IM 2021-039, Orphaned Well Identification, Prioritization, and Plugging and Reclamation

United States Department of the Interior
BUREAU OF LAND MANAGEMENT

Grand Junction, Colorado 81506

https://www.blm.gov

July 13, 2021

In Reply Refer To:
3160 (310) P

EMS TRANSMISSION   07/15/2021
Instruction Memorandum No. 2021-039
Expires: 09/30/2024
 

To:                   All Field Office Officials

From:              Assistant Director, Energy, Minerals, and Realty Management

Subject:           Orphaned Well Identification, Prioritization, and Plugging and Reclamation
                                                                        Due Date: October 31^st, every Fiscal Year
 

Program Area: Federal and Indian Oil and Gas Operations.
 

Purpose: This Instruction Memorandum (IM) and its six attachments update the expired policy and guidance for the identification and prioritization of orphaned wells in IM 2007-192, Priority Ranking for Orphaned and Idled Wells; and Section 349(b) of the Energy Policy Act of 2005 (EPAct). This IM defines an orphaned well as a well with 1) no legally responsible or liable party to perform permanent well plugging, abandonment and reclamation, and 2) no adequate financial assurance (i.e. bond(s)) for which the United States is the beneficiary to cover the estimated cost for permanent well plugging, abandonment, and surface reclamation. This IM provides guidance to the Bureau of Land Management (BLM) Field Offices (FOs) concerning the process the BLM will use to identify potential orphaned wells, pursue liable parties, seek funding to permanently plug and abandon, and reclaim (also defined as remediate) identified orphaned wells.

Administrative or Mission Related: Mission Related.

Policy/Action: This IM is designed to support Executive Order 14008. It will address orphaned wells to “…reduce emissions of toxic substances and greenhouse gases from existing and abandoned infrastructure and that prevent environmental damage that harms communities and poses a risk to public health and safety. Plugging leaks in oil and gas wells and reclaiming can create well-paying union jobs in oil, and gas communities while restoring natural assets, revitalizing recreation economies, and curbing methane emissions.” This IM is consistent with Secretarial priorities 1) Making investments to support the Administration’s goal of creating millions of family-supporting and union jobs and 2) centering equity and environmental justice.  The BLM is focused on ensuring that it has a comprehensive inventory, assessment, and reclamation of orphaned oil and gas wells. The BLM will prioritize funds from the collection of bonds and through appropriations to address plugging and abandonment and reclamation.

This IM provides guidance to the BLM FOs for:

1. Identifying potential orphaned wells by using the lease records to determine liable parties for wells with noncompliant operators,
2. Determining if a well meets the criteria for orphaned status,
3. Prioritizing the orphaned wells for final abandonment,
4. Estimating the cost for final abandonment, plugging, and surface reclamation for each orphaned well, and
5. Ensuring final abandonment, permanent plugging, and reclamation of the orphaned wells.

Legally liable parties for surface disturbance for a well that is located on a Federal or Indian oil and gas lease include the current operator, the current Record Title Owner(s) of the lease (RTO), the current Operating Rights Holder(s) (ORH), and all previous RTOs and ORHs that held an interest in the lease since the surface disturbance occurred or the well was drilled. This IM applies to land, surface or subsurface, administered by the land management agencies within the Department of the Interior (DOI) (including the BLM, Bureau of Indian Affairs (BIA)[1], National Park Service, the Fish and Wildlife Service) or administered by other Federal agencies, such as the U. S. Forest Service, Army Corps of Engineers, etc.

This IM is part of a multi-pronged approach to prevent the transition of nonoperational Federal and Indian wells to orphaned well status. This approach includes: implementing the BLM’s annual risk-based inspection and enforcement strategy; active monitoring of wells per BLM IM 2020-006, Idled Well Reviews and Data Entry; risk-based reviews of individual oil and gas bond amounts to reduce potential liabilities per BLM IM 2019-014, Oil and Gas Bond Adequacy Reviews; and identifying all of the potentially liable parties to require their performance of permanent plugging and abandonment of the wells and site reclamation. If wells ultimately become orphaned, the orphaned wells that present immediate health and safety concerns, including environmental harm, are the BLM’s highest priority for plugging. Beyond health and safety concerns, the agency’s strategy will be to focus on the Federal or Indian wells that have been orphaned for the longest period of time.

Each BLM FO will work to prevent the occurrence of orphaned wells by regularly reviewing bond amounts and timely securing necessary bond adjustments (or recommending adjustments to BIA for Indian wells), as well as by implementing the idled well review policy in IM 2020-006. When a current operator no longer is capable of performing or fails to perform permanent well abandonment pursuant to 43 C.F.R. 3162.3-4, (typically demonstrated by noncompliance with the authorized officer’s order), the FO will follow the procedures set out in Attachments 1 and 2 to ensure it contacts all of the remaining liable parties. If the FO determines that a well is orphaned, then it will prioritize plugging and reclamation of the orphaned well as explained in the Prioritizing Orphaned Wells section below, determine the potential cost for plugging and/or reclamation, and certify that the FO pursued all liable parties.

