Policy for Approving Requests for Commingling and Allocation Approval and Off-lease Measurement Approval

UNITED STATES DEPARTMENT OF THE INTERIOR

BUREAU OF LAND MANAGEMENT

Washington, DC 20240

http://www.blm.gov

September 22, 2011

In Reply Refer To:          

3160 (310) P

EMS TRANSMISSION 09/28/2011

Instruction Memorandum No. 2011-184

Expires:  09/30/2012

To:                   All Field Officials

From:               Assistant Director, Minerals and Realty Management

Subject:           Policy for Approving Requests for Commingling and Allocation Approval and Off-lease Measurement Approval

Program Area:  Fluid Minerals.

Purpose:  This Instruction Memorandum (IM) provides field offices (FO) with interim guidance for the approval of requests for commingling and allocation approval (CAA) and off-lease measurement.  This guidance also addresses concerns for production accountability from recent audit findings.

Policy/Action:  Unless otherwise approved, measurement of oil and gas production for all Federal and Indian leases, units, or communitization agreements (CA) must occur within the boundary of the lease, unit participating area (PA), or CA from which the production originated.   The Bureau of Land Management (BLM) prohibits measurement of production from any other lease, unit PA, CA, or non-Federal properties without prior approval.  All off-lease measurement, commingling, or allocation of Federal or Indian production requires prior approval as stated in 43 CFR 3162.7-2 and 3162.7-3. 

In the interest of accurate production accounting and reporting, FOs receiving requests for a CAA and off-lease measurement must only approve requests that meet the standards in Attachment 1.  The FO must deny all other requests.  All previously approved commingling, allocation, and off-lease measurement requests must meet the standards in Attachment 1.  The FOs will work with operators to develop reasonable timeframes for compliance until such time as final guidance in the revision to Onshore Oil and Gas Order Number 3 is implemented.  If compliance is not possible, the FO will terminate the commingling, allocation, and off-lease measurement approvals.  Without an approval granting commingling, allocation, or off-lease measurement, the regulations dictate that measurement of oil and natural gas is to occur on the lease.

Timeframe:  This policy is to be implemented immediately.

Budget Impact:  There may be an increase in the time required to process a request to commingle production or for off-lease measurement.

Background:  In March 2010, the Government Accountability Office (GAO) issued report GAO-10-313 recommending the BLM “develop guidance clarifying when Federal oil and gas may be commingled and establish standardized measurement methods in such a way that production can be adequately measured and verified.”  We will issue final guidance in the revision to Onshore Oil and Gas Order Number 3.

Manual/Handbook Sections Affected:  At present, this interim guidance will not affect any manual or handbook.  After approval of Onshore Oil and Gas Order Number 3, a manual and handbook for commingling and off-lease measurement will be developed.

Coordination:  The Washington Office Fluid Minerals Division and BLM state fluid minerals staff coordinated preparation of this IM.

Contact:  If you have any questions concerning the content of this IM, please contact me at 202-208-4201, or your staff may contact William Gewecke at 202-912-7152 or email at wgewecke@blm.gov, or Mike Wade at 303-236-1930 or email at mwade@blm.gov.

Signed by:                                                                   Authenticated by:

Michael Nedd                                                             Robert M. Williams

Assistant Director                                                       Division of IRM Governance,WO-560

Minerals and Realty Management

1 Attachment

1-Minimum Requirements for Commingling and Allocation Approvals and Off-lease Approvals (8 pp)