I 
109TH CONGRESS 
2D SESSION 
H. R. 6368 
To provide for a study by the National Academy of Engineering regarding 
improving the accuracy of collection of royalties on production of oil, 
condensate, and natural gas under leases of Federal lands and Indian 
lands, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 5, 2006 
Mrs. MALONEY (for herself, Mr. HINCHEY, Mr. GRIJALVA, and Mr. CONYERS) 
introduced the following bill; which was referred to the Committee on Re-
sources 
A BILL 
To provide for a study by the National Academy of Engineer-
ing regarding improving the accuracy of collection of 
royalties on production of oil, condensate, and natural 
gas under leases of Federal lands and Indian lands, 
and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Study of Ways to Im-
prove the Accuracy of the Collection of Federal Oil, Con-
densate, and Natural Gas Royalties Act of 2006’’. 
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SEC. 2. STUDY OF ACTIONS TO IMPROVE THE ACCURACY 
OF COLLECTION OF FEDERAL OIL, CONDEN-
SATE, AND NATURAL GAS ROYALTIES. 
The Secretary of the Interior shall seek to enter into 
an arrangement with the National Academy of Engineer-
ing under which the Academy, by not later than six 
months after the date of the enactment of this Act, shall 
study and report to the Secretary regarding whether the 
accuracy of collection of royalties on production of oil, con-
densate, and natural gas under leases of Federal lands (in 
eluding submerged and deep water lands) and Indian 
lands would be improved by any of the following: 
(1) Requiring the installation of digital meters, 
calibrated at least monthly to an absolute zero value, 
for all lands from which natural gas (including con-
densate) is produced under such leases. 
(2) Requiring that— 
(A) the size of every orifice plate on each 
natural gas well operated under such leases be 
inspected at least quarterly by the Secretary; 
and 
(B) chipped orifice plates and wrong-sized 
orifice plates be replaced immediately after 
those inspections and reported to the Secretary 
for retroactive volume measurement corrections 
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and royalty payments with interest of 8 percent 
compounded monthly. 
(3) Requiring that any plug valves that are in 
natural gas gathering lines be removed and replaced 
with ball valves. 
(4) Requiring that— 
(A) all meter runs should be opened for in-
spection by the Secretary and the producer at 
all times; and 
(B) any welding or closing of the meter 
runs leading to the orifice plates should be pro-
hibited unless authorized by the Secretary. 
(5) Requiring the installation of straightening 
vanes approximately 10 feet before natural gas en-
ters each orifice meter. 
(6) Requiring that all master meters be in-
spected and the results of such inspections be made 
available to the Secretary and the producers imme-
diately. 
(7) Requiring that— 
(A) all sampling of natural gas for heating 
content analysis be performed monthly up-
stream of each natural gas meter, including up-
stream of each master meter; 
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(B) records of such sampling and heating 
content analysis be maintained by the pur-
chaser and made available to the Secretary and 
to the producer monthly; 
(C) probes for such upstream sampling be 
installed upstream within three feet of each 
natural gas meter; 
(D) any oil and natural gas lease for which 
heat content analysis is falsified shall be subject 
to cancellation; 
(E) natural gas sampling probes be lo-
cated— 
(i) upstream of the natural gas meter 
at all times; 
(ii) within a few feet of the natural 
gas meter; and 
(iii) after the natural gas goes 
through a Welker or Y–Z vanishing cham-
ber; and 
(F) temperature probes and testing probes 
be located between the natural gas sampling 
probe and the orifice of the natural gas meter. 
(8)(A) Reinstating the requirement to file Fed-
eral Energy Regulatory Commission (FERC) Form 
16 in April and September of each year for every 
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natural gas pipeline, including each intrastate pipe-
lines, in addition to the filing of FERC Form 2. 
(B) Requiring— 
(i) use of such FERC Form 2 to create 
FERC Form 16 data for the years beginning 
April and September, respectively, 1992, and 
for each year thereafter; and 
(ii) filing with the Federal Energy Regu-
latory Commission a FERC Form 16 for April 
and September that is completed with such 
data back to April 1992. 
