Implementing Royalty in Kind Business Processes and Support Systems: Road Map to the Future

摘要

Since 1995, the Minerals Management Service (MMS) has been conducting feasibility studies and pilot projects to determine if royalty in kind (RIK) is in the Nation's best interests and, if so, to build the business case and framework for making RIK an integral part of the royalty management process. Based on experiences to date, senior MMS management has decided to proceed with the development and implementation of RIK as a viable option for managing the Nation's royalty assets. This Road Map sets forth the vision and strategic direction to implement, over a three year period, the operational RIK activity within MMS' Minerals Revenue Management (MRM) organization. Senior management defined the following business objectives for the future RIK activity: Implement RIK where applicable and when it is an improvement over royalty in value (RIV); Leverage the MRM position as an asset holder; Take advantage of potential inter-agency synergies; Minimize the cost of royalty administration; Reduce business cycle time; Accelerate timing of revenue collections; and Adopt energy industry business practices and controls wherever feasible. MMS senior management also established the following performance objectives to be met when the RIK option is exercised: Confirm and reconcile within 90 days all production royalties taken in kind; and Accelerate the timing of revenue receipt by 5 days over the RIV approach. MMS senior management designated the Gulf of Mexico (GOM) as the core strategic area for the evolution of the RIK activity. For onshore Federal leases, MRM will pursue a strategy of identifying high potential RIK opportunities, which will be pursued only with the support and participation of the affected States. Regarding Indian lands, MRM will work with Tribes when they express an interest in exercising the RIK option.