American Oil and Gas Reporter - February 2016 - 95

for December, which were held in Durango, Co., Oklahoma City and Dickinson,
N.D.
The California Independent Petroleum
Association says a government study indicates BLM failed to have its proposed
revisions evaluated by state organizations such as the Interstate Oil & Gas Compact Commission or the Western Governors' Association. CIPA adds it is unknown
if tribal organizations had an opportunity
to review it.
The agency's justifications for seeking
changes to Onshore Order No. 3 are suspect, CIPA adds.
"The petroleum industry ultimately is
accountable to BLM for its measurement
and accounting of production. If 31 BLM
oil and gas field offices cannot consistently apply standards from Order No. 3,
which BLM created and has owned for 26
years, why would anyone at BLM believe
that promulgating these standards into a
regulation and complicating them by
adding new requirements without legal authority would have a different result?" the
association asks.
Compliance Costs
IPAA and the Western Energy Alliance say BLM significantly underestimated the costs of complying with the proposed onshore order revisions. They point
to the impacts of one provision that requires gauge lines and valves to have

0.375-inch internal diameters, although industry practice is to use tubing with an outside diameter of 0.375 inches. According
to one member company, complying with
this single regulatory provision would cost
it several million dollars.
Many lessees and operators use transducers, flow computers, isolating flow conditioners and other measurement equipment that would be disallowed under the
proposed rule unless specifically approved by the government, the associations
note. Since there now is no equipment on
that approval list, operators would need to
obtain approval for each component,
IPAA and the Alliance warn.
PAW's comments point to requirements in the proposed revisions that operators secure an application for permit to
drill for nonfederal wells operating on federal leases or CAs.
"The final rule should be revised to
clarify that it does not apply to wells
wherein the wellbore only penetrates private or state tracts committed to a federal unit or CA," PAW recommends. "Absent the suggested revision, BLM must
provide a legal basis for expanding its regulatory authority to private and state minerals."
Requiring operators to obtain federal
approval to develop nonfederal resources
would lead to significant increases in development costs, PAW says. The association points out the APD filing cost in-

creased to $9,500 on Oct. 1.
Other proposed changes to Onshore Order No. 4 mandate a significant increase
in record keeping, retention, and submission requirements, PAW says. In addition
to new costs for operators, the onshore order revisions expand federal authority
over transporters and purchasers. "As a result, many would have to implement new
or revised record-keeping systems in order to comply," the association says.
In its comments, the Permian Basin Petroleum Association says Order No. 4 revisions would require oil storage tanks,
hatches, connections and other access
points be vapor tight. Operators already are
working with the U.S. Environmental
Protection Agency on implementing greenhouse gas regulations that require vapor
recovery measures, and the association
says BLM's proposed regulations conflict
with EPA requirements.
The proposed regulations also specify
which Coriolis meters and associated
software require BLM approval, PBPA observes.
"The BLM is getting into the day-today operations of oil and gas operators,"
PBPA says. "BLM does not have the need
nor authority to list the equipment by make
and model that can be used in field operations. It does have the authority to put out
standards that industry should follow;
how to follow those standards should be
the decision of the individual operator." ❒

BLM Revises Onshore Oil, Gas Rules
WASHINGTON-The Bureau of Land
Management says changes to oil and natural gas production measurement and accountability policies are needed to address
new technologies and industry practices
introduced in the 25 years since it issued
Onshore Orders No. 3, 4 and 5. The
agency cites a 2007 General Accountability Office report that determined BLM's
guidance regarding production accountability was "unconsolidated, outdated, and
sometimes insufficient."
The GAO found federal oil and gas
measurement regulations and policies in
Onshore Orders No. 3, 4 and 5 didn't provide reasonable assurances that production
was measured accurately, the report states.
Order No. 3 establishes site security
standards and ensures that operators accurately report oil and gas production from
federal and Indian (except Osage Tribe)
leases, to ensure proper royalty payments
are made. Order No. 4 sets measurement
standards for crude oil while natural gas
measurement is covered by Order No. 5.

Proposed revisions for Orders No. 4 and
5 address the use of new metering technology, and measurement documentation
and record keeping. BLM says the Order
No. 4 changes include requirements for
production accountability for oil purchasers and transporters as well as operators and lessees.
Order No. 3
BLM says the proposed revisions to
Onshore Order No. 3 address facility
measurement points (FMPs), site facility
diagrams, seals, meter bypasses, documentation and record keeping, commingling,
off-lease measurements, and reporting
incidents of unauthorized removal or mishandling of oil or condensate.
Under the proposed changes, operators
must designate FMPs on existing and new
oil and gas leases, and provide new site facility diagrams. The revisions also authorize BLM to:
* Codify language on approving commingling production from multiple leas-

es, unit participating areas, communitized areas (CAs), and state properties;
* Establish conditions for approving
off-lease measurements, and update requirements relating to using valve and
drain seals, and prohibiting meter bypasses; and
* Have purchasers and transporters
comply with the same record-keeping
standards as operators.
The revisions include changes to definitions used in Order No. 3, BLM says,
including designating FMPs as an approved point "where oil or gas produced
from a federal or Indian lease, unit or CA
is measured, and the measurement affects
the calculation of the volume or quality of
production on which royalty is owned."
The definition also establishes a nationwide process for designating and approving FMPs. BLM points out the most crucial element for approval will be identifying the well associated with the FMP. Each
FMP would have a unique identifying
number that operators, transporters and
FEBRUARY 2016 95

American Oil and Gas Reporter - February 2016

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