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Audit Report: IG-0786

January 4, 2008 

Department of Energy's Receipt of Royalty Oil

The Department of Energy's Strategic Petroleum Reserve is a critical component of this Nation's energy security strategy. Established in 1975 in the aftermath of the oil embargo, the Reserve is one of the primary means of assuring U.S. energy stability and security in the event of a petroleum production or import disruption. The Department of Interior operates a Royalty-in-Kind program designed to handle oil collected from private production platform operators in the Gulf of Mexico as royalties to the Federal Government. Through a Memorandum of Understanding between the Department of Energy and the Department of Interior, a portion of the royalty oil has been used to fill the Reserve. The Department of Interior's Mineral Management Service (MMS) transfers oil to the Department of Energy at specific oil terminal locations referred to as "market centers.

Topic: Energy