BLM proposes updated rules on oil and gas
FARMINGTON — The Bureau of Land Management has announced that it is updating the rules and fees governing oil and natural gas extraction in an effort to catch up to advances in technology used by the energy industries.
Last week, the BLM announced a proposed rule updating and replacing its regulations, which have not been revised since 1989, related to the measurement of oil produced from federal and Indian onshore leases. The proposed rule would replace Onshore Oil and Gas Order Number 4 (Order 4), which sets minimum standards for the measurement of oil extracted from public lands.
On Oct. 1, the federal agency also increased fees charged to oil and gas companies for APD, or Application for Permit to Drill. The price went up $3,000 from $6,500 to $9,500 for the non-refundable filing fee operators pay regardless of whether a permit is approved or not. The updated APD fee was set by Congress in the Fiscal Year 2015 National Defense Authorization Act.
The BLM's proposed rule reflects advances in measurement technology and critical updates in standards and practices, according to a Sept. 29 press release. The drafted changes stem from concerns raised by the Government Accountability Office, the Department of the Interior’s Office of Inspector General and the Secretary’s Subcommittee on Royalty Management, that existing rules do not ensure that royalties from oil production are effectively tracked and paid.
BLM will take public comment on the rule for 60 days, through November 30. People can submit comments on the proposed rule change by going to www.regulations.gov or by writing to the U.S. Department of the Interior, Director (630), BLM , Mail Stop 2134 LM, 1849 C Street NW, Washington, DC 20240 Attention: Regulatory Affairs.
“The proposed rule represents yet another important step in the BLM’s modernization of its oil and gas regulations,” said Janice M. Schneider, assistant secretary for Land and Minerals Management. “These updates address longstanding concerns about the adequacy of existing regulations and will help ensure that the oil produced from Federal and Indian leases is properly measured and accounted for -- a critical component of ensuring that American taxpayers, Indian tribes and allottees, and states and local governments, receive the full royalties they are due.”
The revised rule would allow operators to use Coriolis Measurement Systems, a "reliable and accurate" means by which oil is measured, according to the release. Currently, the existing rule only allows oil measurement to be performed manually by tank gauging or with a meter, which requires special permission.
The new rule also demands that operators verify with the federal agency the accuracy of high-producing wells more frequently. It also gives the BLM a stronger ability to verify and audit industry production records.
The BLM's oil and gas management program generates more than $3 billion in royalty revenue each year from oil and gas leasing activities on federal lands.
James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.