Fiscal Year 2014 Oil and Gas Inspection and Enforcement Strategy Matrices Instructions and Strategy Goal

UNITED STATES DEPARTMENT OF THE INTERIORBUREAU OF LAND MANAGEMENTWashington, DC 20240http://www.blm.govJanuary 17, 2014In Reply Refer To: 3160 (310) PEMS TRANSMISSION 01/24/2014Instruction Memorandum No. 2014-031Expires: 09/30/2015To: All Field OfficialsFrom: Assistant Director, Energy, Minerals, and Realty ManagementSubject: Fiscal_Year 2014 Oil and Gas Inspection and Enforcement Strategy Matrices Instructions and Strategy GoalDD: 1/31/2014Program Area: Oil and Gas Management, Inspection and Enforcement.Purpose: In addition to the informal guidance provided on November 18, 2013, this Instruction Memorandum (IM) provides the field offices (FO) with oil and gas inspection and enforcement (I&E) strategy inspection plan matrices instructions and goals for conducting oil and gas I&E activities in fiscal year (FY) 2014.Policy/Action: For FY 2014, the Bureau of Land Management (BLM) will continue the risk-based strategy for production inspections, records analysis/record verification inspections, and idle well inspections. Inspections for drilling, abandonment, environmental, and workovers will continue to follow guidance in the BLM Handbook H-3160-5, Inspection and Enforcement Documentation and Strategy Development Handbook.The BLM's goal is to have the entire I&E strategy be risked-based and in the Automated Fluid Minerals Support System (AFMSS). The BLM has automated the risk ratings for the production inspection and the idle well inspection portions of the strategy in AFMSS. The risk factors are on a scale of 1 to 10, with 1 being the lowest and 10 being the highest risk. The AFMSS also applies a weighting factor for each of the risk factors based on the importance of the risk. Using these weighting factors, AFMSS averages all of the risk factors for an identified type of inspection to arrive at an overall risk rating. Attachment 1 details the risk and weighting factors for the production and idle wells inspections.The AFMSS carries the risk information forward to a matrix in AFMSS for the FOs to plan their technical field inspections (e.g., drilling, abandonment, production) based on their available workforce and their workload. Due to budget and staffing limitations, however, the BLM has not yet automated the records analysis/records verification inspections, or the environmental inspection portions of the strategy. Therefore, for FY 2014, the FOs must plan these inspections manually using the attached spreadsheet (attachment 2).For FY 2014, the minimum high risk factor is 4.0 for production inspections and 4.0 for idle well inspections. For production inspections, the goal is to inspect all high risk factor cases (overall production inspection risk factor of 4.0 and above) and at least one-third of the cases with overall risk factors lower than 4.0. For idle well inspections in FY 2014, the goal is to have each FO inspect 20 percent of the high risk factor wells (risk rating greater than 4.0). For records analysis/records verification inspections, the goal is to complete a records analysis on 10 percent of the cases with a production inspection overall rating of 4.0 or higher and to complete a records verification inspection on 10 percent of the remainder of the production inspection cases. The cases selected for review are to be a mix of various operators and geographic locations. For environmental inspections, the goal is to inspect all wells/facilities rated as high priority.Creating the Inspection Strategy Matrices For FY 2014, the FOs must create the I&E strategy using a combination of AFMSS and spreadsheets. For the technical field inspections (e.g., drilling, abandonment, production), the FOs will use the matrix in AFMSS (IEP.13S screen). Attachment 3 provides the instructions for running the risk-based reports for production inspections and idle well inspections, along with instructions for completing the matrix in AFMSS. The AFMSS database automatically created the FY 2014 priorities on November 18, 2013. This information is available for FOs to run the risk-based reports and create their strategy matrices.For the records analysis/records verification portions of the strategy and the environmental inspection portions of the strategy, the FOs will use the spreadsheet provided. Attachment 4 provides the instructions for completing the spreadsheet. For the FOs with Indian Trust responsibility, the FOs must complete two separate spreadsheets: one for Federal data and one for Indian Trust data.In addition to completing the technical inspection strategy in AFMSS, the FOs must complete and return the attached Excel spreadsheet in attachment 2 to the Washington Office Division of Fluid Minerals (WO-310) and their state office (SO) by January 31, 2014. Taking into consideration the number of inspection