Termination of Royalty-in-Kind (RIK) Eligible Refiner Program, 15725 [2010-7032]

Agencies

• DEPARTMENT OF THE INTERIOR
• Minerals Management Service

[Federal Register Volume 75, Number 60 (Tuesday, March 30, 2010)]
[Notices]
[Page 15725]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7032]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

[Docket No. MMS-2009-MRM-0014]


Termination of Royalty-in-Kind (RIK) Eligible Refiner Program

AGENCY: Minerals Management Service, Interior.

ACTION: Advance notice for the termination of the RIK Eligible Refiner 
Program.

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SUMMARY: On behalf of the Secretary of the Interior (Secretary), the 
Minerals Management Service (MMS) has conducted a determination of need 
for the RIK Eligible Refiner Program under 30 CFR 208.4 and has 
concluded that a need for the program no longer exists.

DATES: As a result of this determination, MMS will discontinue the 
sales of Federal royalty production to eligible refiners under the 
Eligible Refiner Program until further notice.

FOR FURTHER INFORMATION CONTACT: Colin Bosworth, telephone (303) 231-
3186, FAX (303) 231-3846, or e-mail colin.bosworth@mms.gov.

SUPPLEMENTARY INFORMATION: The regulations at 30 CFR 208.4(a) provide 
that the Secretary may evaluate crude oil market conditions from time 
to time. The evaluation will include, among other things, the 
availability of crude oil and the crude oil requirements of the Federal 
Government, primarily those requirements concerning matters of national 
interest and defense. Furthermore, the regulations at 30 CFR 208.4(b) 
state that, upon a determination by the Secretary under paragraph (a) 
of this section that defined eligible refiners do not have access to 
adequate supplies of crude oil at equitable prices, the Secretary, at 
his or her discretion, may elect to take in kind some or all of the 
royalty oil accruing to the United States from oil and gas leases on 
Federal lands onshore and the Outer Continental Shelf for sale to 
eligible refiners.
    On September 16, 2009, the Secretary announced a phased-in 
termination of the RIK Program. The termination of the RIK Program 
precludes future sales of Federal royalty oil to eligible refiners as 
part of the Eligible Refiner Program. The MMS will honor all existing 
RIK sales contracts as defined in the contract terms.
    The MMS's determination is supported by decreased participation in 
the RIK Eligible Refiner Program as well as eligible refiners 
demonstrating a successful ability to compete in the open market. In 
1999, six eligible refiners participated in the program, compared to 
only two in 2009. Over the past few years, eligible refiners have been 
successfully competing in the RIK Unrestricted Oil Sales Program as 
well as in the open market. The RIK unrestricted oil sales were open to 
any bidder who met prequalification requirements, and bidders included 
many of the major oil companies operating in the United States. On 
average, 50 percent of the volumes that MMS offered in the RIK 
Unrestricted Oil Sales Program during the past year have been awarded 
to eligible refiners. In the most recent unrestricted oil sale, one 
eligible refiner bid successfully on 80 percent of the volumes that MMS 
offered for sale. The decreased participation in the Eligible Refiner 
Program, in conjunction with the increased success of eligible refiners 
in the RIK Unrestricted Oil Sales Program, clearly demonstrates that an 
RIK Eligible Refiner Program is not needed at this time.

    Dated: March 18, 2010.
Gregory J. Gould,
Associate Director for Minerals Revenue Management.
[FR Doc. 2010-7032 Filed 3-29-10; 8:45 am]
BILLING CODE 4310-MR-P