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Onshore Oil & Gas Order #1

Onshore Oil & Gas Order #1. BLM/Forest Service Final Rule. Onshore Oil & Gas Order #1. Ken McMurrough NRS BLM, Colorado State Office 303-239-3642 (x3799 fax) hugh_mcmurrough@blm.gov Hank Szymanski – 303-239-3797 Hank_Szymanski@blm.gov. Overview Onshore Oil & Gas Order No. 1. Authority

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Onshore Oil & Gas Order #1

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  1. Onshore Oil & Gas Order #1 BLM/Forest Service Final Rule

  2. Onshore Oil & Gas Order #1 Ken McMurrough NRS BLM, Colorado State Office 303-239-3642 (x3799 fax) hugh_mcmurrough@blm.gov Hank Szymanski – 303-239-3797 Hank_Szymanski@blm.gov

  3. OverviewOnshore Oil & Gas Order No. 1 • Authority This rule, effective April 6, 2007, revised the existing OO#1 which supplemented primarily the federal regulations at 43 CFR 3162.3 and 3162.5. • Purpose - Approval of Operations of Federal and Indian Oil and Gas Leases The purpose of OO#1 is to state the application requirements for the approval of all proposed oil and gas and service wells, certain subsequent well operations, and abandonment.

  4. OverviewOnshore Oil & Gas Order No. 1 • Defines terms • Components of APD • Time line • Approval requirements • Split estate • Indian leases • Reclamation/Abandonment • Appeals

  5. BackgroundReasons for Revision of Previous Order • Leasing Reform Act of 1987 • Energy Policy Act of 2005 • Update for Current Practices • Split estate policy • Cultural & wildlife inventory • Right of Way coordination • Master development plans, directional drilling • Best Management Practices

  6. BackgroundStatus • Proposed rule – Published July 2005 • Energy Policy Act – Signed August 2005 • Further proposed rule – Published March 2006 • Public comments – Received nearly 90 from industry, interest groups and the public at large • Final rule – March 7, 2007

  7. BackgroundMajor Revisions • Process time line • Section 366, Energy Policy Act of 2005 • Requires compliance with applicable law • Define terms • Complete APD • Onsite inspection included • Cultural & wildlife Inventories not included • Geo-referenced well plat

  8. BackgroundMajor Revisions (continued) • Split estate • Operator provides SUPO & COAs to surface owner • Bond compensation for loss or damages for access based on statutory requirements on patented lands (min $1000) • Onsite inspection • 15 day requirement eliminated • Onsite required for complete APD • Valid period for APD • Changed to 2 years with 2 year extension

  9. BackgroundControversial Issues • Time line • Onsite inspection required • Required for complete APD • NEPA, NHPA, ESA compliance • Potential delays – no definite time to process • APD may be deferred or denied within 30 day after complete APD submittal

  10. BackgroundControversial Issues (continued) • Valid period for APD • 2 years with 2 year extension • Split estate • SUPO & COAs provided to surface owner • Good Faith Effort vs mandatory notification • What is a “good faith effort” • Bonding for access • Compensation based on loss or damages or as required by specific statutory authority

  11. SpecificsDefinitions, New or Revised • Best Management Practices • Casual Use • COA • Complete APD • Days • Emergency Repairs • Geospatial Database • Master Development Plan • Onsite Inspection • Private Surface Owner • Reclamation • Surface Managing Agency

  12. SpecificsGeneral • Read the preamble first if you have questions • Early notification is new (initial planning conference) & is voluntary, precede NOS • Best Management Practices, something we have been doing for decades, are strongly recommended

  13. SpecificsNotice Of Staking Option • Provides operator opportunity to gather information to address site-specific resource concerns while preparing the APD package. • 10 days after receiving NOS, an onsite inspection will be scheduled to take place as soon as weather & conditions permit. • Minimum staking required: 1) center stake for proposed well, 2) 2 reference stakes, 3) flagged access centerline. • BLM will invite surface managing agency (SMA) and surface owner, if applicable.

