American Oil and Gas Reporter - June 2018 - 31

tions, the 2016 rule would affect existing
wells, including a substantial number that
are likely to be marginal or low-producing
and therefore less likely to remain economic
to operate if subjected to additional compliance costs. BLM adds the rule also
contains numerous unnecessary administrative and reporting burdens that are likely
to constrain development, and the rule's
expected compliance costs are expected
to exceed any associated benefits.
Particular burdens on marginal wells
include leak detection and repair (LDAR),
pneumatic equipment, and liquids unloading requirements, BLM states. The
agency says it is possible that operators
will shut in some marginal well production
prematurely because of the costs and uncertainties involved in obtaining needed
exemptions from BLM or the costs associated with an alternate LDAR program.
"There are many other reporting requirements in the 2016 final rule and the
cumulative effect of the burden is substantial," the agency says. "Specifically, the
BLM estimates that the 2016 final rule
would impose administrative costs of about
$14.0 million a year ($10.7 million to be
borne by the industry and $3.27 million to
be borne by the BLM). The BLM estimates
that the proposed revision of the 2016 final

rule would alleviate the vast majority of
these burdens and would pose administrative
burdens of only $349,000 a year."
According to the agency, in addition
to waste minimization and LDAR requirements, its revisions of the 2016 rule
would rescind:
* Well drilling requirements;
* Well completion and related operations requirements;
* Pneumatic controllers equipment
requirements;
* Pneumatic diaphragm pumps equipment requirements; and
* Storage vessels equipment requirements.
Recommended Changes
The Western Energy Alliance and
IPAA say they support BLM's proposed
revisions to the 2016 rule, but call for
further technical changes to increase
clarity for the regulated community.
The agency should limit the rule's applicability to oil and gas leases, units and
communitized areas with a minimum federal mineral interest threshold, the groups
suggest. In many Western states, checkerboard mineral interests have created communitized areas with a de minimis level
of federal minerals, yet the proposed rule

would apply and impose significant economic burdens on private mineral owners.
The recommendation says a 10 percent
minimum federal mineral interest would
protect the federal mineral estate sufficiently
without harming private property owners.
The rule's definition of "avoidably
lost" gas is vague, and it is it unclear
whether BLM is referring to losses upstream or downstream of the gas meter,
or both. Clarifying language should be
added to the definition to minimize confusion, the groups urge:
* It includes "oil or gas that is lost
because of line failures," but the agency's
definition of line failure makes it unclear
as to whether it means mechanical failure
or pressure constraints of the line.
* The agency also should add "nonpipeline specification gas" to the definition,
since some wells produce associated gas
with high levels of nitrogen, carbon dioxide, hydrogen sulfide or other nonhydrocarbon gases that prevent the production
from being pipeline-ready at the wellhead.
The groups recommend BLM exempt
safe disposal of nonpipeline specification
gas through either venting or flaring from
royalty-bearing provisions.
SEE METHANE PAGE 123
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American Oil and Gas Reporter - June 2018

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