The latest audit  from the Government Accountability Office (GAO) cites ongoing problems with the Department of Interior’s oil and gas royalty collection practices

Reported by Staff

A major part of the system is basically still a mess, according to the GEO report, and describes efforts to ensure accurate measurement of what’s being extracted from federal lands as “ineffective and inefficient.”

Interior lags in keeping up with current technologies, says
the GAO, not updating several measurement standards in 20 years, and for failing to meet inspection and calibration goals aimed at maintaining accurate measurements.

Royalities from oil and gas production on federal lands are among the government’s largest non-tax revenue source, generating more than $6.5 billion last year despite slumping energy prices.

Which is why accurate inspection and measurement is essential.

“Interior’s offshore and onshore production accountability inspection programs are not consistently setting or meeting program goals for inspecting oil and gas leases and do not sufficiently address key factors affecting measurement accuracy,” the report states.

It also notes that the agencies of the department that manage land-based leases and offshore activities have not been coordinating information and practices, and not provided little oversight of officials making crucial decisions on measurement.

“Limited oversight, gaps in staff skills, and incomplete tools hinder Interior’s ability to manage its production verification programs,” the report adds.

The GAO audit follows the Interior’s inspector general discovery in 2008 that staff members in a Colorado office of a program overseeing “in kind” payment of royalties had “inappropriate relationships with oil industry that could compromise their objectivity.” That report said a third of that staff either socialized with or received gifts from oil companies doing business with Interior’s Minerals Management Agency, which oversees onshore leases.  At the time, more than 40% of royalties were paid in kind.

The Interior Department has concurred with most of the latest findings and has agreed to key suggestions for improving the programs, according to the GAO report. But the watchdog group, Project on Government Oversight, said the report shows that Interior is failing to correct longstanding problems.