The
NewsRoom
Release #: 3107
Date: July 12, 2004
Secretary Norton Unveils Royalty-in-Kind
Business Plan:
Federal Program Aims to Optimize Value for
Taxpayers
Secretary of the Interior Gale Norton today
announced the release of a five-year business plan for the
Federal
royalty-in-kind (RIK) program, aimed at enhancing management of the
Nation’s oil and gas royalty assets. The RIK program, administered by
Interior’s Minerals Management Service (MMS), generates revenues
through receiving oil and gas royalties in kind, rather than in cash,
and competitively selling the commodities in the marketplace.
“The new MMS Five Year Royalty in Kind Business
Plan provides the blueprint to successfully increase revenues and
decrease administrative costs associated with managing our oil and gas
royalty assets,” said Secretary Norton. “We are applying proven
private sector business practices to improve government efficiencies
and effectiveness,” she continued.
The plan is a culmination of six years of pilot
testing and validation of the RIK approach. During that time, the MMS
has achieved a host of RIK program successes that have prepared the
agency to fully deploy this business management approach. Secretary
Norton noted that assessments of the RIK program to date indicate that
business efficiencies are being achieved, conflict with oil and gas
producers is diminishing, and MMS is achieving revenue increases of
generally 1 to 3 percent more than cash royalties.
“The MMS is now poised to fully deploy a
royalty asset management strategy that selectively uses both RIK and
cash royalties to optimize returns to taxpayers,” said Secretary
Norton. “The release of this business plan signifies that we are
moving to an operational phase of RIK from the previous pilot
projects. Implementation of the plan will result in an
effective, steady-state RIK program of the highest quality and
integrity,” she added.
The business plan incorporates suggestions of the
General Accounting Office and recommendations from MMS’s commercial
consultant, the Lukens Energy Group of Houston, Texas, to clearly
outline RIK program objectives and to routinely and comprehensively
measure RIK program performance. As such, the plan includes
measurable commercial and administrative goals aimed at increasing
efficiencies and effectiveness of the government’s management of
mineral royalties and an emphasis on even greater internal controls.
Secretary Norton added that “with release of this
plan, we commit to routine reporting to Congress on MMS’s progress in
achieving the plan’s goals.”
MMS Director Johnnie Burton said, “We are pleased
with the new RIK business plan. It arrays a suite of program
objectives and management actions. I am confident that we will meet
these challenging expectations and continue establishment of a top
tier royalty asset management program of which all Americans can be
proud.”
Copies of the business plan are available from the
MMS Minerals Revenue Management web page.
The Minerals Management Service is the Federal
bureau in the U.S. Department of the Interior that manages the
nation's oil, natural gas, and other mineral resources on the Federal
Outer Continental Shelf. The agency also collects, accounts for, and
disburses mineral revenues from Federal and American Indian leases.
MMS disbursed more than $8 billion in Fiscal Year 2003 and more than
$135 billion since the agency was created in 1982. Approximately $1
billion from those revenues go into the Land and Water Conservation
Fund annually for the acquisition and development of state and Federal
park and recreation lands.
Relevant Web Sites
MMS Main Website
Gulf of Mexico Website
Media Contacts
Hugh
Vickery
(202) 208-6416
Curtis Carey
(202) 208-3985
MMS: Securing Ocean Energy & Economic Value for
America
U.S. Department of the Interior |