Update of Onshore
Orders 3, 4, and 5
Richard Estabrook, BLM
Washington Office (Ukiah, CA)
Petroleum Accountant’s Society of Oklahoma
February 12, 2015
• These are draft proposed revisions;
• The BLM is not soliciting comments today;
• The BLM discourages you from paying
attention to this presentation
Outline
• Overview of BLM jurisdiction, responsibility,
and statistics
• Current measurement regulations
• Draft proposed changes
• Status and timeframes
Outline
• Overview of BLM jurisdiction, responsibility,
and statistics
• Current measurement regulations
• Draft proposed changes
• Status and timeframes
BLM Jurisdiction and Responsibility (oil and gas)
•245 million acres of public land (BLM)
• 325 million acres of other federal land
• 60 million acres of Indian trust land
• 57 million acres of split estate
700 million acres
BLM oil and gas responsibility:
• Leasing
• Permitting
• Inspection and Enforcement
• Drilling, plugging
• Environmental
• Proper measurement
Federal Onshore Oil and Gas
Statistics (FY2013)
•
•
•
•
•
•
23,000 producing leases
12.6 million acres of producing leases
93,000 wells
135 million bbls/year of oil
2.6 trillion cubic feet of gas per year
$3 billion in Federal royalty per year
Outline
• Overview of BLM jurisdiction, responsibility,
and statistics
• Current measurement regulations
• Draft proposed changes
• Status and timeframes
Federal Onshore Measurement Regulations
Federal Oil and Gas Royalty Management Act
43 CFR Part 3160
§ 3162.7-1
§ 3162.7-2
§ 3162.7-3
Disposition of
Production
Oil Measurement
Gas
Measurement
NTL-4A
Statewide NTLs
Venting, flaring,
EFCs
bene. use, loss
Onshore Order 3 Onshore Order 4 Onshore Order 5
Site Security
Oil Measurement
Gas
Measurement
Onshore Order 3 – Site Security
•
•
•
•
•
•
•
•
•
Seals (tanks and LACTS)
Run tickets
No meter bypasses
Reporting of theft
Self inspection
Seal records: 6-year retention
Site security plan
Site facility diagram
Federal seals
Onshore Order 4 – Oil Measurement
•
•
•
•
•
•
•
•
Tank gauging procedures
Tank sampling procedures
LACT, positive displacement meter requirements
LACT proving requirements
Sediment and Water (S&W) determination
API gravity determination
Variance required for other methods (e.g. Coriolis)
Incorporates numerous API standards (pre-1989)
Onshore Order 5 – Gas Measurement
• Flange and pipe tapped orifice plates:
• AGA Report 3 (1985)
• Chart recorders:
• calibration
• outer 2/3
• Gas sampling:
• BTU determined once per year
• Calculations:
• AGA Report 3 (1985)
NTL 2007-1 Electronic Flow Computers
• Parallels Onshore Order 5 requirements
• Adopts AGA-8, API 14.3.3 (1992), and portions of
API 21.1 (1993)
• Display requirements
• Instantaneous DP, SP, Temp, Flow rate
• Yesterday’s volume (except Wyoming)
• Calibration
• Transducer accuracy basis for calibration
• Operation
• Overall uncertainty ±3% for >100 Mcf/day
• Low-flow cutoff ≤0.5”
• Calculations per API 14.3.3 (1992) are OK
NTL-4A
• Addresses “beneficial use”
• Defines “avoidable” vs. “unavoidable” loss
• Sets standards for venting and flaring:
•
•
•
•
Emergencies
Testing
Prohibits venting/flaring of “gas well” gas
Venting/flaring of “oil well” gas for 1 year if justified
and approved
• Reporting of gas used beneficially, vented, flared,
or lost
Outline
• Overview of BLM jurisdiction, responsibility,
and statistics
• Current measurement regulations
• Draft proposed changes
• Status and timeframes
Existing Regulations
Federal Oil and Gas Royalty Management Act
43 CFR Part 3160
§ 3162.7-1
§ 3162.7-2
§ 3162.7-3
Disposition of
Production
Oil Measurement
Gas
Measurement
NTL-4A
Statewide NTLs
Venting, flaring,
EFCs
bene. use, loss
Onshore Order 3 Onshore Order 4 Onshore Order 5
Site Security
Oil Measurement
Gas
Measurement
Proposed Revisions
Federal Oil and Gas Royalty Management Act
43 CFR Part 3170
§ 3170
Records,
variances, def’s
§ 3173
§ 3174
Site Security,
Oil Measurement
comm, OLM, FMP
§ 3175
§ 3178
§ 3179
Gas
Measurement
Beneficial Use
Venting, flaring,
avoidable loss
Proposed Revisions Common to
Part 3170
•
•
•
•
•
•
Definitions
Records, including purchasers/transporters
Tampering
Variances
Appeals and enforcement
