2024-26475. Clarifying the Implementation of Certain BLM Oil and Gas Measurement Regulations

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Department of the Interior

Bureau of Land Management

1. [BLM_HQ_FRN_MO4500178504]

AGENCY:

Bureau of Land Management, Interior.

ACTION:

Proposed notice to lessees.

SUMMARY:

The Bureau of Land Management (BLM) is proposing to adopt Notice to Lessees No. 5 (NTL-5), clarifying when and how operators are expected to comply with certain requirements in the oil and gas measurement regulations, which became effective in January 2017.

DATES:

Send your comments on the proposed NTL-5, included below and entitled, Compliance with the Site Security, Measurement of Oil, and Measurement of Gas, 43 CFR part 3170, to the BLM on or before December 16, 2024. The BLM is not obligated to consider any comments received after this date in making its decision on the final NTL-5.

ADDRESSES:

You may send written comments by any of the following methods:

Mail, personal, or messenger delivery: U.S. Department of the Interior, Director (630), Bureau of Land Management, 1849 C St. NW, Room 5646, Washington, DC 20240, Attention: NTL-5.

Electronic mail: [e-mail].

FOR FURTHER INFORMATION CONTACT:

John Ajak, Acting Division Chief, Fluid Minerals Division, telephone: [phone], email: [e-mail], or by mail to Bureau of Land Management, 1849 C St. NW, Room 5633, Washington, DC 20240, for information regarding the substance of this Notice to Lessees.

Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States.

SUPPLEMENTARY INFORMATION:

The BLM will respond to any relevant and substantive public comments it receives on this proposed NTL-5 when it ultimately publishes any final NTL-5 in the Federal Register . If the BLM publishes a final NTL-5, it will take effect 30 days after its publication date. Because the oil and gas measurement rules (43 CFR subparts 3174 and 3175) became effective on January 17, 2017, operators of onshore oil and gas leases have had sufficient time to prepare for compliance. Further, each of the three notifications within this proposed NTL-5 have additional, independent compliance dates—ranging from 3 months to 1 year—depending upon the requirement. Therefore, if the BLM publishes a final NTL-5, it will consider an effective date of 30 days following the publication of the final NTL-5 as sufficient notice for operator compliance.

Compliance With the Site Security, Measurement of Oil, and Measurement of Gas

43 CFR Part 3170

(Proposed NTL-5)

This proposed Notice is issued pursuant to 43 CFR 3164.2, which authorizes the Bureau of Land Management (BLM) to issue a Notice to Lessees (NTL) when necessary to implement the BLM's oil and gas regulations. As explained in detail below, there is a need to clarify when and how operators are expected to comply with certain requirements in the oil and gas measurement regulations (43 CFR subparts 3174 and 3175), which became effective in January of 2017. Therefore, the BLM is hereby notifying ( print page 90038) operators of onshore Federal and Indian oil and gas leases of the following:

(1) The BLM will, beginning 3 months after the effective date of this NTL, no longer decline to enforce the requirements of subpart 3174 on operators of oil measurement facilities in use prior to January 17, 2017.

(2) The BLM will delay enforcement of each of the requirements for BLM-approved equipment and software for 1 year following the BLM's publication of applicable test procedures.

(3) In compliance with 43 CFR 3175.120(e), operators must submit gas analysis reports to the Authorized Officer (AO) upon request until such time as the Gas Analysis Reporting and Verification System (GARVS) becomes available for use.

Full Implementation of 43 CFR 3174 Measurement of Oil

On November 17, 2016, the BLM published final rules in the Federal Register pertaining to oil and gas site security and measurement (43 CFR subparts 3170, 3173, 3174, and 3175) with an effective date of January 17, 2017 (81 FR 81516, 81 FR 81462, and 81 FR 81356). Section 3173.12(e) requires operators to apply for approval of a facility measurement point (FMP). For permanent measurement facilities in place prior to January 17, 2017, the rule provided operators with between 1 and 3 years to apply for an FMP, depending on the average volume of oil and gas produced from the lease, Communitization Agreement, or unit Participating Area. Under § 3174.2(f), oil measurement facilities in use prior to January 17, 2017, are required to comply with subpart 3174 “on or before the date the operator is required to apply for an FMP number under § 3173.12(e).”

The BLM had anticipated that the Automated Fluid Minerals Support System (AFMSS) module for FMP applications would be fully functional prior to January 17, 2017. As of this date, the AFMSS FMP application module remains unavailable. Since promulgation of the final rule, therefore, the BLM has been unable to accept operators' electronic FMP applications and assign FMP numbers due to competing priorities in updating AFMSS.

