CHAPTER 14 REENGINEERING THE BUSINESS PROCESSES AND SUPPORT SYSTEMS OF THE ROYALTY MANAGEMENT PROGRAM

• Jurisdiction: United States

Federal & Indian Oil & Gas Royalty Valuation and Management II
(Feb 1998)
CHAPTER 14
REENGINEERING THE BUSINESS PROCESSES AND SUPPORT SYSTEMS OF THE ROYALTY MANAGEMENT PROGRAM
Milton K. Dial
Program Reengineering Office
Minerals Management Service
Denver, Colorado

Background

The Royalty Management Program (RMP) is responsible for ensuring that some $4.5 billion in annual revenues from Federal and Indian mineral leases is collected, accounted for, verified, and disbursed to appropriate recipients in a timely manner. In addition to a broad range of financial services, the RMP also operates a comprehensive compliance strategy that includes an automated compliance verification program to validate the accuracy and timeliness of revenues paid, and an audit program staffed by MMS, State and Tribal auditors.

The Federal Government is the largest mineral royalty owner in the United States. The business environment in which the RMP administers royalty payments is similar in many respects to private land and State land minerals owners. However, in scale of activity, and variety and complexity of lease terms, it is significantly different. Currently, the RMP administers the rental, royalty, net profit share and other financial terms for nearly 26,000 producing mineral leases. This lease universe includes onshore Federal lands (20,000 leases), Indian Tribal and allotted lands (3,800 leases), and Outer Continental Shelf lands (2,000 leases). The RMP also administers approximately 46,000 non-producing mineral leases. The RMP also has a broad customer and stakeholder base including interfaces with the Bureau of Land Management, Bureau of Indian Affairs, and MMS Offshore Minerals Management. Over 2,000 lessees report and pay royalties monthly and over 3,000 operators report production also on a monthly basis.

Current Systems and Operating Environment

To accomplish its mission, the RMP operates a centralized accounting and collection center in Lakewood, Colorado; and audit offices located in Houston, and Dallas, Texas; Oklahoma City, and Tulsa, Oklahoma; and Lakewood, Colorado. Furthermore, audit support is provided from 11 States and 7 Indian Tribes. Automated systems are critical to supporting RMP's royalty and production reporting, accounting, financial and compliance operations. These systems process over 700,000 lines of information submitted monthly to RMP by payors and operators.

The primary automated systems used by the RMP to accomplish its mission are:

Auditing and Financial System (AFS) — the primary financial system used to receive and account for mineral revenues reported and paid, and to distribute and disburse

[Page 14-2]

revenues to States, Tribes, the Bureau of Indian Affairs, other Federal agencies and the U.S. Treasury.

Production Accounting and Auditing System (PAAS) — the primary production accounting system used to receive and account for minerals production from Federal and Indian lands; and conduct volumetric exception processing.

Business Information System (BIS) — the primary management information system that permits MMS, State, Tribal and other Federal agencies...