American Oil and Gas Reporter - January 2017 - 23

IndustryDigest
standards for underground natural gas
storage facilities, including wells,
wellbore tubing, and casing.
In an alert to clients, law firm Babst
Calland points out that because the rule
was released as an IFR, it is to take
effect within 30 days of publication
without benefit of public input.
However, Babst Calland says PHMSA
is accepting comments for 60 days, and
"may consider making changes to the
rule based on the comments filed."
Babst Calland says the rule
incorporates by reference API
Recommended Practice 1170 Design
and Operation of Solution-Mined Salt
Caverns used for Natural Gas Storage,
and RP 1171 Functional Integrity of
Natural Gas Storage in Depleted
Hydrocarbon Reservoirs and Aquifer
Reservoirs, covering reservoir and well
design, integrity and monitoring, risk
management, record keeping, integrity
verification, site security and safety,
emergencies, procedures, training, and
other subjects.
API Midstream Group Director Robin
Rorick says the organization is
"encouraged the new rule adopts API's
rigorous safety management practices,"
but that it "fears the rule's unrealistic
compliance timeline will effectively
prevent operators from implementing the
requirements of the rule, and potentially
could undermine the very safety efforts
the rule is trying to promote."
Under the rule, Babst Calland
mentions, PHMSA will regulate the
downhole portions of gas storage
facilities for the first time. The attorneys
note that PHMSA has had statutory
authority to regulate storage since 1968,
but had declined to do so until it was
mandated by the Protecting Our
Infrastructure of Pipelines and Enhancing
Safety (PIPES) Act, which Congress
passed in June 2016 in response to the
2015 Aliso Canyon, Ca., gas storage leak.
Babst Calland says existing storage
facilities must meet the operations and
integrity provisions of the applicable
API RP within one year of publication.
Storage facilities built more than six
months after publication must comply
with all applicable provisions on
commencement of operations. The
attorneys say reporting obligations will
take effect 30 days from publication,
and operators must file initial annual
reports within six months of the
effective date.
Babst Calland explains that the rule

requires storage operators to file annual,
incident, and safety-related condition
reports, and to file 60-day notices for
certain construction activities (new
storage facilities and wells, and well
workovers), as well as changes such as
acquisitions, divestitures, and changes
in responsible operating entity.
"The IFR is the first step in
PHMSA's storage rule making," the
firm continues. "PHMSA may or may
not make changes to the IFR based on
comments received. Beyond the IFR,
PHMSA has indicated it may adopt
additional, and potentially more
stringent, regulations." ❒

BLM, USDA Cancelling
Federal Oil, Gas Leases
In Montana, Colorado
WASHINGTON-The Bureau of
Land Management is cancelling federal
oil and gas leases in two Western states.
The action affects 15 leases in the
Badger-Two Medicine area of
Montana's Lewis and Clark National
Forest and 25 leases in the Thompson
Divide portion of the White River
National Forest in Colorado.
In a separate action, the Department
of Agriculture says it is choosing the
no-lease option in its final supplemental
environmental impact statement for the
Bridger-Teton National Forest in
Wyoming. The department notes this
supersedes a 2005 Forest Service
decision to offer leases on 35 parcels
covering 44,720 acres.
The Blackfeet Tribe says it considers
the 130,000-acre Badger-Two Medicine
area to be sacred. According to BLM,
those characteristics caused Congress to
withdraw the area, part of a DOIrecognized traditional cultural district,
from mineral development in 2006.
Devon Energy Corp. acquired its
interest in the Montana leases in the
1980s, and DOI says there has been no
drilling in the area. Lease cancellation
entitles Devon to a refund of all rents
and bonuses, DOI notes.
The Montana Petroleum Association
asserts leaseholders' property rights
should be honored without infringement
by retroactive agency decisions.
Accepting DOI's argument that leases
were improperly issued suggests tribal
groups, not landowners or federal
agencies, hold exclusive development

rights, MPA says.
BLM says it has adopted the 2014
White River National Forest final EIS.
The agency says closing most of the
Thompson Divide to leasing is among
its provisions, and the White River
decision resolves all disputed oil and
gas leases issued from 1995 to 2012. It
adds that all 25 canceled leases are
nonproducing. In addition to the
cancellations, the agency says is
applying new conditions on remaining
nonproducing leases.
The West Slope Colorado Oil & Gas
Association says political motivations,
not facts or a regard for the law, have
prompted a White River decision that
threatens West Slope jobs and economic
opportunities. Dan Haley, president and
chief executive officer of the Colorado
Oil & Gas Association, characterizes
the move as a property rights taking that
sets a national precedent.
The Agriculture Department says it has
received more than 62,000 comments on
its Bridger-Teton final EIS. The document
covers 39,490 acres in the Wyoming
Range. According to the department,
while leasing alternatives would have
affected less than 200 acres, "the
cumulative effect of individual project
components could result in noteworthy
and negative effects to the sense of place
associated with the project area."
The Western Energy Alliance says
the no-leasing decision violates the
National Environmental Policy Act, and
is an attempt by the Obama
administration to enact as many jobkilling regulations as possible before he
left the White House.
Alliance President Kathleen Sgamma
says all three decisions are retroactive
denials of property rights for leases
issued more than a decade ago, and are
contrary to basic American
jurisprudence. ❒

Work Group Suggests
Incentives For CO2-EOR

MINNEAPOLIS-A 14-state work
group is recommending targeted federal
incentives along with complementary
state actions to encourage capturing
carbon dioxide for use in enhanced oil
recovery with geologic storage.
The Great Plains Institute, which
serves as staff for the State CO2-EOR
Deployment Work Group, says the key

JANUARY 2017 23
American Oil and Gas Reporter - January 2017

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