Royalty Management System. By virtue of the significant increase in funding provided by Congress through a supplemental budget, work started in fiscal year 1981 to install a new Audit and Financial System; action leading to the installation of a Production Accounting and Auditing System also was begun. The conversion of existing accounting offices to the new system will begin early in fiscal year 1982 and will continue through mid-1984. Significant redirection of personnel occurred during the 1981 fiscal year as emphasis changed from resource evaluation toward streamlining, improved royalty management, and acceleration of leasing programs. Actual end-of-year employment for the Division was 1,874 in the fulltime category and 282 in the other-than-permanent categories. Royalty Management The Geological Survey has been the collection agent for royalties and rents due from Federal and Indian land mineral leases since 1925. By 1954, a total of $538 million in mineral royalties had been received. From 1955 through 1980, revenues amounted to more than $15 billion of which $3 billion was collected in calendar year 1980 alone. The latter sum included royalties, rents, and windfall profit taxes from producing geothermal, mining, and oil and gas operations. By the end of calendar year 1981, annual revenues will have increased to almost $4 billion, and, by 1990, collections are expected to run as high as $20 billion. These figures give some idea of the increase in sheer volume of accountable money. In addition, the entire collection-audit-reporting-verification process has been made much more complex in recent years by frequent changes in lease ownership, increases in multicompany joint development of leases, variable royalty schedules, and windfall profit tax legislation that requires royalties to be computed on the basis of complex price indexing and tier categories. Both the General Accounting Office and the Survey considered that the resulting difficulties mandated replacement of the existing largely manual procedures with a computerized and completely new system for speedily accomplishing the tasks of royalty management, along with other improvements in organization and procedures. These changes now are well underway. By the end of fiscal year 1981, the Conservation Division had begun final testing and installation of the In terim Operating System of its Royalty Management Program. The new system centralizes all minerals royalty collecting and accounting functions under a Deputy Division Chief for Royalty Management. Eventually, automated data processing will replace a major share of the manual tasks associated with the accounting process. Operational now, this Interim Operating System phases in use of a new reporting format by payors (lessees) during a 19-month period. In turn, an advanced Auditing and Financial System, which will convert accounts from the Interim Operating System, is scheduled to be fully operational by January 1983. Before that, in the summer of 1982, payors will begin reporting production in more sophisticated formats preparatory to installation of the Production Auditing and Accounting System. This system, a final major component of the royalty program, will be operational in early 1984. The Survey expects to derive several benefits from the new royalty management program, including standardized policies and operating procedures, increased income, timely availability and processing of funds, dramatic increases in personnel productivity, and a substantially reduced regulatory burden on private industry. From the control standpoint, the new system will assure greater security for information collected, will reduce the potential for fraud and abuse in royalty reporting, and will provide a better level of administrative control over activities and funds. The former royalty accounting system was based on a decentralized accounting scheme and placed the responsibility for account management and auditing in 14 separate offices in 11 cities. Originally, this was done to best maintain accounting files along with production and other lease management information. Each Survey office operated with independent procedures suitable to the region and used largely manual accounting methods which were partially supported by automated systems. But, with the current responsibility to process 300,000 reports involving more than 2 million entries annually, paperwork delays had increased greatly, and check processing had slowed. The Government was frustrated by its inability to ensure timely payment because of inadequate reporting requirements and an enormous records management load. Under the new system, seven collection and audit field offices have been or are being eliminated, and an enlarged and consolidated accounting center has been established at Lakewood, Colorado. It is expected that 350 employees will staff this center, four review and analysis audit offices, and headquarters. All components of the new system will be operational by 1984. As finally reorganized, the four review and analysis offices will conduct followup audits of payor accounts. Meanwhile, all 10 offices outside Lakewood will be involved in staged conversions to the various new automated accounting processes already established. The Interim Operating System further updates and expedites procedures so that eventually the thousands of monthly production reports and royalty payments can go directly to a centralized location. By the end of calendar year 1982, it is estimated that approximately 56,000 reports will generate 6 million line entries to account for the Nation's royalty revenues. Other Survey and Division offices are providing integrated support of the Royalty Management Program, including better onsite lease inspection and improved security for all proprietary data; also in process are long-range planning and assessment and various automatic data processing and management information support services for the program. Chief among the information support services is the coordinated installation of a new computer-assisted microform records management system. This advanced recordhandling system will photograph and process working papers and official documents on 35 mm microfilm rolls as well as on microfiche. As required both by law and sound business practice, the Survey's royalty program must store, retrieve, and secure thousands of such records safely and efficiently each day. Accumulated royalty accounting records now