Major/minor, corrective action, timeframe
Implemented through policy
Proposed Revisions to
Onshore Order 3
Site Security
Facility Measurement Points
Commingling
Off-lease measurement
Subjects Covered
Existing
Seals – tanks and LACTs
Run tickets (sales)
Theft or mishandling
Self inspection
Site security plan
Site facility diagram
Federal seals
Proposed Revisions
Seals – tanks and LACTs
Run tickets (sales)
Record of all access
Theft or mishandling
Site facility diagram (added)
Federal seals
Facility Msmt. Points (FMP)
Commingling
Off-lease measurement
Facility Measurement Points
Existing
•
•
No consistent tracking of royalty meters or
measurement facilities
Measurement standards (Orders 4, 5) apply to
“sales and allocation” facilities
1-1
1-2
Measurement must be on the
lease [CA, unit] unless otherwise
approved…
#1
#8
#2
#3
1-3
2-1
2-2
#9
#4
#5
#7
#6
NM-16113
2-3
1-1
1-2
Measurement must be on the
lease [CA, unit] unless otherwise
approved…
#1
#8
#2
#3
1-3
2-1
2-2
#9
#4
#5
#7
#6
NM-16113
2-3
1-1
1-2
Measurement must be on the
lease [CA, unit] unless otherwise
approved…
#1
#8
#2
#3
1-3
2-1
2-2
#9
#4
#5
#7
#6
NM-16113
2-3
1-1
1-2
Measurement must be on the
lease [CA, unit] unless otherwise
approved…
#1
#8
#2
#3
1-3
2-1
2-2
#9
#4
#5
#7
#6
NM-16113
2-3
Facility Measurement Points
Proposed Revisions
•
•
•
•
FMP: A measurement facility used in the
calculation of royalty
Requires BLM approval and would be assigned
an FMP number by the BLM
Measurement standards (3174, 3175) would
only apply to FMPs
Allocation meters would not be FMPs
Facility Measurement Points
•
•
•
•
New facilities would require FMP number
prior to removal of production
Existing facilities within 18 or 24 months
FMP number would be shown on all
measurement equipment
All documentation (including OGORs) would
require FMP number
FMP:70-33011-1234
Questions about FMPs
•
Does the new requirement for FMP numbers
apply to both oil and gas?
Yes. An FMP would include:
- A gas meter
- A LACT
- An oil tank facility (multiple tanks)
•
Would the reporting on the OGOR (card ‘C’) be
at an FMP number?
Yes
Questions about FMPs
•
How are downhole commingling situations
impacted by the new FMP requirement?
An FMP can measure oil and gas from more than
one lease, CA, or PA
•
Are the reporting changes going to be
prospective or retroactive?
Prospective
• Who will assign the FMP number?
BLM
• How will existing facilities get FMP numbers
assigned?
Operators will apply to BLM
Commingling
Existing
•
•
BLM can approve commingling
IM 2013-152: BLM can approve if…
Category 1: Allocation doesn’t affect royalty
Federal Lease
12.5%
1-2
#1
Not FMPs
NMN-25533
#3
Federal Lease
12.5%
2-2
NMN-25211
FMP
#2
Category 2: Marginal volume wells
Fee lease
1-2
#1
Not FMPs
FMP
#3
Federal Lease
12.5%
2-2
NMN-25211
#2
Category 3: Other considerations - environmental
Fee lease
FMP
1-2
Not FMPs
Federal Lease
12.5%
2-2
NMN-25211
Commingling
Proposed
•
•
The provisions of IM 2013-152 would generally
be codified
Would apply to existing commingling approvals
Proposed Revisions to
Onshore Order 4
Oil Measurement
Subjects Covered
Existing
Industry standards (old)
Tank gauging
Sampling – S&W
LACT components
LACT proving
Alternate methods
Proposed Revisions
Industry standards (new)
Uncertainty standards
Tank gauging
Sampling – S&W
LACT components
Coriolis Meas. System
Meter proving
Measurement tickets
Alternate methods
Proposed Revisions to
Onshore Order 5
Gas Measurement
Subjects Covered
Existing
Industry standards (old)
Orifice plate and charts
Low-flow exemptions
Chart recorders
Btu once per year
AGA 3 (1985) calcs
Proposed Revisions
Industry standards (new)
List of approved equipment
4 tiers based on flow rate
Meter tube inspections
Charts ≤ 100 Mcf/day
Integration statements
Gauge line standards
Dynamic sampling frequency
Gas sampling and reporting
Transducer testing protocol
Flow computer testing prot.
Calculations
Subjects Covered - EGM
Existing (NTLs)
API 21.1, API 14.2 (old)
Displayed data
On-site data
LFCO = 0.5”
Verification
Gas expansion (B&B)
Atmos. pressure
IV not required
Proposed Revisions
API 21.1, API 14.2 (new)
Displayed data
On-site data
LFCO = 0.5”
Verification (initial and rtn.)
