What’s the Latest on the BLM Onshore Orders?

The Bureau of Land Management (BLM) has recently enacted new regulations that will have substantial impacts on oil and gas measurement. Many of our customers operate on BLM leases, and we thought you would be interested in the latest on the BLM onshore orders. We have been tracking this often controversial topic and are working on updates in response to many emerging requirements.

The BLM is a federal government agency under the U.S. Department of the Interior. This agency manages private and public use of about 700,000 acres of lands that are under federal jurisdiction. This includes oil and gas production on federal leases with approximately 100,000 wells. The BLM also manages mineral leases on Tribal Native American lands. A key BLM responsibility is to ensure resource and royalty revenue from the public lands. In the latest reported fiscal year, FY2015, the U.S. Treasury received $2.4 billion in revenue from this oil and gas activity.

Since 1989, BLM Onshore orders 3, 4 and 5 have been the governing regulations. In addition, the BLM consists of state offices and district offices that have each enacted their own rules known as Notices to Lessors (NTLs).

Several government oversight agency audits and reports have determined that the BLM processes were inadequate, inconsistent, and outdated, and couldn’t ensure that royalty calculations were accurate.

In 2015, the BLM proposed an overhaul to the onshore orders pertaining to oil and gas operations, including measurement functions. New Parts 3173, 3174 and 3175 (Published under Title 43 of the Code of Federal Regulations) replace Onshore Orders 3, 4 and 5, respectively.

Through numerous public hearings and a comment period, the BLM solicited feedback from industry trade organizations, private companies and the public. Many operators and producers voiced concerns that the new rules were too far-reaching, over-burdensome and lacking in legitimate economic benefits.

After further evaluation, the BLM published its final rules, effective January 17, 2017. The BLM has yet to publish final deadlines for compliance, but current estimates call for full compliance by June 2019. Updated operations within the BLM are also probably at least a year out.

On February 7, 2017, U.S. Representative Kevin Cramer of North Dakota introduced H.J. Res. 68, which would nullify the new BLM rules. It was referred to the House Committee on Natural Resources but a final ruling has yet to be delivered. Here at Flow-Cal, we are assuming that the new BLM rules will not be repealed and will go forward as published.

So, let’s take a closer look at the new Parts, which address the following three areas:

·        Part 3173 – Site Security

·        Part 3174 – Oil Measurement

·        Part 3175 – Gas Measurement

Part 3173 – Site Security

Part 3173 establishes official custody locations called Facility Measurement Points (FMPs). All FMPs must be approved by the BLM. Part 3173 defines a timeline for FMP compliance based on volume, and defines record retention times for federal leases and Native American leases. The approval process requires operators to submit complete site diagrams with the initial FMP request, detailing equipment, piping, and flow, as well as when any changes are made.

Part 3174 – Oil Measurement

Part 3174 requires oil measurement equipment to be on a BLM-approved list. A newly-established Production Measurement Team (PMT) will conduct the approval process. The PMT is expected to be in place by late summer of this year. Part 3174 incorporates, by reference, many industry standards and defines measurement equipment uncertainty levels in a tiered system based on volume. It also defines phase-in requirement timelines based on volume.

Part 3174 authorizes the use of Coriolis meters and automatic tank gauging (ATG). It also defines meter proving requirements, including one that requires operators to notify an “Authorized Officer” (AO) within 72 hours of a LACT error.

Part 3175 – Gas Measurement

Part 3175 shares many similarities with Part 3174. It defines an electronic gas measurement (EGM) system and requires approval of all measurement system components by the PMT. It also incorporates many industry reports and standards by reference and establishes production-level thresholds for FMPs based on historical volumes. Like Part 3174, Part 3175 also defines phase-in requirement timelines based on volume.

Part 3175 also requires a measurement system to be approved as an “Accounting System” and provides specific reporting requirements.

It also delves into gas analysis and transducers. It defines gas sampling requirements and requires gas analyses to be uploaded to the BLM GARVS system. In addition to defining new type testing for transducers, it also defines requirements for a qualified transducer testing facility.

Finally, Part 3175 defines requirements for meter tube inspection and requires notification to the AO for schedules of tube inspections, verifications and repairs.

At Flow-Cal, we have been working to gain a complete understanding of the new BLM rules, how they’ll affect our customers, and what our requirements will be to achieve approval. To that end, we have established an internal team and organized a BLM Working Group to enable customer involvement and feedback. We have also held several meetings with BLM representatives to resolve questions and propose implementation options.

We have established priorities and timelines, and we will continue our collaboration with the BLM, customers, manufacturers and the working group. We are committed to meeting requirements to gain BLM approvals. We are also committed to meeting customer needs throughout our product line.

The new rules will substantially impact operators on BLM lands, but we’re doing our part to ease this transition. If you have any questions, or would like to know more about Parts 3173, 3174 and 3175, give us a shout! Visit flowcal.com or contact us at 281-282-0865.