involve millions of pieces of paper. The microform records management system component will be able to routinely file, index, cross reference, and store most of the records that must be accessible for fast accurate reading and copying for both ongoing business and legal and historical reasons. Some few transitory or exceptionally cumbersome records will remain permanently in their original form, and a mandatory destruction schedule will be authorized for other records. If the predicted rise in royalty collections to $20 billion in 1990 is correct, the Royalty Management Program will ensure that the Geological Survey is prepared to cope properly with the rapid increase of the royalty management workload. The resulting reduction in undercollections, together with prompt payments and same-day deposits into interest-bearing accounts, are expected to add millions of dollars annually to the revenues accruing to recipients of royalty payments. Oil and Gas From Onshore Federal and Indian Lands The number of leases on Federal and Indian lands, the total wells on those leases, and the royalties collected from oil production continued to increase through fiscal year 1981 even though the volume of oil produced has been declining since 1969. Although onshore gas production has continued to increase gradually, royalties stemming from gas well operations have risen sharply since 1975 because of higher market prices. Private companies are attempting to offset the decline in oil production by increasing exploration activities in frontier areas, particularly the western overthrust belt in Utah, Wyoming, Idaho, and Montana. They are also conducting research aimed at increasing the amount of oil and gas recovered from older declining reservoirs. Production from onshore Federal and Indian lands provided roughly 5 percent of the oil and gas produced in the United States during fiscal year 1981. The U.S. Geological Survey conducts geological investigations, environmental analyses, and other studies related to the many aspects of exploration and development, safety of operations, collection and processing of royalties, and protection of the environment as they pertain to Federal and Indian mineral lease operations. During fiscal year 1981, the Geological Survey approved about 6,400 applications for drilling permits to provide exploration and development wells on Federal leases. More than 6,000 environmental analyses or reviews of the potential impacts of oil and gas development operations on Federal lands also were prepared. In the same period, about 4,000 new wells were started on Federal leases. Approximately 2,200 of those wells were completed for the production of oil and gas or for the injection or disposal of various fluids. Other sources of oil and gas, such as the "tight" gas sands and tar sands that occur in New Mexico, Colorado, Utah, and Montana, have become more attractive prospects now that present market prices have made drilling and production from these deposits economically feasible. Exploration and development in newer more remote regions provide new challenges. Terrain, especially in wilderness areas, often is rugged; cold winters with deep snows can hamper drilling and supply operations, and the distance from existing pipelines limits delivery of new supplies to the marketplace. Some producible wells completed in these remote areas will likely be shut-in until pipelines or local processing facilities are built to serve them. The development and use of enhanced recovery processes have been instrumental in the restoration or increase of production from many oil fields originally developed through natural production methods. Such procedures include repressuring of oil reservoirs with gas or water, flooding with chemical solvents, or stimulating with heat to support continued production after other recovery measures become uneconomical. In addition, well-completion techniques and formation stimulation processes constantly are being improved and will continue to add to the supplies of oil and gas produced. Mineral Resource Mineral land classification is one of the main missions of the Geological Survey as stated in Survey's Organic Act. Geological, geophysical, and engineering data are compiled to classify lands that are prospectively valuable for the occurrence of leasable minerals and to outline the boundaries of areas that contain leasable minerals that are presently or potentially economically producible. OIL SHALE During fiscal year 1981, the Geological Survey classified 2.7 million acres of land in western Colorado as prospectively valuable for oil shale. This action provides the Secretary of the Interior with the information needed to remove these lands from withdrawn status, thus making them available for leasing and mineral entry. In addition, two oil shale leasing areas were established-the Roan Plateau Oil Shale Leasing Area comprising 315,000 acres located in Rio Blanco and Garfield Counties and the White River Oil Shale Leasing Area containing 341,000 acres in Rio Blanco County. The White River area, which contains the thickest and richest oil shale deposits in Piceance Creek Basin and rich deposits of dawsonite (sodium aluminum carbonite) and nahcolite (sodium bicarbonate), has multiple mineral development potential. Similar classification actions are expected to follow in Wyoming, Utah, Montana, and Nevada. In cooperation with appropriate State agencies, the Survey is conducting oil shale exploration drilling programs in Montana and Nevada. PHOSPHATE Increasing demand for phosphate, necessary to support the Nation's agricultural needs through the production of fertilizer, has caused increased industry interest in the public phosphate-bearing lands, especially those in Idaho. A cooperative program between the State of Idaho and the Survey is investigating the phosphate potential of large areas in southeastern Idaho. Twelve quadrangle maps were published in fiscal year 1981. These maps, plus five additional ones scheduled for publication in early fiscal year 1982, will complete the series. These maps identify the most geologically promising lands for phosphate development in Idaho. SODIUM AND POTASSIUM The concerns of the Geological Survey with regard to sodium and potassium minerals have been directed to examining and, if need be, to revising the existing classification standards for these minerals. To identify new sodium-bearing lands, the Survey has established 35,875 acres in California as