UNITED STATES GENEI~ALACC~UNTF~G WASHINGTON, D.C. 20548 DEFENSE DIVISION 3-6@w lllllll1l llllllll Ill11 lllllllllllllll LM095464 Ill11 111111114 I 23 Dear Mr, Sanders: A!% As paxt of our examination into the conservation and management_ J of natural resources by the Department of Defense (Code 862C9), we ', have reviewed certain matters relating to revenues from the operation of Naval Petroleum Reserve No, 3 (Teapot Dome, Wyoming)and the a&in- _ istraxion of the Naval. Oil Shale Reserves in Colorado and &xh. We found that errors in the pricing of crude oil sales from Naval Petroleum Reserve No. 3 resulted in underpayments to the Navy of about $19,000. Purther, some grazing fees collected from lessees operating on Naval Oil Shale Reserve+-++,-dsthat should have been deposited to the General Fund of the U. S;YTreasury had been cotin- gled with funds used by the Dureau of Land Iknagement, Department of . the Interior. Actions have been or are being taken to correct these deficiencies. ERRORSIN PIWXNG CRUDEOIL SAIaEs FROMNAVAL 333TROm RESEm NO. 3 During the 24-month period ended December31, 190, revenue from the sale of crude oil was understated by about $19,000 because the con- tractor operator of Naval Petroleum Reserve No. 3 had not billed the purchaser in accordance with the pricing provisions of the sales con- tract. Contract NOd-9914, dated November1, 1968, provides that the purchaser shalL pay the "base price" in effect at the date the oil is delivered, less 5 cents per barrel. The prior sales contract included a provision for paying the "base pricew less 10 cents per barrel. The term "base price" is defined as the average price per barrel of all prices regularly posted or published by principal purchasers of crude oil in Natrona County, Wyoming, for oil of equal gravity and quality, The operator had made erroneous billings which resukted in the following underpayments, 50 TH ANNIVERSARY 1921- 197 AmotlRtof Ty3eoferror underpayments Average price regularly posted or published not used $16,341 Billings prepared on basis of pricing provisions applicable to the prior sales contract ("base price" less 10 cents per bsmel) 2,530 Total $18,87a Webrought this matter to the attention of the Officer in Charge, Navs2 Petroleum and Oil Shale Reserves in Colorado, Utah, and Wyoming, ! ': located at Casper, Wyoming, in January lp?'L The errors appeared to be due to oversight. The Officerin Charge advised us later that the operator of Naval Petroleum Reserve No, 3 had been notified of the errors and that this matter was being taken up with the purchaser, As of the end of October lg'j'l, efforts by the Office of Naval Petroleum snd Oil Shale Resemes to resolve this matter were still underway, INcoNSIm~~ OFGRAZINGRECEIPTS FROB!NAVALOIL SW RESEZV?I LANDS Four district offices of the Bureau of Land Managementwere not he&ling the deposit of grazing receipts in a consistent maxmerin that somereceipts were comingled with Bureau fuuds instead of deposited to the General Fund of the Treasury. AU surface resources on federally ownedlands within Navatl Oil Shale Reserves Nos. 1 and 3 in Colorado and Naval Oil Shale Reserve No. 2 in Utah are managedby the Bureau under a cooperative agreement I between the Secretary of the Navy and the Secretary of the Interior, Under this agreemnt, the Btmeaumay issue leases, permits, or licenses involving surface resourcess While the costs of administering grazing permits OP?I the Reserve lands are generally financed with Navy funds, most of the receipts from grazing fees have been deposit& to a Breau WX0l.U3t, in which they are coimd ed with fmds used to finance range improvements on Bureau lands and other expenditures. Four district offices of the Bureau are involved in administration of these grazing permits. Receipts f'rom grazing fees on lands tithin Shale Reserves Nos, 1 and 3 amountedto $5,0~6 for the year ended February 28, 1970, and were deposited by the two cognizant district offices to a Bureau receipt account. As to graze fees from ShaLe * ..^ -L . . Reserve Ro. 2 &uring fiscal year 1970, a third district office depos- ited about $1,&k to the General li'und of the Treasury and the fourth district office deposited about $186 to the Rureau receipt account. We beLieve, based on our review of 10 U.S.C. @33(b) and 31 U.S.C. 484, that all such receipts should be deposited into the Genera3 Rmd of the Treasury. On November23, 197X, the Bureau of Laud Msnagementissued instruc- tions that receipts from grazing fees on Zav lax16be deposited to the General &nd of the Treasury. Copies of this report are being sent to the Director, Office of Hauagemeznt and Budget, and the Secretary of the Interior. Sincerely yours, Associate Director The Honorable Frank Sanders Assistant Secretary of the Navy (FinancialManagement) :
Revenues From the Operation of Naval Petroleum Reserve No.3, and the Administration of the Naval Oil Shale Reserves in Colorado and Utah
Published by the Government Accountability Office on 1971-12-27.
Below is a raw (and likely hideous) rendition of the original report. (PDF)