MMS began conducting pilot RIK projects to test the circumstances under which taking oil and gas royalties in kind, rather than in value, makes sense. The Wyoming oil RIK pilot, conducted in partnership with the state, began in the fall of 1998. While the Wyoming oil market is complex, the MMS and the state have demonstrated that they can initiate and operate an ongoing RIK program. From the Wyoming oil RIK pilot, the MMS has gained valuable information for evaluating future RIK programs.
Lessees can benefit from a reduced administrative burden.
There is greater certainty for both the lessee and the government because valuation disputes can be avoided. RIK does not work in every situation. For example, MMS stopped offering trucked properties because of the lack of competitive bids and purchaser interest. The MMS and the state took and sold in kind between 25 and 30 percent of the royalty barrels produced in Wyoming during the 18-month period covered by the analysis. The evaluation of the Wyoming oil pilot covered a time of extreme price volatility.