Mineral Revenues

Progress Has Been Slow in Verifying Offshore Oil and Gas Production Gao ID: RCED-90-193 August 31, 1990

Pursuant to a congressional request, GAO reviewed the Department of the Interior's actions to: (1) verify the accuracy of reported offshore oil and gas production; and (2) annually inspect certain offshore lease sites.

GAO found that: (1) Interior lacked a fully operational program for verifying that sites accurately reported all oil and gas production for royalty determination purposes, but the Minerals Management Service (MMS) recently initiated two programs aimed at verifying such reports; (2) as of July 1990, the MMS automated oil verification program included all facility measurement points (FMP) in the Gulf of Mexico region, but none in the Pacific region due to computer problems, while MMS conducted the gas verification program exclusively in the Gulf region; (3) although MMS has not fully implemented either program, the first 6 months' results indicated that sites generally accurately reported the produced oil volume and preliminary gas production results noted only minor volume discrepancies; (4) although the Federal Oil and Gas Royalty and Management Act (FOGRMA) required Interior to annually inspect each lease site that produced or was expected to produce significant quantities of oil or gas or had a history of noncompliance, MMS was not meeting the FOGRMA inspection mandate; (5) during 1989, the MMS Gulf region inspected almost all oil FMP, but inspected less than one-third of the gas meters; (6) in the Pacific region, MMS conducted production measurement and site security inspections at all 10 oil FMP and 8 of 9 gas FMP; and (7) MMS Gulf regional officials said that it inspected gas meters only if they were co-located with oil meters, and they were not necessarily those with the greatest production or those which had a history of noncompliance.

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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