a competitive bid process
provides price certainty for refiners by eliminating valuation challenges during audit.
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- Charging a fair market value for its royalty share achieves
the RIK program intent to provide small refiners with a reliable supply of inventory at
equitable prices.
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- RMP nominates oil volumes with operators. This eliminates
many of the imbalance problems of the past by having RMP involvement in the front end of
the process.
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- Refiners will pay on actual deliveries they receive subject
to review. This change solves many of the over/under delivery problems experienced under
the previous program’s billing based on operators’ reported data.
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- Operators will no longer report RIK sales on 2014’s
other than to report transportation deductions and gravity bank adjustments.
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- Imbalances will be kept to a minimum due to the new
nomination process and a real time reconciliation process. Any imbalance identified during
the reconciliation process from one month will be corrected using the next month’s
nomination process.
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