The Bureau of Land Management (BLM) is expected to begin tracking compliance with their Onshore Orders for conducting oil and gas operations on federal and Indian lands at the end of 2019 and into 2020.
Companies and operators in energy, midstream, E&P, and pipeline operations have time to ramp up their compliance efforts with the BLM Onshore Orders before the BLM moves from tracking to enforcement. Ultimately, at this stage, the BLM is asking companies to document and prove their efforts to support compliance.
Two of the most important aspects of complying with the BLM Onshore Orders are BLM Onshore Order 3170 (Onshore Oil and Gas Production) and Onshore Order 3175 (the Measurement of Gas).
Onshore Order 3170: Make Clear Identifications and Designations
The Facility Measurement Point (FMP) is the central issue for companies and operators to prove compliance.
The BLM defines the FMP as a “BLM-approved point where oil or gas produced from a Federal or Indian lease, unit PA (participating area), or CA (communitized area) is measured and the measurement affects the calculation of the volume or quality of production on which royalty is owed.”
The BLM is asking companies and producers to identify very specific aspects of their operations related to their FMP:
- Identify Royalty Points
- Identify Flow Rates
- Identify Equipment
- Ensure no Commingling of Product
– Royal Point for Liquids: identify whether the accumulated volume between provings is less than or greater than 50,000 barrels.
– Royalty Point for Gas: identify the level of production (less than 35 Mcf per day, 35-200 Mcf per day, 200-1,000 Mcf per day, or more than 1,000 Mcf per day).
– Flow Rates for Gas: ensure that electronic gas measurement (EGM) systems meet or exceed the flow rate calculation identified by the API 14.3.3 standard.
– Equipment for Gas: ensure that EGM system commissioning is in compliance with API 21.1, which is defined as the “initial verification and documentation that an EGM system, electronic flow meter (EFM), transducer, or equipment is functioning according to the specification, design, and contractual requirement.”
– Commingling: No matter whether you are a midstream company or a producer, the BLM expects companies to follow commingling guidelines. According to the BLM, “leases, CAs, and unit PAs with different royalty distributions should not be commingled unless the request involves low-volume properties or overriding considerations.” [Read Additional Guidance]
Onshore Order 3175: Documentation for Gas Measurement
BLM Onshore Order 3175 establishes “minimum standards for accurate measurement and proper reporting of all gas removed or sold from Federal and Indian leases, units, unit participating areas, and areas subject to communitization agreements.”
The critical aspects of BLM Onshore Order 3175 include:
- FMP Verification
- Retention Records
- Meter Tube Inspection
- EGM Commissioning and Verification
- Gas Sampling Analysis
– FMP Verification: BLM is requiring evidence that FMP royalty points meet the minimum requirements of API 21.1 and AGA 3 (API 14.3). Essentially, FMP includes, but is not limited to, the approved point of royalty measurement and measurement points relevant to determining the allocation of production to Federal or Indian leases, unit PAs, or CAs.
– Retention Records: BLM is requesting documentation for Commissioning, Configurations, Events, Alarms, Sample Tube Cleaning, and other documentation available during verifications.
– Meter Tube Inspection: BLM is requiring that on-site meter tube inspection reflects AGA 3 Part 2. What should you do now? If you are producing more than 200 Mcf per day, you should inspect meters now. If you are producing less than 200 McF per day, you should inspect meters by 2020. When you do perform the meter inspection, you should provide the BLM with a 72-hour inspection notice.
– EGM Commissioning and Verification: the verification should be in compliance with API 21.1 to ensure that the EGM device is functioning properly. The procedures for commissioning may be different from subsequent verifications in terms of the amount or values of test points to be verified.
– Gas Sampling Analysis: operators must maintain documentation of sample cylinder cleaning, have the documentation available on-site during sampling, and provide to the BLM upon request. Also, a portable gas chromatograph (GC) must be operated, verified, and calibrated under the same requirements as a lab GC.
This falls under the category of the new Gas Analysis Reporting and Verification System (GARV) that will soon be implemented.
SOPs Support Compliance with BLM Onshore Orders
To support the accurate measurement of liquids and gas on Federal and Indian lands, companies and operators need to review and possibly update their Standard Operating Procedures (SOPs).
SOPs provide guidance to both experienced and new measurement personnel on measurement processes, provide proof of following measurement procedures, and provide documentation to satisfy BLM inspection.
– For example, in regards to meter tube inspection in BLM Onshore Order 3175, every company’s SOPs should be in alignment with AGA Report No. 3, “Orifice Metering of Natural Gas and Other Related Hydrocarbon Fluids.”
– For example, the SOP for EGM Commissioning and Verification should include a no flow cutoff policy, data access and security in alignment with API 21.1, verification after repair or replacement, operational standards within calibrated limits, verification procedures per API 21.1, and control evidence of verification.
– Other BLM-related SOPs include FMP description and definition, data retention records, portable chromatographs, and oil measurement (if applicable to your company or operation).
What’s Next for BLM Onshore Order Compliance?
In 2019, companies and operators will have the ability to file for FMP designation. The new GARV system for gas sampling is also expected to be implemented in 2019. Additionally, information on approved equipment and the official handbook on BLM Onshore Order 3175 is expected to be released.
As the BLM Onshore Order begins to take effect this year, companies and operators should begin taking action steps to review and update their SOP manuals to comply with the BLM Onshore Orders.
If you require assistance with the preliminary review and a potential update, please contact Gas Certification Institute (GCI). We want to ensure that your measurement SOPs are compliant with the new BLM requirements in 2019 and beyond.