This policy instructs all BLM FOs to evaluate their orphaned wells to determine if the wells listed in the Automated Fluid Minerals Support System (AFMSS) as orphaned are verified and accurate. By October 31 of every fiscal year, the State Office (SO) will provide these verifications to HQ-310, using the guidance found on the Orphaned Well Combined Priority Rating Sheet (Attachment 6) and the SO’s Individual Well Priority Scoring spreadsheets (Attachment 4), if applicable. A SO that does not have orphaned wells will send in the information outlined in Attachment 6 by October 31 every fiscal year; the SO will state in its response that its current orphaned well status is “zero orphaned,” to be noted below the operator’s name (Column C).

Orphaned wells that can be addressed using BLM funds that are available at the agency’s state-level office(s) should be shown on Attachment 6 with these funding sources noted. Attachment numbers 4 and 6 will be updated each year to include any new orphaned wells and status changes to previously orphaned wells on the Orphaned Well Combined Priority Rating spreadsheet. HQ-310 will review these yearly submittals to assess the overall magnitude of liability and direct any available funds based on priority. Orphaned wells on Indian land cannot be addressed using BLM funds. BLM Offices will inform BIA of the status of those wells, the priority level, and the cost of plugging, abandonment, and reclamation of the wells to facilitate such activities by the Indian landowners.

Offices will ensure that any BLM funding used for orphaned well permanent plugging and abandonment and reclamation includes WBS code LX.SI.OWEL0000. The addition of this WBS code will allow HQ-310 to systematically track the actual costs incurred by the BLM when permanently plugging, abandoning, and reclaiming orphaned wells. The associated BLM labor is not to be charged to this WBS code.

The information provided in this IM and its attachments is intended to provide a way for the BLM offices to achieve consistency in how they identify and address orphaned wells. There are six attachments that contain easy-to-use instructions. Offices are encouraged to familiarize themselves with the attachments and work with other offices that have experience in addressing orphaned wells. Some of the guidance from long-standing handbooks, manuals, strategies, etc., is reiterated in this memorandum. This IM guidance does not supersede other guidance (with the exception of updating the expired IM 2007-192), however, due to the importance of this topic and prior Government Accountability Office audit recommendations, the BLM recognizes a benefit in providing consolidated IM guidance for the BLM offices working through orphaned well issues.

Timeframe: Effective immediately.

Budget Impact: There will be an increased demand on staff time with this policy. Staff working on potentially orphaned wells will need to issue and monitor multiple enforcement actions. They also will have to notify the appropriate liable parties. Some FOs may not have completed the entire process needed to verify the orphaned well status of the wells under their jurisdiction due to staffing or time constraints. Therefore, this policy may have a moderate to high impact on some FOs, especially for those offices that were unable to verify that the BLM contacted all liable parties.

Background: Section 349(b) of the EPAct, 42 U.S.C. § 15907, requires the Secretary of the Interior, in cooperation with the Secretary of Agriculture, to establish a program to remediate, reclaim, and close orphaned oil and gas wells located on land administered by the land management agencies within the DOI and the Department of Agriculture. The EPAct further states that the program shall include a means of ranking such wells for priority in remediation, reclamation, and closure, based on public health and safety, potential environmental harm, and other land use priorities.

On May 16, 2018, the Government Accountability Office (GAO) released its Report entitled, Oil and Gas Wells: Bureau of Land Management Needs to Improve Its Data and Oversight of Its Potential Liabilities (GAO-18-250). The GAO found that the BLM’s liabilities related to orphaned wells have increased from 2010 to 2017. The GAO also identified data quality concerns related to tracking and monitoring orphaned well costs incurred or potential liabilities from the orphaned wells. The GAO recommended that the BLM (1) systematically and comprehensively track the actual costs incurred by the BLM when reclaiming orphaned wells and the information, including the number of orphaned wells and inactive wells over time, that is necessary to determine the agency’s potential liabilities and (2) develop a plan to address resources needed for conducting well and bond adequacy reviews and reclaiming orphaned wells. This IM and its attachments address these two recommendations. 

Pages of Manual/Handbook Sections Affected: None.

Coordination: This guidance was coordinated with the BLM’s Division of Fluid Minerals, Energy and Minerals, and Realty Management Directorate, and State Offices, the BIA, and the DOI’s Office of the Solicitor.

Contact: If you have questions or concerns regarding this IM, please contact Nicholas Douglas, at 970-256-4944. Your staff may contact Rebecca A. Good (Deputy Chief, Division of Fluid Minerals, HQ-310) at rgood@blm.gov.

Signed By:                                                                              Authenticated by:
Nicholas E. Douglas                                                               Ambyr Fowler
Assistant Director                                                                   Division of Regulatory Affairs
Energy, Minerals, and Realty Management                           and Directives (WO-630)

6 Attachments

1 – Verifying a Well’s Orphaned Status (6 pp)

2 – Enforcement and Subsequent Actions (8 pp)

3 – Add an Entity to the 17(g) List (2 pp)

4 – Orphaned Well Individual Well Priority Scoring Sheet (1 p)

5 – Estimating Costs Associated with Orphaned Wells on Federal and Indian Lands (4 pp)

6 – Orphaned Well Combined Priority Rating Sheet (1p)