Sunday Gazette-Mail from Charleston, West Virginia on July 27, 1975 · Page 52
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July 27, 1975

Sunday Gazette-Mail from Charleston, West Virginia · Page 52

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Charleston, West Virginia
Issue Date:
Sunday, July 27, 1975
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Page 52
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ISO -July 27,1975 Sunday Gazette-Mail ' Installed Joseph Stanislawczyk, director of the West Virginia State Agency for Surplus Property, a division of the Department of Finance and Administration, has been installed as president of the National Association of State Agencies for Surplus Property. He will be responsible for preparing reports for federal Senate hearings. Oil Royalty Payments Called Short By E. W. Kenworthy (C) A'eui York Times Service WASHINGTON - The United States government is not getting full value from onshore gas and oil leases on federal lands, according to a review of the royalty accounting system by the Interior Department Office of Audit and Investigation. Nor, the study concludes, are Indian tribes receiving "all royalty payments due them" for leases granted on their reservations -- a finding that the Office of Audits says raises questions about the Interior Department's proper discharge of its "trust responsibility." These conclusions were reached after an investigation lasting from March to December last year of royalty collections, which, under the 1920 Mineral Leasing Act, are the responsibility of the Interior Department's United States Geological Survey. * * * ' THE REPORT found that the losses sustained-by the federal government, the states with which federal income is shared, and Indian tribes were attributable to the Geological Survey's undervalua- tion of oil and gas production, inadequate and confusing reporting procedures on production and sales by oil companies, delayed royalty payments, poor accounting procedures, failure to conduct reviews of company reports and staff deficiencies in both "expertise and numbers." The report said that it was impossible to put a figure on the total losses, but there was reason to believe them "significant," probably on the order of several million dollars a year. · For example, it found that undervalua- tion of gas production in just one year by .the Northern Rocky Mountain area offices :cost the government $136,000 in royalties, and that "the real loss is probably several times that figure." · Again it discovered that a postaudit by just one of the Geological Survey six area offices that covered only 10 per cent of the accounts under its supervision produced $362,000 in added royalties. The highly critical report comes at a .time when the Geological Survey has been under fire on other fronts. Its expertise has been called in question by oil company geologists who have regarded the survey's estimates of the nation's undiscovered, recoverable oil as highly optimistic and un- ·realistic. ~. In the early 1960s the survey's estimate ."ranged from 400 billion to 590 billion bar- ~rels. Last year, however, Vincent E. Mc- "JKelvey, the survey's director, estimated it -to be 200 billion to 400 billion barrels. And -,a few weeks ago, the estimate was .'dropped to 50 billion to 127 billion barrels ··-- roughly the estimate of oil company and 'independent geologists. , * * * ^ IN ANOTHER area, the General Ac; counting Office disclosed that several high ··level survey officials were stockholders in ^companies affected by actions of the sur- '.vey. There have been complaints on Capitol ',Hill and from consumer and environmental organizations for a long time that the ·upper echelons of the Geologic Survey ;.were too heavily staffed with scientists and engineers who had come from the oil ^and gas industries or who intended to go ;into such employment after government service. 1 However, there was not the slightest -suggestion in the audit report of any collu- ^sion between officers in the survey's Roy- ;alty Accounting System and oil and gas : producers. Nor was any evidence adduced '.. of deliberate cheating of the government - by the companies. - Rather the failure of the government to "get all the royalty income it could and should receive was set down to an inexpert -accounting system and imprecise reporting procedures that often led to company 'errors and delays in payments. ; There was an oblique suggestion that the -.Geological Survey, an agency made up "largely of scientists and engineers, was ;more interested in oil exploration and de- -velopment than in collecting royalties, and Ithat therefore the survey should be relieved of the latter responsibility. - Nevertheless, the report credited the "Conservation Division with recognizing ·the shortcomings in royalty collection and ^requesting the study. ; The.survey now administers 12.386 leas- -es on federal and Indian lands, involving £1,399 producing ojtend gas wells. ONE-DAY ONLY Bow ... WOW! What a WOW OF A SALE Kanawha Valley merchants have planned for Monday, one day only. It's the annual Dog Days Sale and it's crammed with bargains that will make you howl with delight. Check today's newspaper for the "bone-fide" buys that are planned for you, and Monday, look for posters in participating stores in your area. Don't let this sale go begging, get out and put the bite on those bargains. Bow .. . WOW! PRESENTED AS A PUBLIC SERVICE BY: CHARLESTON NEWSPAPERS

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