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A modest proposal: Speakers outline proposed updates to BLM oil and gas regulations

Richard Estabrook, a petroleum engineer for the Bureau of Land Management, said its Onshore Orders regulations are a "very unique thing in federal government."...

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Mike Wade, Richard Estabrook and Michael McLaren of the Bureau of Land Management take questions related to proposed oil and gas measurement regulation updates at a public meeting Tuesday at the Astoria Hotel. (Press Photo by Andrew Wernette)

Richard Estabrook, a petroleum engineer for the Bureau of Land Management, said its Onshore Orders regulations are a “very unique thing in federal government.”

“An Onshore Order is a regulation that has the full weight of a regulation, but it’s not published anywhere, which seems strange,” he said, adding that they fail to show up in any rulebook yet can be found on the Internet.

The BLM explained proposals to update its Onshore Orders 3, 4 and 5, which deal with how gas and oil are measured for royalty payments, during a meeting Tuesday at the Astoria Hotel and Event Center in Dickinson -- one of three held in the country.

In connection to the meetings, a public comment period is open through next Monday for the proposed updates of each of the orders.

The orders were established in 1989, Estabrook said, but have not been revisited or revised since then. This makes them outdated in relation to modern methods for measuring oil and gas, he said, which can lead to issues.

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The proposed changes to the orders would give clearer, modern guidelines as to how gas and oil are gathered and measured. They detail down to the technical equipment and standards of measurement that would be required.

One example Estabrook gave was how Coriolis meters are now the industry standard in measuring the flow rate of oil and gas. This was not so when the orders were laid down, he said, and therefore do not accurately account for this when stating measurement requirements.

Another issue relates to how natural gas is monitored in relation to calculating royalties according to Onshore Orders 3 and 5, Estabrook said.

Royalty determination for gas involves the lease-stated royalty rate, which is then multiplied by the volume, then the heating value, and then its value determined by the Office of Natural Resource Revenue.

Estabrook said the volume and the heating value have an equal effect in how the royalties are determined, so an error of 10 percent in either would result in the same erroneous percentage in the calculated royalty.

Onshore Order 5 has 26 stipulated regulations on gas measurements, but only one of them deals with heating value while the rest concern volume.

“That is a huge gap … in our being able to ensure the heating value is … accurately measured and properly recorded,” Estabrook said.

He said the BLM has been subject to reports in past years on the inadequacies of its outdated orders by the Secretary of the Interior’s Subcommittee on Royalty Management, the Office of the Inspector General and the Government Accountability Office.

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One of the major proposals that would affect all three of the existing orders would be the creation of a central body for approving resource measurement methods, which would combat past inconsistencies with different field offices giving different opinions on such.

“What we’re proposing is we would establish a new Production Management Team at a national level, and all requests for new technology, new procedures, new equipment, would go through one central review process at a national level.”

The team would also do the same for methods of measurement proposed by well operators, he said.

Estabrook, along with Inspection and Enforcement Compliance Specialist Mike Wade and BLM petroleum engineer Michael McLaren, explained the proposed changes to each of the orders in depth.

A spokesperson for ConocoPhillips read a prepared statement from the company asking the BLM for the general comment periods be extended beyond Dec. 14 in order for oil companies to have more time in scrutinizing the proposals.

The letter also asked for some facilities to be grandfathered into some of the new standards should they be adopted, as well as a more thorough economic impact analysis on their implementation.

Sen. Bill Bowman, R-Bowman, represents District 39, which encompasses a great deal of BLM land from McKenzie County to Bowman County. He said he was intent on hearing all voices on the matter.

“What I want to see is that we take everyone’s ideas into consideration because people that work in the industry know way more than I know about this,” he said.

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Bowman also said he wanted the BLM to make sure it was making accurate rules, but that it didn’t go too far.

“If it comes at such a cost that the industry shuts down because of that, then is it worth it?” he asked.

Related Topics: DICKINSON
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