Gas expansion (API 14.3.1)
Atmos. Pressure (no cntrct)
IV required
Reporting raw data
Sampling Frequency
Common practice:
• Higher volume meters: monthly
• Lower volume meters: quarterly
Why?
Royalty Policy Committee (2007):
“MMS and BLM should develop a procedure to
determine the potential BTU variability of produced
natural gas on a by-reservoir or by-lease basis, and
estimate the implications for royalty payments”
“MMS and BLM should adjust BTU frequency
requirements for sampling and reporting on a case-bycase basis, or consider other regulatory requirements”
BLM Heating Value Study
The goals…
• Determine heating value variability for
each meter
• Correlate variability with variables (type
of reservoir, type of lift, rich/lean gas,
temperature…)
• Figure out appropriate sampling
frequency
BLM Heating Value Study
The data…
Field Office
Buffalo, WY
Farmington, NM
Glenwood Springs, CO
Pinedale, WY
Rawlins, WY
Vernal, UT
TOTAL
# of POM
requested
62
65
24
81
46
44
322
# of POM
received
42
64
9
52
38
32
237
# of POM
used
42
59
9
46
37
24
217
# of samples
221
549
24
513
292
296
1895
Meter #1 Heating Value History - 2007
Heating Value, Btu/scf
1280
True heating value?
1240
1200
1160
1120
1080
1040
2007
Meter #1 Heating Value History - 2007
Heating Value, Btu/scf
1280
True heating value?
1240
1200
1160
1120
1080
1040
2007
Meter #1 Heating Value History - 2007
Heating Value, Btu/scf
1280
1240
True heating value?
1200
1160
1120
1080
1040
2007
Meter #1 Heating Value History - 2007
Heating Value, Btu/scf
1280
1240
1200
±2σ
1160
Average
1120
1080
1040
2007
Variability vs Reservoir Type
20
15
V95%
Coal bed methane
Gas cap
10
Retrograde
Tight sands
5
0
0
100
200
300
400
Average sample period, days
500
600
Variability vs Lift Type
20
V95%
15
Flowing
10
Pump jack
Plunger lift
5
0
0
100
200
300
Average sample period, days
Figure 15
400
500
600
Variability vs Separator
20
V95%
15
No separator
10
Separator
5
0
0
100
200
300
Average sample period, days
400
500
600
Variability vs Pressure
20
15
V95%
> 500 psi
10
50 – 500 psi
< 50 psi
5
0
0
100
200
300
Average sample period, days
400
500
600
Variability vs Heating Value
20
15
V95%
> 1141 Btu/scf
10
1081 - 1141
< 1081
5
0
0
100
200
300
Average sample period, days
400
500
600
Variability vs Flow Rate
25
20
V95%
15
< 50 Mcf/day
50 - 100
10
100 - 500
> 500
5
0
0
100
200
300
Average sample period, days
400
500
600
BLM Heating Value Study
Conclusion
• Heating value variability is random and
meter specific
Meter #1 Heating Value History - 2007
Heating Value, Btu/scf
1280
1240
1200
1160
Average
1120
1080
1040
2007
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #1 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2007
Heating Value, Btu/scf
1280
1240
Average
1200
1160
1120
1080
1040
2007
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
BLM Heating Value Study
More conclusions:
• Set performance standard for average
annual heating value uncertainty
• High historic variability = more samples
• Low historic variability = less samples
• Incentive for good sampling practice
Meter #2 Heating Value History - 2010
Heating Value, Btu/scf
1280
1240
1200
1160
1120
1080
1040
2010
Questions about Btu determination
•
Currently, the BLM requires Btu sampling at
least once a year, while ONRR is requiring it to
be done at least twice a year. Who has
jurisdiction on this issue?
Both. Operators would comply with both
requirements by sampling twice per year
•
What could be changing?
New sampling frequencies may be proposed in the
3175
Questions about venting and flaring
•
Will the BLM require venting (non-tank) and
flaring from gas operations to be reported on
the OGOR? Is there a situation where this may
be royalty bearing?
- OGOR reporting requirements are the
jurisdiction of ONRR
- NTL-4A already requires the reporting of
vented/flared volumes
- Under NTL-4A it could be royalty bearing if it is
unapproved or deemed to be avoidably lost
Questions about venting and flaring
•
Will tank venting require measurement and
reporting on the OGOR as “flash gas” or “vapor
recovery” or some other report type? If this is
NOT sold (ie. flared or combusted) would it be
royalty bearing?
Outline
• Overview of BLM jurisdiction, responsibility,
and statistics
• Current measurement regulations
• Draft proposed changes
• Status and timeframes
Status and Timeframe
•
•
•
3173, 3174, 3175 currently under review by the
Secretary’s Office
Draft published in the Federal Register by July,
2015
Final published by August, 2016