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Program A: Mineral Resources Management

Program Authorization: La. Const. Article IX, Sec. 3 - 6; R.S. 36:351; R.S. 30:121

PROGRAM DESCRIPTION

The State of Louisiana holds title to vast areas of land and water bottoms which produce or have the potential to produce minerals (primarily oil and gas). Leasing of these areas for mineral production provides a large revenue source for the state. The Mineral Resources Management Program provides staff support to the State Mineral Board which ensures that the state is obtaining the highest possible returns from the leasing of these lands. The mission of this program is to provide the State Mineral Board with engineering, geological and administrative services. The goal of this program is to maximize revenues to the state from royalties, bonuses and rentals generated from mineral production on state-owned lands while maintaining a preference for the intrastate market when in the best interest of the state. There are two activities in this program: Mineral Resources Management, and Mineral Income Auditing.

OBJECTIVES AND PERFORMANCE INDICATORS

1. The Mineral Resources Management Program will increase the percentage or productive acreage as a part of total acreage leased by 1% over the 6/30/98 level by 6/30/99. (This objective measures the program's performance to increase production and revenues to the state.)

2. The Mineral Resources Management Program will increase the portion of total royalties paid which are audited by 1% by 6/30/99. This will help ensure the state is receiving proper payments on its leases.

RESOURCE ALLOCATION FOR THE PROGRAM

SOURCE OF FUNDING

This program is funded with Fees and Self-generated Revenues, Statutory Dedications, and Federal Funds. The Fees and Self-generated Revenues are derived from the following: (1) assessing a 10% fee on the bonus amount for each lease awarded; (2) assessing a $100 fee for each assignment and $500 for each unitization proposal or other instrument requiring advertisement; (3) assessing fees for geophysical permits; (4) assessing fees or liquidated damages as specified in certain lease forms for failure to timely submit releases of leases and production on unleased acreage; (5) assessing a fee of $35 per hour for staff time required to process claims for refunds of overpayment of royalties caused by the payer's errors; (6) assessing a fee for reproduction expenses; (7) assessing a fee of $120 per year for each subscription for Notices of Publication which describe tracts being offered for lease and contain lease sale results and other special notices; (8) assessing a fee of $200 for mineral lease nominations; (9) assessing a 10% late royalty payment penalty; (10) assessing a 5% incorrect royalty reporting penalty; (11) the sale of lease maps; and (12) assessing a $100 per day penalty for late assignments. These Self-generated Revenues provide for the operational expenses of this office. The Statutory Dedications are derived from the Legal Support fund per Act 1293 of 1995. (Per R.S. 39:32B. (8), see table below for a listing of expenditures out of each statutory dedicated fund.) The Federal Funds are derived from the Department of Interior's Mineral Management Service.

ANALYSIS OF RECOMMENDATION

GENERAL FUND

TOTAL

T.O.

 

DESCRIPTION

 

 

 

 

 

$0

$7,447,976

82

 

ACT 18 FISCAL YEAR 1997-1998

 

 

 

 

 

 

 

 

 

BA-7 TRANSACTIONS:

$0

$0

0

 

None

 

 

 

 

 

$0

$7,447,976

82

 

EXISTING OPERATING BUDGET - December 10, 1997

 

 

 

 

 

$0

($248,494)

0

 

Equipment/Major Repairs Adjustment(s)

$0

$49,764

0

 

Annualization of 1997 -'98 Merit Pay Adjustment(s)

$0

$69,373

0

 

1998 -'99 Merit Pay Adjustment(s)

$0

$247,347

0

 

Attrition Adjustment(s)

$0

($16,630)

0

 

Retirement Rate Adjustment(s)

$0

($239,210)

0

 

Reductions in various Expenditure Categories; Including Reductions to fully fund Salaries

$0

$11,879

0

 

Risk Management Adjustment(s)

$0

$21,321

0

 

Retirees Group Insurance Adjustment(s)

$0

$309,723

0

 

Indirect cost to the Management and Finance Program for administrative services

 

 

 

 

 

$0

          $7,653,049

82

 

TOTAL RECOMMENDED

 

 

 

 

 

$0

$205,073

0

 

DIFFERENCE (TOTAL RECOMMENDED AND EXISTING OPERATING BUDGET)

The total means of financing for this program is recommended at 102.8% of the existing operating budget. It represents 96.7% of the total request ($7,916,086) for this program. The 2.8% increase is due to an increase in indirect costs to the Management and Finance Program in the Office of the Secretary for administrative services. This program does not have any positions that have been vacant for 1 year or more.

PROFESSIONAL SERVICES

$1,000,000

 

Legal services to pursue recovery of mineral underpayments per Act 1293 of 1995

$20,000

 

Computer consultation relative to the royalty accounting and the leasing information systems

 

 

 

$1,020,000

 

TOTAL PROFESSIONAL SERVICES

OTHER CHARGES

$920,790

 

Upgrade royalty accounting and leasing information systems computer for the Department

$3,395

 

Recordation of leases and other documents for the re-leasing of state acreage

 

 

 

$924,185

 

TOTAL OTHER CHARGES

 

 

 

 

 

Interagency Transfers:

$71,143

 

DNR - Secretary - Executive Program - indirect cost of the legal section for services rendered

$1,348,616

 

DNR - Secretary - Management and Finance Program - indirect cost for administrative services and data processing

$300,000

 

LSU - Transferred the Louisiana Geological Survey

$50,000

 

Division of Administration - Office of State Lands for lease preparation

 

 

 

$1,769,759

 

TOTAL INTERAGENCY TRANSFERS

ACQUISITIONS AND MAJOR REPAIRS

$18,000

 

Replacement of one (1) vehicle for use by the Auditors

 

$18,000

 

TOTAL ACQUISITIONS AND MAJOR REPAIRS

11 DEPARTMENT OF NATURAL RESOURCES


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