In January 2017, the BLM issued Instruction Memorandum (IM) 2017-032 (Jan. 17, 2017). Recognizing the delay in finalizing the AFMSS FMP application module, the IM explained that: “State and field offices will delay implementation and enforcement of new oil measurement regulations under 3174 as they apply to permanent oil measurement facilities in place before January 17, 2017. The length of the delay will be the number of days between January 17, 2017, and the date when the BLM fully implements FMP functionality in [AFMSS]. The phase-in periods in § 3174.2(f) will apply this same delay.” As provided in the IM, the BLM sent a letter to operators informing stakeholders of this delay in enforcement.

By its own terms, the IM expired on September 30, 2020, or 1,353 days after January 17, 2017. Thus, the BLM's discretionary delay of enforcement of the subpart 3174 requirements terminated, at the latest, on September 30, 2020.

Although the BLM remains unable to accept electronic FMP applications, such applications are not a practical or legal prerequisite ^[1] for measurement operations in use prior to January 17, 2017, to comply with the requirements of subpart 3174. Operators of oil measurement facilities in use prior to January 17, 2017, have been on notice at least since the expiration of IM 2017-032—if not November 17, 2016, when the relevant final rule was published—that the requirements of subpart 3174 would eventually apply to them by operation of regulation and in the absence of any BLM policy of non-enforcement. Particularly in view of this extended notice period, the BLM will, beginning 3 months after the effective date of this NTL, no longer decline to enforce the requirements of subpart 3174 to operators of oil measurement facilities in use prior to January 17, 2017.

Use of Approved Equipment and Software for the Measurement of Oil and Gas

Certain provisions in subparts 3174 and 3175 require operators to use BLM-approved measurement equipment and software. In 2018, IM 2018-077 explained that the BLM would delay its enforcement of the use of approved measurement equipment “until the BLM has executed the prerequisite approvals of equipment and software, and operators are afforded a reasonable opportunity to comply.” That IM, like IM 2017-32, expired on September 30, 2020.

In fiscal year 2024, the BLM anticipates publishing additional recommended test procedures on the BLM website ( www.blm.gov ) and will notify local and national industry groups of the availability of these test procedures. The BLM is hereby notifying operators that, following the effective date of this NTL, the BLM will delay enforcement of each of the requirements for BLM-approved equipment and software for 1 year following the BLM's publication of applicable test procedures. For example, operators are expected to use BLM-approved Coriolis meters for liquid measurement, the test procedure for which is currently available on the BLM website,^[2] by no later than 1 year after [THE EFFECTIVE DATE OF THE FINAL NTL]. Prior to a BLM approval of measurement equipment or software, equipment or software must be installed and operated within the manufacturer's recommendations and meet the BLM's measurement uncertainty requirements (§ 3174.4 Table 1 and § 3175.31(a)).

Gas Analysis Reporting

Under § 3175.120(e), the “operator must submit all gas analysis reports to the BLM within 15 days of the due date for the sample.” Section 3175.120(f) requires operators to “submit all gas analysis reports and other required related information electronically through the GARVS.”

IM 2018-077 noted delays in the development of GARVS based on competing work priorities. At that time, the BLM anticipated that GARVS would be available no earlier than June 2019. IM 2018-077 instructed the BLM to require submission of the gas analysis reports, whenever appropriate, in the interim until GARVS became available. GARVS remains unavailable, and the BLM has no timeline for its development. In the interim, operators must continue to submit gas analysis reports to an AO upon request pursuant to the BLM's recordkeeping requirement at 43 CFR 3170.7(h). The BLM further notifies operators that the submission of electronic gas analysis reports through GARVS will not be required until 3 months following the BLM publicly announcing GARVS availability on the BLM website.

(Authority: 43 CFR 3164.2)

David Rosenkrance,

Assistant Director, Energy, Minerals, and Realty Management.

Footnotes

1.  The preamble to final subpart 3174 demonstrates that the intent of the cross-reference in § 3174.2(f) to the FMP application deadlines in § 3173.12(e) was to tether the subpart's requirements to the date that application requirements were effective, not to tether (practically or legally) the subpart's requirement to the act of filing an FMP application itself. See81 FR 81462, 81468 (Nov. 17, 2016).

2.   https://www.blm.gov/​sites/​default/​files/​docs/​2022-06/​BLM_​Testing_​Procedure_​Coriolis_​Liquid.pdf.