Known Sodium Leasing Areas. These minerals play a key role in glass, ceramic, and chemical manufacturing processes. TAR SANDS America's tar sands are estimated to contain more than 30 billion barrels of oil equivalent. Although this resource is found in 22 States, 90 percent of the Nation's tar sands are located in Utah. In response to the Secretary of the Interior's decision to initiate a tar sand leasing program, the Conservation Division took the first step towards leasing by establishing the following 11 Designated Tar Sand Areas in Utah: P. R. Spring, 274,000 acres; Tar Sand Triangle, 157,000 acres; Asphalt Ridge-Whitrocks and Vicinity, 41,000 acres; Sunnyside and Vicinity 157,000 acres; Circle Cliffs East and West Flanks, 91,000 acres; Hill Creek, 107,000 acres; San Rafael Swell, 130,000 acres; Raven Ridge-Rim Rock and Vicinity, 16,000 acres; Argyle Canyon-Willow Creek, 22,000 acres; Pariette, 22,000 acres; and White Canyon, 10,000 acres. Thirty-three individual deposits containing a total of more than 1 million acres with an estimated potential of 24 billion to 29 billion barrels of oil were classified in the 11 Designated Tar Sand Areas by the end of the fiscal year. Leasable Solid Minerals During fiscal year 1981, there were 887 Federal Combined production of 18 mineral commodities contributed $912 million to the country's gross national product and brought $49 million in royalty revenue to the Federal Government in fiscal year 1981. About 90 percent of the Nation's potash, with a production value of $300 million, was produced from 51 leases in New Mexico, California, Nevada, and Utah during the year. Approximately 30 percent of total domestic sodium compounds production, mostly soda ash, came from 30 leases in Wyoming, California, Nevada, and New Mexico. Production is valued at $267 million. About 70 percent of the Nation's lead was produced from 28 leases in Missouri and was valued at $151 million. Nearly 10 percent of the country's uranium was mined from 14 leases on Indian lands in New Mexico and Washington. Additionally, sizable quantities of phosphate, zinc, and copper were produced from leased properties. Other mineral commodities produced from Federal and Indian lands included sand and gravel, fluorspar, silica sand, feldspar, oil shale, iron ore, barite, gypsum, chat, quartz crystals, and clay. In addition to the leasable minerals, about 20 percent of the Nation's lithium is recovered from brines as a byproduct from sodium leases in Nevada. Oil Shale The Prototype Oil Shale Leasing Program, was established in fiscal year 1971 to encourage industry to develop commercial oil shale mining and processing technology in an environmentally responsible fashion. Four 5,120-acre tracts, two each in Utah and Colorado, containing an oil equivalent of 15 billion barrels of 25-gallon-perton oil shale, were leased in 1974 for a total bonus to the U.S. Government of $449 million. Processing and environmental data derived from the prototype program will be used as a basis for Departmental decisions on further leasing of Federal oil shale resources. Prototype program leases are managed by the Conservation Division's Oil Shale Office in Grand Junction, Colorado. The Oil Shale Office has managed the 20,000 acres of Federal oil shale tracts through comprehensive exploration and baseline environmental data collection, to onsite mining and testing of oil shale retorting technology under the approved detailed development plans. This has required constant analysis and development-plan modification based on data from nearly 900 field sampling points and on advances in oil shale processing and environmental management technologies. Since 1974, the lessees have expended more than $500 million for lease acquisition and tract development. By the early 1990's, operations on the current four lease tracts are expected to reach a combined production rate of 300,000 barrels per day and ultimately may recover more than 5 billion barrels over the life of the properties. This will yield royalties to the U.S. Government and States of Colorado and Utah estimated at $3 billion to $5 billion over the initial 20 to 30 years of operation. These tracts will host some of the largest mining and processing operations ever achieved in the United States. On Colorado Tract C-a, in late June of 1981, the Rio Blanco Oil Shale Company ignited its modified in-situ retort No. 1, a 60-foot X 60-foot X 400-foot column of rubblized oil shale developed from a 1,000-foot-deep mine using multiple surface boreholes (fig. 1). Over its expected operating life of 4 months, this test retort should yield from 15,000 to 25,000 barrels of oil. Planning is also underway for field testing of a Lurgi surface retort that may produce up to 2,000 barrels per day of oil from oil shale removed from the modified in-situ mine and a 36-acre open pit. The lessee is awaiting action on Congressional legislation that would permit offtract disposal of overburden and processed shale. This would enable open-pit development of the entire tract as envisioned at the time of leasing. On Colorado Tract C-b, the Cathedral Bluffs Shale Oil Company completed sinking of a service shaft 34 feet in diameter to a depth of 1,750 feet and is installing permanent hoisting equipment and other shaft utilities. Commercial ore handling facilities are being installed in the nearly completed 29-foot-diameter production shaft. From these, and a smaller ventilation-escape shaft. 15 feet in diameter (fig. 2), a mulitple level mine will be extended across the tract. Shale oil would be derived through rubblization and ignition of a 290-foot interval of oil shale in a modified in-situ retort chamber. Shale excavated from the mine would be surface retorted according to development-plan modifications submitted for Oil Shale Office review in September 1981. joint development by the White River Shale Project of two Utah tracts (U-a and U-b) is expected to commence in early 1982 following Oil Shale Office approval of the detailed development plan submitted in September 1981. So far, development has been enjoined by court action. stemming from a contested State-land selection and by conflicting prior mining claims. These issues should be resolved by the time development plans are approved. Development will FIGURE 1.-Aerial photograph of Tract C-a Mine Development Area, mine headframe, and Modular Development Phase modified in-situ retort off-gas, water treatment, and oil-collection facilities. |