CHAPTER 1 INTRODUCTION AND OVERVIEW OF BLM OIL AND GAS PROGRAMS

• Jurisdiction: United States

Federal Drainage Protection & Compensatory Royalties
(Mar 1994)
CHAPTER 1
INTRODUCTION AND OVERVIEW OF BLM OIL AND GAS PROGRAMS
Erick V. Kaarlela
Bureau of Land Management Division of Fluid Minerals
Washington, D.C.

Bureau of Land Management
Fluid Minerals Management

I. Description of the Program

The three primary objectives of the Bureau of Land Management's (BLM) Fluid Mineral Lease and Reservoir Management Programs are to foster a fair return to the public for its resources, to ensure environmentally acceptable activities, and to provide for conservation of the fluid mineral resource, as well as other resources, in the context of multiple use management. The BLM also has been delegated the Secretary's Trust responsibility for Indian lands once a lease is issued by BIA.

All industry applications to conduct operations and other related proposals are reviewed to ensure technical competence and to ensure that due consideration is given to resource conservation and environmental protection.

Field inspections are performed prior to the approval of drilling proposals and during drilling, producing, and other related operations to ensure compliance with the applicable laws, regulations, lease terms, and the provisions of the approved operating plan to insure that the program objectives are being met. In the event of noncompliance, the BLM is authorized to take appropriate enforcement actions.

In addition, the Bureau manages an active Reservoir Management program designed to assure that Federal and Indian mineral interests are properly protected. This involves protection against drainage, diligent development of Indian leases, and appropriate distribution of proceeds when Federal/Indian interests are pooled with other mineral owners.

II. Major Issues

A. NEPA COMPLIANCE

In view of conflicting appellate court decisions and the language of the 1987 Reform act, we must continue to assure that the environmental consequences of industry proposed actions are timely and appropriately considered.

B. RESERVOIR MANAGEMENT

Emphasis needs to be maintained in the drainage program to ensure continued monitoring and protection of the Federal/Indian mineral resources.

C. AUTOMATION

Automating program processes in order to streamline and effect efficiencies, as well as merging with the Bureau's target automated system, will be a demanding and resource draining effort.

[Page 1-2]

D. LIABILITY

There are currently 60,000 wells located on public lands that either are marginal producers [produce less than 10 barrels of oil per day or less than 50 MCFG per day], or are injection/disposal wells, shut-in or temporarily abandoned. Approximately 60 percent of these wells are operated by "small" companies [companies that operate three or fewer wells]. Although it is impossible to predict whether these small operators will plug their wells and restore the surface when the well is depleted, there is a risk that some of them will not. According to Office of Inspector General [OIG] estimates, the Government will face some liability for plugging between 150-600 of these wells. The costs to plug and abandon these wells will vary widely, however, the OIG estimates the costs to the taxpayer could be between $1.2-$4.8 million [estimate $8000/well].

[Page 1-3]

Comprehensive Description
Bureau of Land Management
Fluid Mineral Lease and Reservoir Management

1. Description of Program

The three primary objectives of the Bureau of Land Management's (BLM) fluid mineral lease and reservoir management program are to foster a fair return to the public for its resources, to ensure environmentally acceptable activities within the program, and to provide for conservation of the fluid mineral resource, as well as other resources, in the context of multiple-use management.

The Bureau has a Trust responsibility for all Indian tribal lands and all Indian allotted lands and individual allottees whose restrictions have been lifted. This Trust responsibility authorizes the Bureau to supervise and direct operations under oil and gas leases, to furnish scientific and technical information and advice, and to ascertain and record the amount of production. Portions of this responsibility were originally transferred from the Secretary to the Geological Survey by Secretarial Order Nos. 731 and 1112, dated January 2, 1934, and September 4, 1936, respectively. This responsibility was subsequently transferred to the Minerals Management Service (MMS) on January 19, 1982, by Secretarial Order No. 3071, and then to the Bureau on February 7, 1983, by amended Secretarial Order No. 3087.

The Bureau's fluid minerals management program with respect to Federal and Indian lands leased for oil, gas and geothermal resources is basically concerned with the approval and supervision of industry operations. The general requirements imposed on the lessees and operators are set forth in the individual lease instruments and any stipulations thereto; the operating regulations [43 CFR 3160 for oil and gas and 43 CFR 3260 for geothermal]; and the leasing regulations [...