Mineral Revenues:

Cost of Modifying Gas Royalty Provisions Overestimated by Interior

RCED-88-45: Published: Nov 5, 1987. Publicly Released: Nov 19, 1987.

Additional Materials:

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the validity and reasonableness of the Department of the Interior's estimate of the cost to retroactively modify its natural gas royalty provisions.

GAO found that Interior's Minerals Management Service (MMS) estimated that retroactive modification of the basis for royalty payments on natural gas to reflect market prices, rather than ceiling prices, would result in the: (1) relinquishment of $134.5 million for the period January 1, 1983 through July 31, 1986; and (2) need to refund about $500,000 in royalties already collected from oil and gas companies. GAO also found that MMS based the estimate on several assumptions regarding the period of time and the quantities of natural gas subject to ceiling prices. GAO estimated royalty amounts using MMS assumptions but more accurate market price data, and found that: (1) about $87 million would be foregone; and (2) the MMS estimate of royalty refunds was reasonable. GAO believes that MMS underestimated the market price that companies received from the sale of natural gas.

Sep 28, 2016

Sep 26, 2016

Aug 15, 2016

Jul 26, 2016

Jul 21, 2016

Jul 14, 2016

Jul 7, 2016

Looking for more? Browse all our products here