Internal Control Review of the Oil and Gas Inspection and Enforcement Program

This Information Bulletin (IB) highlights findings from a recently completed Internal Control Review (ICR) of the Bureau of Land Management (BLM) Oil and Gas Inspection and Enforcement program. We believe all offices may benefit from the lessons learned program-wide. The inspection program is fundamental to ensure sound oil and gas operations. 

The review focused on the overall inspection and enforcement aspects of the oil and gas program in 10 field offices and, more specifically, on documentation of inspections completed.  The ICR teams completed this task with a records review, side-by-side review of field inspection expertise, adherence to established policy, and personal interviews of employees who work in the program. The review covered the office procedures as well as reviews of field inspections in the areas of drilling, production, and environmental/reclamation from a post-approval standpoint.  Across a vast program with 49,000 leases, there is always room for improvements to make the inspection program stronger. The following captures key findings and conclusions from the review.

TECHNICAL COMPETENCY, OFFICE STUCTURE, AND SUPERVISION – The review team found that the BLM’s commitment to Petroleum Engineering Technician (PET) certification and the related formal training program, including refresher modules, was a positive contributing factor to the overall technical and procedural proficiency of the individuals reviewed. Closely related to this finding, the review revealed that those offices that have established and maintained subordinate supervisory and “lead” types of positions have superior accomplishments, program quality, and the time and ability to mentor newer employees. Conversely, those offices using essentially none of these types of positions were clearly struggling. In those situations, leadership, program direction, mentoring, program quality, and even morale were significant problems and appeared to be directly linked to the organizational structure in place.

AVAILABILITY OF OVERTIME AND FUNDING IN GENERAL – The review team found that budgeting for and the authorizing of overtime was a significant issue in several offices and needed to be addressed in order to ensure BLM’s oversight responsibilities are adequately met. The “oil patch” operates around the clock 24/7; our responsibilities to provide meaningful oversight of operations must include a presence and visibility in the field to witness priority events that have the potential to affect public health and safety as well as conservation of resources. Oversight also ensures compliance with policies and procedures that affect proper royalty receipts with production accountability.

Distribution of funding to assure proper levels of personnel in those offices experiencing sustained increased activity levels is a significant issue as well. Rapid program growth has led to chronic shortages of inspectors and field-going personnel, along with support positions. While this in itself is not a new issue for the BLM, the consequences witnessed in this review included, as one example, wells that have never been inspected but have been in production for 10 to 12 years. 

Complicating this situation is recruiting, training, and mentoring new employees which can distract the existing staff from performing their on-going responsibilities. We recognize there is significant invested employee development time for PET inspectors; it requires at least 1 to 2 years completing certification. Rather than make the commitment to hire and train a large number of needed new employees, one office has chosen to less aggressively add to their staff and maintain a high level of quality for the operations that they can review and inspect. We need to discuss this productivity issue openly at all levels of the organization to find solutions that will work for all concerned.

DOCUMENTATION AND FILES MANAGEMENT – The review found that the overall records and file management system was quite poor in a significant number of offices reviewed. Fundamental provisions for maintaining effective files are not in place, leading to situations where the team found files that were incomplete, misfiled, or in some cases, missing entirely. Documentation required by policy for the Automated Fluid Materials Support System (AFMSS) and hardcopy files was incomplete in a number of offices reviewed. Clearly, the “paperwork” aspect of the inspection program is an issue requiring ongoing attention, greater commitment, and further training and emphasis. Without a proper account, documentation, and case recordation, we will fail if challenged and will not accurately portray the work completed, especially in offices that may face attrition or turnover.

ENVIRONMENTAL AND RECLAMTION INSPECTIONS – While the team reviewed drilling, production, and environmental/reclamation inspections and related files, in general, the environmental/reclamation inspections (and appropriate follow-ups) seemed to be the area most lacking in overall achievement. In a number of environmental/reclamation cases reviewed, the quality of either the inspection itself and/or the required documentation was inadequate as was the commitment to do follow-up to ensure the required additional work was completed. In some cases, because of the overall shortage of personnel, staff without the specific expertise to do particular types of inspections did the inspections, leading to a lower quality of overall inspection. In addition, some offices, with large and expanding workloads, simply have not had the opportunity to hire and sufficiently train the required personnel with the necessary surface compliance expertise. 

