U.S. to boost royalty audits of energy companies

WASHINGTON (Reuters) - The U.S. Interior Department said on Wednesday it will add more staff this year to ensure energy companies are properly paying royalties owed on the oil and natural gas drilled on federal and Native American lands.

The department's Minerals Management Service will add about 19 auditors and continue "to target companies that have been identified as high risk," said MMS Director Liz Birnbaum. She did not name the companies.

Government auditors will focus in particular on smaller energy producers that may not been checked that frequently in the past, according to Birnbaum.

The MMS receives monthly royalty payments from about 2,000 energy companies and individuals on nearly 30,000 producing leases.

During 2008 and 2009, the agency checked if royalties were paid correctly by 900 companies on 6,300 producing properties.

"Our goal for 2010 is to cover 86 percent of high-risk companies and 43 percent of high-risk mineral producing properties," said Birnbaum.

The MMS pointed out for comparison that the Internal Revenue Service audits from 1 percent to 5 percent of individual income tax returns, and from 11 percent to 27 percent of large companies.

(Reporting by Tom Doggett; Editing by David Gregorio)