§ 3179.8 - Alternative capture requirement.

§ 3179.8 Alternative capture requirement.

(a) With respect to leases issued before the effective date of this regulation, for operators choosing to comply with the capture requirement in § 3179.7 on a lease-by-lease, unit-by-unit, or communitized area-by-communitized area basis, the BLM may approve a capture percentage lower than the applicable capture percentage specified under § 3179.7, if the operator demonstrates, and the BLM agrees, that the applicable capture percentage under § 3179.7 would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.

(b) To support a demonstration under paragraph (a) of this section, the operator must submit a Sundry Notice that includes the following information:

(1) The name, number, and location of each of the operator's wells, and the number of the lease, unit, or communitized area with which it is associated;

(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available and the volumes being vented and flared from each well;

(3) Map(s) showing:

(i) The entire lease, unit, or communitized area and the surrounding lands to a distance and on a scale that shows the field in which the well or wells are or will be located (if applicable), and all pipelines that could transport the gas from the well or wells;

(ii) All of the operator's producing oil and gas wells, which are producing from Federal or Indian leases (both on Federal or Indian leases and on other properties) within the map area;

(iii) Identification of all of the operator's wells within the lease, unit, or communitized area from which gas is flared or vented, and the location and distance of the nearest gas pipeline(s) to each such well, with an identification of those pipelines that are or could be available for connection and use; and

(iv) Identification of all of the operator's wells within the lease, unit, or communitized area from which gas is captured;

(4) Data that show pipeline capacity and the operator's projections of the cost associated with installation and operation of gas capture infrastructure, to the extent that the operator is able to obtain this information, as well as cost projections for alternative methods of transportation that do not require pipelines;

(5) Projected costs of and the combined stream of revenues from both gas and oil production, including:

(i) The operator's projections of gas prices, gas production volumes, gas quality (i.e., heating value and H₂S content), revenues derived from gas production, and royalty payments on gas production over the next 15 years or the life of the operator's lease, unit, or communitized area, whichever is less; and

(ii) The operator's projections of oil prices, oil production volumes, costs, revenues, and royalty payments from the operator's oil and gas operations within the lease over the next 15 years or the life of the operator's lease, unit, or communitized area, whichever is less.

(c) In establishing an alternative capture requirement under this section, the BLM will set the capture percentage at the highest level that the BLM determines, considering the information identified in paragraph (b) of this section, will not cause the operator to cease production and abandon significant recoverable oil reserves under the lease.