FERC Should Improve the Natural Gas Well Determination Process
Highlights
GAO reviewed the Federal Energy Regulatory Commission's (FERC) natural gas well determination process. The Natural Gas Policy Act (NGPA) established a series of maximum lawful prices for various categories of natural gas. These prices were intended by Congress to provide producers with an incentive to locate and develop new sources of natural gas and to continue production from marginal wells. The ceiling prices vary by category and escalate each month based on the annual inflation adjustment. To establish entitlement for ceiling prices under any of the incentive price categories, producers/operators must apply for well category determination, which are made on the basis of documentation evidencing that a well meets the qualification requirements defined in the law and in FERC regulations.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Federal Energy Regulatory Commission | The Chairman of FERC should discontinue desk auditing all determinations for sufficiency of evidence and direct the NGPA Compliance Division to (1) monitor the adequacy of agency procedures based on reviewing a statistically valid sample of determinations for both sufficiency and accuracy of evidence, and (2) consolidate the reviews for sufficiency and accuracy of evidence in one branch. |
Closed
Please call 202/512-6100 for additional information.
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| Federal Energy Regulatory Commission | The Chairman of FERC should direct the NGPA Compliance Division to (1) give guidance to the jurisdictional agencies for use in implementing validation procedures, and (2) coordinate its overall compliance activities with the jurisdictional agencies and review producer records when they are the only source of supporting evidence. |
Closed
Please call 202/512-6100 for additional information.
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