  14. SpecificsGeneral • Geospatial database, required for well plat • Operator must make a “Good Faith Effort” : 1) notify the private surface owner for access, 2) provide operator with SUPO & COA, 3) obtain surface access agreement • Casual Use further explained, includes surveying and staking

  15. Specifics9-point Drilling Plan • More complete casing and cementing information • Added language for directional drilling

  16. Specifics12-point Surface Use Plan • Geospatial data optional • Additional staking required over that used for an NOS • Certify or Good Faith Effort made to get the SUPO to the private surface owner (#11) • Moved “Certification” out of SUPO, it now stands alone as a required APD component

  17. SpecificsBonding • Bond increase and phased release (lease bond only) are now in the Order • BLM requires sufficient bond to restore surface adversely affected by lease operations after abandonment • Authority to require additional bond to be applied to off-lease facilities required to develop a lease

  18. SpecificsNOS Processing Time Line • Onsite scheduled within 10 days • “List of Concerns” provided at onsite or within 7 days • Submit APD within 60 days or NOS may be returned

  19. SpecificsAPD Processing Time Line • 10-Day letter for APD completeness notification • Onsite scheduled within 10 days (unless NOS onsite conducted) • “Additional Deficiencies” provided at onsite • 45 days to submit additional information • 30 days for BLM decision after complete APD submitted • Decision to Approve, Defer, or Deny APD

  20. SpecificsAPD Permit Deferral • BLM will provide the operator a list of pending actions and a schedule for completion before final APD approval can be granted • BLM will inform the operator of the actions they could take to assist • The operator has 2 years to take the specified actions • BLM will approve the APD within 10 days after all actions are complete

  21. SpecificsAPD Approval • FS has NEPA responsibility on the Forest • On the Forest, BLM should be a cooperating agency (Co-lead) and adopt the NEPA analysis as a basis for its decision • On Indian lands, BLM may be a cooperating agency (Co-lead) OR may adopt the NEPA analysis prepared by the BIA

  22. SpecificsMaster Development Plans • Eliminated Master “Drilling” Plans • Master development plan (MDP) for 2 or more APDs with common drilling plan, SUPO and POD. • Subsequent APDs can reference the MDP for NEPA analysis • Each subsequent proposed well must have a survey plat and an APD Form (3160-3)

  23. SpecificsOperator Responsibilities • Section IV, General Operating Requirements Operator responsibilities discussed - includes requirements for : • NEPA • General operations • Protecting cultural & historic resources • Protecting endangered species & their habitat • Surface protection • Safety • Completion reports

  24. SpecificsCompletion Reports • Well logs submitted in electronic format • For directional wells be sure to report the bottom hole lat/long locations (at top of production interval and at total depth)

  25. SpecificsPrivate Surface • Certify to BLM that a Good Faith Effort has been made to notify the private surface owner before entry • Certify to BLM that a surface use or access agreement has been reached or a Good Faith Effort made • Certify copy of SUPO & COA provided to private surface owner or a Good Faith Effort made

  26. SpecificsSubsequent Operations • NOI required for new construction, re-construction, or alterations that result in new disturbance. • If no existing approved plan exists, an NOI must be filed & approved by the BLM. New field inspection may be required & additional cultural or biological inventories may be required. • Split Estate - Operator must “certify” that “good faith effort” made to provide private surface owner a copy of any proposal for new surface disturbance.

  27. SpecificsWell Conversions • Order includes a more complete explanation of well conversions • Added a section on conversion to an injection well

  28. SpecificsWaivers, Exceptions, Modifications • Waiver – Permanent removal of lease stipulation. • Exception – Case-by-case exemption from lease stipulation. • Modify – Permanent change to lease stipulation • Request should also include information to support that the stipulation no longer justified or the proposed operation would not cause unacceptable impacts.

  29. SpecificsAbandonment • 6 months to complete earthwork (weather permitting) after well completion/plugging • May be difficult on multi-well pad • An agreement between the SMA or private surface owner and the operator necessary before assuming improvements (roads, pads, other)

  30. SpecificsAppeals • FS SUPO subject to FS appeal requirements • BIA decisions subject to BIA appeal requirements

  31. Thoughts, Comments? • Onshore Oil and Gas Order Number 1, Approval of Operations • Federal Register, Volume 72, Page 10308-10338 (72FR10308), Wednesday, March 7, 2007 • Effective May 7, 2007

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