The People of America's Oil and Natural Gas Indusry

Terminating Royalty-in-Kind

Mark Green

Mark Green
Posted September 16, 2009

Today, U.S. Interior Secretary Ken Salazar announced that he would terminate the Royalty-in-Kind (RIK) program, which collected $6.6 billion in oil and gas deliveries in fiscal 2008, and is one of the government's largest sources of non-tax revenue. The program is an effective means of ensuring that the American people receive fair compensation for development of federal resources.

Terminating this straight-forward method of handling royalty payments runs the risk of raising administrative costs and adding additional layers of paperwork required to determine the value of oil and gas production. The Minerals Management Service itself noted administrative efficiencies brought on by the program, and pointed out that another benefit of RIK is the reduction in costly lawsuits tied to product valuation.

We urge Secretary Salazar to carefully weigh the impacts his 'fundamental restricting' of the royalty system could have on U.S. production of oil and gas, American jobs and revenue to the government. America's oil and natural gas industry is ready to work with the administration to improve the royalty-collection system so Americans enjoy the benefits of increased domestic development.

Raising the cost of bringing much-needed domestic supplies online in the United States is not the way to achieve energy and economic security.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.