Daily Rules, Proposed Rules, and Notices of the Federal Government


Office of Natural Resources Revenue

30 CFR Parts 1202 and 1206

[Docket No. ONRR-2011-0005]

RIN 1012-AA01

Workshops To Discuss Revisions to Federal Oil and Gas Royalty Valuation Regulations: Advance Notice of Proposed Rulemaking

AGENCY: Office of Natural Resources Revenue, Interior.
ACTION: Notice of public workshops.
SUMMARY: The Office of Natural Resources Revenue (ONRR) announces three public workshops to discuss specific issues regarding the existing Federal oil and gas royalty valuation regulations at 30 CFR parts 1202 and 1206 for oil and gas produced from Federal onshore and offshore oil and gas leases.
DATES: Workshop 1--September 27, 2011 (8:30 a.m. to 12 p.m. central time) in Houston, Texas.

Workshop 2--September 29, 2011 (8:30 a.m. to 12 p.m. eastern time) in Washington DC.

Workshop 3--October 4, 2011 (8:30 a.m. to 12 p.m. mountain time) in Denver, Colorado.

ADDRESSES: Workshop 1--JW Marriott Houston, 5150 Westheimer Road, Houston, Texas 77056-5506, telephone number (713) 961-1500.

Workshop 2--Main Interior Building, 1849 C Street, NW, Washington, DC 20240 (Yates Auditorium), telephone number (202) 254-5573.

Workshop 3--Office of Natural Resources Revenue, Denver Federal Center, 6th Avenue and Kipling Street, Building 85, Auditoriums A-D, Denver, Colorado 80226, telephone number (303) 231-3585.

FOR FURTHER INFORMATION CONTACT: Hyla Hurst, Regulatory Specialist, Office of Natural Resources Revenue, P.O. Box 25165, MS 61013C, Denver, Colorado 80225, telephone (303) 231-3495, fax number (303) 233-2225,

The comment period for the Advance Notice of Proposed Rulemaking (ANPR) for Federal oil and gas valuation closed on July 26, 2011. The ONRR received responses from 19 commenters representing states, industry, industry trade associations, and the general public. We appreciate the feedback and hope to obtain additional input at the public workshops. You may find it helpful to review the comments prior to your attendance at one of the workshops. You may access the comments at

As indicated in the ANPR, the intention of this rulemaking process is to provide regulations that would (1) Offer greater simplicity, certainty, clarity, and consistency in production valuation for mineral lessees and mineral revenue recipients; (2) be easy to understand; (3) decrease industry's compliance costs; and (4) provide early certainty to industry and ONRR that companies have paid every dollar due.

The ONRR is seeking further public comment on the following issues:

(1) Using index prices to value oil and gas. Commenters generally agreed that the use of index pricing to determine the value of Federal oil production for royalty purposes under the existing rules is working well. The ONRR invites other suggestions to improve the oil valuation regulations. Comments on the use of index pricing in valuing Federal gas for royalty purposes were sharply divided. The ONRR invites more specific comments as to whether index pricing could possibly replace gross proceeds in valuing Federal gas production.

(2) Examining possible alternatives to the requirement to track costs for determining gas transportation. Comments on this issue were divided. The ONRR invites specific comments on alternative methods for calculating actual transportation costs that would adjust for location differences between the lease or unit and the index pricing point.

(3) Considering accounting for the value of liquid hydrocarbons contained in the gas stream by applying an adjustment or “bump” to the index price. Generally, commenters provided that they would support an alternative method for calculating the actual costs to process gas if it were truly revenue neutral. However, ONRR invites suggestions regarding other methodologies that would simplify the valuation and reporting of processed gas.

(4) The ONRR also is interested in receiving comments on any other alternative valuation methodologies that would provide additional levels of clarity, efficiency, and early certainty to the industry and Federal Government. In addition to the specific issues identified above, we invite participants to comment on any other significant issues impacting the value of Federal oil and natural gas for royalty purposes.

We encourage stakeholders and members of the public to participate. The workshops will be open to the public without advance registration; however, attendance may be limited to the space available at each venue. For building security measures, each person may be required to present a picture identification to gain entry to the meetings.

Dated: September 2, 2011. Gregory J. Gould, Director for Office of Natural Resources Revenue.