hours available to the FO annually, the FO will develop a plan to identify the number of inspections planned for completion during the year. Each FO must follow the "INSPECTION WORKLOADS -- PRIORITY ORDER" in priority order as detailed in this IM.Amending the Inspection Strategy MatricesDue to the number of inspection databases, it is difficult for the WO to know when the FOs create new versions of the matrix. Therefore, FOs must notify the WO-310 and their SO by email of all "Official Versions" of the matrix created after January 31, 2014, within 7 calendar days.INSPECTION WORKLOADS -- PRIORITY ORDER In determining the number of each type of inspection, use the following priorities. Please keep in mind, however, that conducting production inspections on high-risk cases is a top Department of the Interior priority. FOs should make every effort to take the necessary steps (e.g., sharing resources, using flexible work schedules) to conduct production inspections on all of the high-risk cases. However, due to the time sensitivity of drilling and abandonment inspections, and the need to ensure protection of resources and public health and safety, drilling and abandonment inspections continue to be the highest priorities in addition to high-risk production inspections.For production, drilling, and abandonment inspectors (Petroleum Engineering Technicians (PET)): 1. High Priority drilling wells2. High Priority plugging and abandonment operations3. Federal and Indian production cases with a risk factor of 4.0 and above (If the FO anticipates not being able to accomplish all of these cases, conduct inspections in risk-factor order, highest to lowest considering location of cases to minimize travel times and cost.)4. Idle well inspections5. Production accountability inspections, such as Records Analysis (RA) and Records Verification (RV)6. Well production testing that may occur during or after drilling operations but before placing the well on a producing well status (see attachment 5 for details)7. High Priority workover operations8. One-third of Federal and Indian production cases with a risk factor below 4.0 (FOs should conduct inspections in risk-factor order, highest to lowest considering location of cases to minimize travel times and cost and not randomly.)9. Production inspections on cases that have had a change of operator (see attachment 5 for details)For Production Accountability Technicians (PAT) 1. Production accountability inspections (RA, RV) For surface compliance specialists: 1. High Priority construction/drilling wells (surface compliance)2. High Priority environmental inspections (see attachment 5 for details)3. Interim Reclamation inspections (see attachment 5 for details)4. Final Reclamation inspectionsAFMSS Inspection "Type" and "Activity" CodesIn FY 2013, the BLM added some new Inspection Types and Inspection Activities to AFMSS and changed the definition of others (see attachment 6). The BLM modified some of these for FY 2014. Attachment 6 replaces and supersedes appendix 1 in the Inspection and Enforcement Documentation and Strategy Development Handbook, H-3160-5, and all other definitions for "Inspection Type" and "Inspection Activity." Attachment 7 contains clarification for using some of the codes.Closing Inspections In previous years, the FOs would close incomplete (open) inspections at the end of the FY with remarks reflecting that the FO would re-open and complete the inspection during the following FY. This is no longer an approved practice. Once an inspection is open in AFMSS, the inspection remains "Open" until the inspection is completed. Do not close inspections at the end of the FY (including the end of FY 2013) and re-open after the start of the next FY in order to complete the inspection later. However, inspections are not to remain open while enforcement actions (Incidents of Noncompliance (INC), Written Orders) are pending (see H-3160-5, Inspection and Enforcement Documentation and Strategy Development Handbook, IV.L.). Therefore, in summary, close an inspection when the last inspection activity is complete; do not leave the inspection open because there is an outstanding enforcement action.This change is necessary so the BLM can accurately count and report the number of inspections the BLM completes each FY. Closing an incomplete inspection and re-opening it the follow year has led to inconsistent reporting of accomplishments. The goal remains to close all open inspections by the end of each FY; however, there are circumstances that may prevent that from occurring.Additional Guidance The National Operations Center (NOC) Fluid Minerals Section is available to assist FOs in performing production accountability reviews and will issue an Information Bulletin (IB) when it is ready to accept new cases. State I&E Coordinators may then submit a list of potential leases or