Two quick newsworthy items concerning royalty management:
1. The Senate Energy and Commerce Committee is currently conducting the confirmation hearing for David Hayes to be the Deputy Secretary of the Interior. I'm watching the hearing here and posting some of my reactions on POGO's Twitter feed.
2. Representative Carolyn Maloney (D-NY) just introduced a bill (H.R. 1462) for the National Academy of Engineering to provide a study "regarding improving the accuracy of collection of royalties on production of oil, condensate, and natural gas under leases of Federal lands and Indian lands, and for other purposes." The study will examine whether there needs to be improvements in the meters used to measure production rates for natural gas, addressing issues brought up by industry whistleblowers. To improve the accuracy of collections, "Requiring that for purposes of reporting the royalty value of natural gas, condensate, oil, and associated natural gases, such royalty value must be based upon the natural gas’ condensate’s, oil’s, and associated natural gases’ arm’s length, independent market value, as reported in independent, respected market reports such as Platts or Bloombergs, and not based upon industry controlled posted prices, such as Koch’s"--so fair market value.
The bill also seeks an examination for imposing penalties for intentional non-payment of royalties for natural gas liquids, and a review of royalty payments to "determine whether the correct production standard volume and total heating content analysis was used to calculate such payments" and "determine whether such payments were adequate under the terms of such oil and gas leases, by among other procedures comparing the reported royalty values with respected published market price reports, such as Platts or Bloombergs." This is an important step towards the government determining whether the taxpayers are served by the Royalty-In-Kind program.
-- Mandy Smithberger