(9) Requiring that administrative jurisdiction 
over all natural gas gathering lines, interstate pipe-
lines, and intrastate piplines revert immediately to 
the Federal Energy Regulatory Commission. 
(10) Prohibiting the dilution of natural gas 
with inert nitrogen or inert carbon dioxide gas for 
royalty determination, sale, or resale at any point. 
(11) Requiring that both the measurement of 
the volume of natural gas and the heating content 
analyses be reported only on the basis of 14.72 PSI 
and 60 degrees Fahrenheit, regardless of the ele-
vation above sea level of such volume measurement 
and heating content analysis, for both purchases and 
sales of natural gas. 
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(12) Prohibiting the construction of bypass 
pipes that go around the natural gas meter, and im-
posing criminal penalties for any such construction 
or subsequent removal including, but not limited to, 
automatic cancellation of the lease. 
(13) Requiring that all natural gas sold to con-
sumers have a minimum BTU content of 960 at an 
atmospheric pressure of 14.73 PSI and be at a tem-
perature of 60 degrees Fahrenheit, as required by 
the State of Wyoming Public Utilities Commission. 
(14) Requiring that all natural gas sold in the 
USA will be on a MMBTU basis with the BTU con-
tent adjusted for elevation above sea level in higher 
altitudes. Thus all natural gas meters must correct 
for BTU content in higher elevations (altitudes). 
(15) Issuance by the Secretary of rules for the 
measurement at the wellhead of the standard volume 
of natural gas produced, based on independent in-
dustry standards such as those suggested by the 
American Society of Testing Materials (ASTM). 
(16) Requiring use of the fundamental orifice 
meter mass flow equation, as revised in 1990, for 
calculating the standard volume of natural gas pro-
duced. 
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(17) Requiring the use of Fpv in standard vol-
ume measurement computations as described in the 
1992 American Gas Association Report No. 8 enti-
tled Compressibility Factor of Natural Gas and 
Other Related Hydrocarbon Gases. 
(18) Requiring that gathering lines must be 
constructed so as to have as few angles and turns 
as possible, with a maximum of three angles, before 
they connect with the natural gas meter. 
(19) Requiring that for purposes of reporting 
the royalty value of natural gas, condensate, oil, and 
associated natural gases, such royalty value must be 
based upon the natural gas’ condensate’s, oil’s, and 
associated natural gases’ arm’s length, independent 
market value, as reported in independent, respected 
market reports such as Platts or Bloombergs, and 
not based upon industry controlled posted prices, 
such as Koch’s. 
(20) Requiring that royalties be paid on all the 
condensate recovered through purging gathering 
lines and pipelines with a cone-shaped device to push 
out condensate (popularly referred to as a pig) and 
on 
condensate 
recovered 
from 
separators, 
dehydrators, and processing plants. 
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(21) Requiring that all royalty deductions for 
dehydration, treating, natural gas gathering, com-
pression, transportation, and other similar charges 
on natural gas, condensate, and oil produced under 
such leases that are now in existence be eliminated. 
(22) Requiring that at all times— 
(A) the quantity, quality, and value ob-
tained for natural gas liquids (condensate) be 
reported to the Secretary; and 
(B) such reported value be based on fair 
independent arm’s length market value. 
(23) Issuance by the Secretary of regulations 
that prohibit venting or flaring (or both) of natural 
gas in cases for which technology exists to reason-
ably prevent it, strict enforcement of such prohibi-
tions, and cancellation of leases for violations. 
(24) Requiring lessees to pay full royalties on 
any natural gas that is vented, flared, or otherwise 
avoidably lost. 
(25) Requiring payment of royalties on carbon 
dioxide at the wellhead used for tertiary oil recovery 
from depleted oil fields and for edible purposes on 
the basis of 5 percent of the West Texas Inter-
mediate crude oil fair market price to be used for 
one MCF (1,000 cubic feet) of carbon dioxide gas. 
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