The Bureau of Land Management (BLM) is proposing new regulations to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian leases. The regulations clarify when produced gas lost through venting, flaring, or leaks is subject to royalties and when oil and gas production used on site would be royalty-free. This proposal is the first time BLM has updated waste provisions in over 30 years.
This proposed rule would:
- Align the BLM’s royalty rate for new competitive Federal oil and gas leases with “a rate of not less than 12.5 percent in amount or value of the production removed or sold from the lease.”
- Update the BLM’s existing NTL-4A requirements related to venting, flaring, and royalty –free use of natural gas from onshore Federal and Indian leases.
- Prohibit venting, except in certain limited circumstances; limit the rate of routine flaring at development oil wells; require operators to detect and repair leaks; and mandate reductions in venting from: Pneumatic controllers and pneumatic pumps that operate by releasing natural gas; storage vessels; activities to unload liquids from a well; and well drilling, completion, and testing activities.
- The rule would require operators to submit “gas capture plans” with their Applications for Permits to Drill new wells
Operators can make cases against compliance with most of the proposed requirements if complying means that the assets may be abandoned and resources will not be recovered.
For those who are watching NSPS OOOOa developments closely, this rule will look familiar. For more information regarding NSPS OOOOa, click here https://www.federalregister.gov/articles/2015/09/18/2015-21023/oil-and-natural-gas-sector-emission-standards-for-new-and-modified-sources . In essence, the control requirements mirror what is found in NSPS OOOOa, but would apply to both new and existing sources. While many of the requirements found in the BLM rule mirror NSPS OOOOa, there is one interesting deviation: the frequency of LDAR surveys. In NSPS OOOOa, as proposed, the frequency of LDAR surveys would depend on the percentage of leakers found to be leaking during the survey. This approach will require operators to secure component counts at each site in order to determine the percentage of leakers found to be leaking- which can be very cumbersome. However, the BLM rule offers frequency based on the number of leaks found.
Limitations on Venting and Flaring
BLM identifies two distinct scenarios which result in flaring:
- Wells that always flare associated gas due to lack of infrastructure; and
- Wells that have access to pipeline infrastructure, but flare associated gas due to pipeline limitations, upset conditions, gas processing limitations, or other issues.
BLM is proposing to limit routine flaring of associated gas from development wells to 1,800 Mcf per month, per producing well. BLM is also proposing to create a 2 year renewable exemption from flaring limit, available only for certain existing leases that are located a significant distance from gas processing facilities and flaring at a rate well above the proposed flaring limit.
BLM is also proposing that, prior to bringing wells online to an existing pipeline system, an operator would have to evaluate the pipeline capacity and prepare a plan to minimize waste of associated gas from that well. This evaluation would be required to be submitted alongside the Application for Permit to Drill or reenter (APD).
In addition to these reducing flaring requirements, the BLM proposes to update existing royalty provisions by more specifically defining when a loss of gas would be considered “unavoidable” and royalty free and when it would be considered “avoidable” and subject to royalties.
Under the proposed rule, operators would be required to conduct semi-annual leak inspections at well sites and compressor locations. If an operator finds no more than 2 leaks at a facility for 2 consecutive inspections, the operator can reduce the inspection frequency to annually. If an operator finds more than 2 leaks at facility, the operator must inspect for leaks quarterly. Once a leak is identified, the BLM proposes that the operator would be required to repair the leak as soon as possible, no later than 15 calendar days after discovery.
Pneumatic Controllers and Pneumatic Pumps
The BLM is proposing to require operators to replace high bleed pneumatic controllers with low bleed or no bleed pneumatic controllers within 1 year of the effective date of the final rule. This requirement would apply only to pneumatic controllers that are not subject to EPA regulations under NSPS OOOO or OOOOa. For pneumatic pumps, the BLM is proposing to require the operator to either replace a pneumatic chemical injection or diaphragm pump with a zero emissions pump or route the pneumatic chemical injection or diaphragm pump to a flare if a flare is installed at the facility.
The BLM is proposing to address gas losses from existing storage vessels which are not covered by the EPA standards. The BLM also proposes to require that operators route VOC emissions from existing storage vessels subject to the requirements to combustion devices, continuous flares, or sales lines within 6 months are the effect date of the rule.
Well Maintenance and Liquids Unloading
For wells drilled after the effective date of the rule, the BLM is proposing to prohibit unloading liquids by simply purging the well. The BLM is also proposing to require specified best management practices to minimize venting from liquids unloading at both new and existing wells.
Reducing Waste from Drilling, Completion, and Related Operations
As proposed, the BLM waste requirements for well drilling and completions would extend to both conventional and hydraulically fractured wells, and therefore would apply to a broader set of wells than the EPA regulations propose to cover. Also, the BLM is proposing to allow an operator to demonstrate that it is in compliance with EPA requirements for control of gas from well completions in lieu of compliance with the BLM requirements.