agreements for NOC review, ranked in priority order per each FO. The NOC issued OC-IM- 2011-037, dated April 7, 2011, with details on procedures in working with the NOC Fluid Minerals Section.All drilling inspections rated "High" must meet the criteria rating as outlined in the Inspection and Enforcement Documentation and Strategy Development Handbook. Exercise special care in classifying field development drilling wells as High for routine casing and cementing operations.All SO I&E Coordinators will be responsible for ensuring the proper rating of drilling inspection items.The SO I&E Coordinators will review the inspection priorities for all inspections rated High to ensure compliance with the priority rating standards. Rating inspections to the correct criteria ensure that the FOs maximize inspection resources. Example: FOs should not rate all drilling wells as High if the wells do not meet the criteria in the Inspection and Enforcement Documentation and Strategy Development Handbook. In development of the strategy matrices, the FOs must coordinate several different areas, including: Coordination must take place with the applicable Tribes and/or the Bureau of Indian Affairs to ensure the BLM is aware of their concerns regarding the prioritization of cases.Interdisciplinary coordination must occur within the FOs to ensure that the FO coordinates all environmental priority ratings with appropriate staff such as Natural Resource Specialists or Environmental Scientists.Coordination between the SO and reporting FOs is essential to ensure the FOs meet all of the inspection goals.FOs must elevate all suspected oil and gas theft immediately to the local BLM Law Enforcement, the BLM Washington Office (AD-300 and WO-310), and the BLM Law Enforcement Special Investigations Group (SIG) following standard protocol as outlined in IM WO-IM-2013-056, Oil and Gas Theft Reporting Guidelines and Format. Attachment 8 contains links to this and other useful IMs, IBs, and other resources.Timeframe: FOs must complete the technical field inspection matrix in AFMSS and save it in AFMSS as "Official" by January 31, 2014. If the FOs save a new "Official" version of the matrix after January 31, 2014, they must notify Michael Wade (mwade@blm.gov) and William Lambert (wlambert@blm.gov) via email within 7 calendar days. FOs must also submit the matrix spreadsheets to WO-310 and their SO by January 31, 2014.Budget Impact: The inspection plan matrices for FY 2014 will reflect any changes in resource needs. The budget will dictate availability of additional resources for FOs with shortfalls to meet their workloads. The FOs will continue to explore shared resources to help meet inspection needs that match industry activity.Background: The BLM provides instructions for preparing the Inspection Plan Matrices on an annual basis to coincide with any current updates to AFMSS and/or other policy changes that may occur on an annual basis.Three years ago, the BLM implemented a risk-based strategy as suggested by both the Government Accountability Office and the Office of Inspector General and agreed to by the BLM. Last year, the WO-310 automated the strategy for field inspections performed by PETs (e.g., drilling, abandonment, production, idle well).Manual/Handbook Sections Affected: BLM Handbook H-3160-5, Inspection and Enforcement Documentation and Strategy Development Handbook, will incorporate the interim policy contained in this IM during its next revision.Coordination: WO-310 coordinated preparation of this IM with WO-310 I&E Specialists, SO I&E Coordinators, NOC personnel, and FO personnel.Contact: If you have any questions concerning the content of this IM, please contact me at 202-208-4201, or your staff may contact Steven Wells, Chief, Division of Fluid Minerals, at 202 912-7143 (s1wells@blm.gov). For questions regarding the Strategy goals or Strategy amendments, contact William Lambert at 406-896-5328 (wlambert@blm.gov) or Michael Wade at 303-236-1930 (mwade@blm.gov). For technical questions regarding preparation of the Strategy Matrices, contact Carol Larson at 406-233-3655 (clarson@blm.gov).Signed by: Michael D. Nedd, Assistant Director, WO-860 Energy, Minerals, and Realty ManagementAuthenticated by: Catherine Emmett, Division of IRM Governance,8 Attachments1 -- Risk and Rating Factors for Production and Idle Wells Inspections (6 pp)2 -- Records Analysis/Records Verification and Environmental Inspection Strategy Spreadsheet for FY14 (2 pp)3 -- Instructions for Running the Risk-based Reports in AFMSS (28 pp)4 -- Instructions for Completing the Records Analysis/Records Verification and Environmental Inspection Strategy Spreadsheet (4 pp)5 -- Selected Inspection Workload Explanations (5 pp)6 -- Complete Re-write of Appendix 1 of the Strategy and Documentation Handbook (11 pp)7 --Clarification of Specific Codes (4 pp)8 --Useful Links (2 pp)