Naval Petroleum Reserve-1

In response to a congressional request, GAO examined: (1) whether the rate of oil production at the Naval Petroleum Reserve (NPR-1) meets the requirements of the Naval Petroleum Reserves Production Act; and (2) the effects of production data inaccuracies and omissions on the Department of Energy's (DOE) final settlement of each owner's account.

GAO found that production data for NPR-1 showed that: (1) the allocation of oil, gas, and water produced from commingled wells was inaccurate; (2) computer-generated reports were inaccurate because of programming and data entry errors; (3) DOE made unexplained changes to records; (4) since production data were inaccurate, production rates may not have met statutory requirements; and (5) there was an absence of effective internal controls that could have prevented or limited the impact of these problems. In addition, the methods that DOE used to determine the production of various pools and strata in commingled wells compounded production inaccuracies and added to the uncertainties about oil production from each pool and computation of owners' shares. Although DOE acknowledged its production data problems and took action to correct its data entry and computer program errors and allocation factors for commingled wells, it was not concerned about the potential effects of these problems on divestiture of the government's share of NPR-1 or the ability to produce at the maximum efficient rate.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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