Another impediment to overall accomplishment has been the pressure and need to complete onsite inspections related to new Applications for Permit to Drill at the expense of follow-up and/or other environmental and reclamations-based inspection work. Pre-leasing inspections and analysis may also further crowd-out available time for follow-up inspection work of ongoing operations as staffs are required to juggle competing activities.

SAFETY – While not widespread, some personnel safety issues bear consideration by all offices. Robust check-in/check-out procedures for employees in travel status must be in place to ensure they have safely traveled to and from remote inspection locations. These procedures are a critical component to assuring the health and wellbeing of all of our employees. Further, offices must ensure that effective communications can occur with these same employees, regardless of whether that are a cell phone system, radio system, etc. The safety of employees near heavy equipment in remote locations and rough field conditions must remain a priority.

OVERALL QUALITY AND RELATIONSHIP TO APPROVALS – We encourage all offices to consider these findings and review their own related situations. An I&E program is only as good as the initial authorizing approval (this finding mirrors the recommendations noted from the Department’s 2010 Safety Oversight Board Report after the Deepwater Horizon oil spill). This review was post-approval only. Quality assurance and program review are responsibilities that must be borne by all levels of the organization. Ongoing communications with and among field offices must occur to find solutions to the challenges of a program that is vital to the Nation’s need and demand for safe and reliable domestic energy development.

COMMITMENT TO OVERSIGHT – While the program has matured and emphasis has shifted, the need to continue effective oversight to the program has not changed. This, again, is a responsibility that must be shared at all levels of the organization. We no longer have the ability to have a separate quality assessment/quality assurance section to provide ongoing reviews of the programs in the field. Therefore maintaining a viable I&E Policy Guidance Team made up of the state I&E coordinators and corresponding specialists from the Washington Office must occur and existing efforts must be reinvigorated. Also, in addition to these topics being a part of any scheduled national fluid conferences, I&E program effectiveness increases with ongoing strategic teleconferences. We must establish a regular teleconference schedule to track progress, share lessons learned, and monitor existing and changing conditions to assist in guiding the program into the future.

PLANNING FOR THE FUTURE OF THE PROGRAM – Stakeholders need to take a fresh look at several key aspects of the program to see if we are efficient and effective with the key program components. One of these is training and certification. While we have a very effective training and certification program, the review team heard many suggestions to consider alternatives to improving our training/employee development procedures. One such idea is to replace the current certification process with an “academy” approach – similar to other programs. Future inspectors would undergo intensive training, certify, and then deploy to the field offices, already certified. The Deepwater Horizon report did acknowledge that the BLM has a reputable certification program for our inspectors.

Our I&E Strategy is constantly adapting to accommodate changes in the program and established goals. We must discuss and refine our risk-based strategy to ensure the BLM strikes the best balance to meet program needs and recommendations of the Office of Inspector General and Government Accounting Office. I&E is the largest component of the largest program in the BLM, and we are responsible for ensuring the proper stewardship of precious energy resources worth billions of dollars in revenue annually.

Our automation processes for this program are evolving as well and will require more discussion and review as well to assure that we are taking maximum advantage of data systems to assist our field-going personnel in performing their functions with the minimum of data entry duplication and “paperwork” in general. Automation must complement and enhance capability as we improve our case recordation; the panther platform for the AFMSS database is 15 years old, pressing the need for enhancement and upgrade. Investment in automation is modest relative to the value of the resources at stake.

Finally, the review revealed a number of issues associated with retention of our valued employees, including cost-of-living, pay scales, and retention. The mineral industry is booming and impacting the cost of living in a number of our field offices. That same industry growth continues to cause competition for our employees with the private sector as well as other agencies that often pay higher salaries for similar work (i.e., PETs, analysts, engineers, and geologists). In addition, other offices, agencies and private sector recruit many field trained and skilled specialists. Management strategies to assist with these ongoing issues must continue.

Attached is the ICR report which provides detailed explanations of the report highlights noted above.

If you have questions concerning the content of this IB, please contact me at 202-208-4201 or your staff may contact Steven Wells at 202-912-7143 (s1wells@blm.gov) or Michael Wade at 303-236-1930 (mwade@blm.gov)