FOR RELEASE:  March 16, 1995                 CONTACT: Tom DeRocco
EMBARGOED UNTIL 10:00 AM                           (202) 208-3983
                                                  Michael Baugher
                                                   (303) 231-3162

            NEGOTIATED RULEMAKING GAS VALUATION TEAM RECOMMENDS
               IMPROVEMENTS IN REGULATIONS ON FEDERAL LANDS

     The U.S. Department of the Interior's Minerals Management
Service (MMS) today released a report containing recommendations
to improve gas valuation regulations for federal lands.  The
report was prepared by a 20-member committee of MMS, state and
industry representatives.

     The committee recommends that some gas produced from federal
leases be valued based on indices published in trade publications
such as "Inside FERC" and "Natural Gas Intelligence."   The
committee also recommends that where agreements contain a mix of
federal, state, Indian and fee leases, royalties be reported and
paid based on the amount of production to which each lessee is
entitled whether or not that amount of production is actually
taken and sold by the lessee.  However, an exception is
recommended for small independent gas producers who pay on their
actual annual sales of production (commonly referred to as
"takes").  This would allow these producers to pay royalty based
on the amount of gas they actually sold rather than the amount of
gas that they were entitled to take from production on a lease.

     "This report is the result of a 13-month comprehensive
examination of valuation issues by parties with very diverse
interests," said MMS Acting Director Cynthia Quarterman.  "This
consensus decision will serve as the basis for regulations that
provide more simplicity and certainty in valuation of gas
produced from federal leases.

     "We view this negotiated rulemaking as a success and, in
fact, MMS is working to complete proposed regulations based upon
this report," she added.

     Acting on a recommendation from the Royalty Management
Program's National Performance Review Laboratory, a study group
was formed in December 1993, to determine the best approach for
valuing natural gas produced on federal public lands.

     The study group was later transformed into the more formal
"Federal Gas Valuation Negotiated Rulemaking Committee," and
chartered by the Secretary of the Interior to advise MMS on a
federal gas valuation rulemaking.

     Committee participants included representatives from the
American Petroleum Institute, Independent Petroleum Association
of America, Independent Petroleum Association of Mountain States,
Natural Gas Supply Association, Rocky Mountain Oil and Gas
Association, Council of Petroleum Accountants Societies;
representatives from individual large independent oil and gas
companies; representatives from the States of Montana, New
Mexico, North Dakota and Utah; and MMS.

     Meeting at least monthly for the past 13 months, the
committee addressed all aspects of the process including such
controversial and complex valuation issues as gas produced from
unitization and communitization agreements and gas sold under
non-arm's-length contracts.

     "We believe that this cooperative effort has equitably
addressed the needs of our many constituents," said Quarterman. 
"The proposed regulation will help to clarify how to pay
royalties on natural gas, while reducing administrative costs,
decreasing litigation, and maintaining revenue neutrality.  MMS
expects to publish the proposed rule early this summer."

     Free copies of the report are available by contacting John
Barder at (303) 275-7234.

     MMS is the federal agency that manages and regulates the
nation's natural gas, oil and other mineral resources on the
Outer Continental Shelf, and collects and disburses revenues from
offshore federal mineral leases and from onshore mineral leases 
on federal and Indian lands.

                                   -MMS-