Updated BLM Policy for Communitization Agreements Will Aid Timely Distribution of Oil and Gas Royalties
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The Bureau of Land Management today announced new guidance for its Field Offices that will help ensure more efficient distribution of oil and gas royalty payments to the Federal treasury, tribes, and Indian landowners.The BLM today published an Instruction Memorandum (IM) that streamlines the process for its review and approval of "“communitization agreements" allow operators -- with the agreement of the owners of the resource -- to pool together Federal, Indian, State, and/or private oil and gas resources that could not otherwise be independently developed. A CA defines how the oil and gas production will be allocated among the operators -- based on the well spacing in the acreage covered by the agreement -- and how revenue will be shared between the operators and mineral owners.The guidance in this new IM responds to a May 2014 report by the Government Accountability Office that found that BLM does not always approve CAs involving Federal leases within 120 days, as required by law; or, for Indian leases, within 30 days, as required by Department of Interior procedures. Such delays have the potential to delay the distribution of royalty payments. The Office of Natural Resources Revenue (ONRR) use the production allocation information found within an approved CA to distribute royalties to the parties to the agreement. Without that information ONRR cannot distribute royalties to the Federal government, tribal nations, and individual Indian oil and gas resource owners.As part of this new process, the BLM will work with oil and gas operators to ensure that CAs are submitted to the agency or the Bureau of Indian Affairs (in the case of Indian leases) at least 90 days before production is set to begin. With the improvements required by the guidance the time required for approval of CAs should be greatly reduced. The BLM will also provide copies of finalized CAs to ONRR within 10 days of their approval.The new IM is effective immediately, and amends policy guidance found in Section 3160-9 of the BLM Manual.
The BLM manages more than 245 million acres of public land located primarily in 12 western states, including Alaska, on behalf of the American people. The BLM also administers 700 million acres of sub-surface mineral estate throughout the nation. Our mission is to sustain the health, diversity, and productivity of America’s public lands for the use and enjoyment of present and future generations.