Indian Oil Production/Sales Statistics

Indian Oil Negotiated Rulemaking Committee

Presented by: John Barder, May 1, 2012

1

Office of Natural Resources Revenue www.onrr.gov

U.S. Department of the Interior

Stewardship Accountability Revenue Management

2

www.onrr.gov

Stewardship Accountability Revenue Management

Breakdown of Oil Production/Sales in the United States for 2011

1,490,115,448

384,960,780

97,721,813

20,807,959

2011 Annual Oil Production

Fee

Fed Offshore

Fed Onshore

 Indian

www.onrr.gov

Stewardship Accountability Revenue Management

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2008 2009 2010 2011

358,005

425,199

260,996

384,961

108,842 109,169 112,12597,722

9,689 10,262 14,308 20,808

Thou

sand

s of B

bls

Annual Oil Production

Fed Offshore Fed Onshore Indian

www.onrr.gov

Stewardship Accountability Revenue Management

Percent of Total Indian Oil Production for CY 2008

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

1.51%0.37% 1.69% 3.10% 2.77%

0.00%

36.05%

9.02%

0.02%

26.68%

0.71%

18.08%

www.onrr.gov

Stewardship Accountability Revenue Management

Percent of Total Indian Oil Production for CY 2009

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

1.51%0.33%

9.81%

2.68% 2.51%0.00%

34.02%

9.43%

0.02%

21.59%

0.84%

17.25%

www.onrr.gov

Stewardship Accountability Revenue Management

Percent of Total Indian Oil Production for CY 2010

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

1.07%0.23%

26.91%

1.85% 1.70%0.00%

25.74%

6.63%

0.08%

22.23%

0.52%

13.04%

www.onrr.gov

Stewardship Accountability Revenue Management

Percent of Total Indian Oil Production for CY 2011

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

0.72% 0.15%

45.75%

1.12% 1.27%0.00%

18.57%

4.10%

0.31%

19.49%

0.26%

8.25%

www.onrr.gov

Stewardship Accountability Revenue Management

0.000%

0.200%

0.400%

0.600%

0.800%

1.000%

1.200%

1.400%

20082009

20102011

0.330%

0.220%

0.540%

1.210%

Transportation Costs as a % of Indian Royalty Value

Note: The above figures do not include transportation factors. Transportation factors are not reported on MMS‐2014 as a transportation allowance.

www.onrr.gov

Stewardship Accountability Revenue Management

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20082009

20102011

1.36%2.58%

8.63%

16.96%

NARM % of Sales Value

www.onrr.gov

Stewardship Accountability Revenue Management

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

20082009

20102011

34.65%

30.81%

23.87%

16.86%

Indian RIK as a % of Total IndianSales Value

www.onrr.gov

Stewardship Accountability Revenue Management

Companies Reporting Royalty on Indian Oil for 2008 ‐ 2011

• 267 total unique Indian oil royalty payors from  2008 – 2011.• Blackfeet Reservation – 13 total payors with 6 of the payors paying over 90% of the royalty. In 

addition, one payor pays approximately 50% of the royalty.• Crow Reservation – 3 total payors with one payor paying of 95% of the royalty.• Fort Berthold – 30 total payors with six payors paying over 70% of the royalty.• Fort Peck – 17 total payors with five payors paying over 73% of the royalty.• Jicarilla Apache Reservation – 19 total payors with seven paying over 90% of the royalty.• Michigan area – one payor pays 100% of the royalty.• *Navajo Reservation – 38 total payors with one payor paying over 83% of the royalty.• Oklahoma – 144 total payors with 14 payors paying over 76% of the royalty.• Turtle Mountain Reservation – 7 total payors with two payors paying over 76% of the royalty.• Uintah & Ouray Reservation – 21 total payors with four payors paying over 80% of the royalty.• Ute Mtn Ute Reservation – 17 total payors with six payors paying over 91% of the royalty.

Crude Oil Marketing& Transportation

Presented by: Dan RiemerMay 1, 2012

Overview

• The Petroleum Supply Chain

• Where Oil is Found

• How Oil is Transported

• Where Oil is Refined

• How Market Price is Determined

• How Market Price Translates to Realized Price

Crude Oil: Quick Facts

Crude oil is a naturally occurring liquid found in rock formations in the Earth.

Fact 1:  Crude oil must be found and extracted, or produced.

Fact 2:  Crude oil must be stabilized for transportation.

Fact 3:  Crude oil must be refined into usable products.

The Petroleum Supply Chain

Exploration& Production

Transportation

Marketing

Distribution

Refining

Note: Independent Producers, Merchant Refiners and Integrated Energy Companies; Upstream/Downstream.

Bakken / Sanish / Three Forks

Wolfcamp / Spraberry / Avalon / Bone Spring

Eagle Ford 

Granite Wash / Cleveland Sand / Colony Wash / Mississippian Lime

Peace River / Cardium

MonterreyNiobrara / Wattenburg

CORPUS CHRISTI

Where Oil is Found:  North American Crude Oil Resource Plays

How Oil Is Transported

Exploration& Production

Transportation

Marketing

Distribution

Refining

Production Refining

Truck

Terminal Facility 

Barge

Pipeline

Off lease Gathering

Accumulation Point

Pipeline

Tanker

Transportation

Where Oil is Refined:  Major Canadian and US Crude Oil Pipelines and Refineries

How Market Price is DeterminedHow Market Price is Determined

SUPPLY DEMAND

INVENTORY

PRICES

PERCEPTION OF SCARCITY DEMAND FOR INVENTORY

Realized Price Formula

Realized Price = Benchmark Price+/‐ Market Adjustment+/‐ Location Adjustment+/‐ Quality Adjustment

Where:

a) Realized Price is market price at facility measurement point (FMP)b) Benchmark Price is West Texas Intermediate (WTI), or NYMEXc) Market Adjustment is grade differential (Bakken, Wyoming Asphalt, Wyoming 

Sweet, West Texas Sour, Uinta Wax, etc.)d) Location Adjustment is transportation cost (actual or normalized)e) Quality Adjustment is actual gravity and sulfur premiums & discounts