U.S. DEPARTMENT OF THE INTERIORBUREAU OF LAND MANAGEMENT
 
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UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
WASHINGTON, D.C. 20240
 
November 2, 2005
 
In Reply Refer To:
3160 (310) P
 
EMS TRANSMISSION 11/09/2005
Instruction Memorandum No. 2006-033
Expires: 09/30/2007
 
To:                   All Field Officials
 
From:               Assistant Director, Minerals, Realty and Resource Protection
 
Subject:            Fiscal Year 2006 (FY 2006) Oil and Gas Inspection and Enforcement (I&E) Strategy Matrices Instructions and Strategy Goals DD: 11/25/2005
                  
Program Area: Fluid Minerals
 
PurposeTo provide Field Offices (FO) with I&E Strategy Inspection Plan Matrices instructions and goals for conducting Oil and Gas Inspection and Enforcement activities in FY 2006.
 
Policy/Action: For FY 2006, the requirements are to inspect all Federal and Indian cases meeting the High priority criteria of the Federal Oil and Gas Royalty Management Act (FOGRMA) and 33 percent of all other Federal and Indian production cases. Any additional inspection time should be allocated to performing additional other Indian production case inspections. 
 
These strategic inspections are critical to meeting our fiduciary responsibilities for Indian revenues based on production of ever-increasing values of oil and gas. The BLM personnel enforce the standards and requirements of applicable laws, regulations and Onshore Orders, and their increased visibility on producing cases provide additional oversight of measurement and sales functions. The BLM’s responsibility is to ensure that all production is properly measured and accounted for while maintaining minimum loss of these resources. Attachment 1 provides detailed minimum strategy requirements for the various types of inspections.
 
Producing cases that are identified where problems in measurement and sales have occurred will be inspected with additional emphasis on witnessing these activities.  Failure to perform correct measurement and sales activities by either the operator/producer or purchaser will result in more intense and detailed inspections being performed. In addition, the operator/producer will be required to explain the event and submit a corrective action plan for the BLM’s review and approval.  Minimum requirements for these corrective action plans are: 1) description of the event and identification of all wells and facilities that could be affected; 2) the corrective action taken and any adjustments made to volumes of oil and gas; and 3) actions that will be performed in the future to ensure that the potential for this type of event to occur is reduced.  The approved corrective action plans will supplement the current Site Security Plans on file and will be minimum standards the operator must comply with in the future.  These plans will be required when the Incidents of Noncompliance (INCs) involve measurement and sales activities that have the potential to reduce the effectiveness of our production accountability efforts.
 
Cases rated High to the FOGRMA Standard for Production:  for cases that are rated high for production and have been inspected for the past three years with no measurement problems or volume discrepancies detected, at a minimum, a Records Verification/Records Review (RV/RR) may be conducted to fulfill FOGRMA requirements.  This may be performed by the Production Accountability Technician (PAT) or Petroleum Engineering Technician (PET).  This technique will allow inspectors to focus on cases that are just below the status of High FOGRMA.
 
Cases rated High to the FOGRMA Standard for Compliance:  Cases rated High for compliance would normally be inspected for the type of violation that caused it to become a FOGRMA High for compliance.  For FY 2006, if the compliance issue did not involve measurement of oil or gas, health and safety, or environmental issues, an inspection of that case will not be required as long as the operator corrected the violation from the previous FY.
 
Field offices are encouraged to exceed these minimum strategy goals whenever possible.  For those field offices that cannot meet the minimum strategy goals outlined in Attachment 1, the inspection workloads are listed below in priority order for distribution of inspection resources to achieve the goals of the program. These inspection workload priorities are to be observed when designing your Inspection Plan Matrices for FY 2006. All high priority inspections are important and must take priority over any low priority inspections.
 
Please note that there is additional emphasis being placed on Environmental and Surface Inspection (ES) types.  High priority environmental inspections should receive the same attention as other types of inspections. High priority environmental drilling (DW-SD) and plugging (PD-SA) inspections will take precedence over low priority environmental production (ES-SP) inspections. 
 
INSPECTION WORKLOADS –PRIORITY ORDER
 
1. High Priority drilling wells.
2.   High Priority plugging and abandonment operations.
3.   Federal and Indian production cases rated High to Federal Oil and Gas Royalty Management Act (FOGRMA) criteria.
4.   High Priority environmental inspections, Federal and Indian.
5.   High Priority Production inspections on new producing oil and gas wells. (See Attachment 4 for details.)
6.   Cases that have had a change of Operator. (See Attachment 4 for details.)
7.   Inspections during any well production testing occurring during or after High Priority drilling operations but before the well is placed on a producing well status. (See Attachment 4 for details.)
8. High Priority workover operations.
9.   Thirty-three (33) percent of the remaining Indian production cases.
    10.   Thirty-three (33) percent of the remaining Federal production cases.
    11.   Interim Reclamation Inspections. (See Attachment 4 for details.)
 
Creating the Inspection Strategy Matrices
 
Due to the shut down of the Automated Fluid Minerals Support System (AFMSS) database, we understand that it will take some time for field offices to complete the backlog of data entry and prepare the FY 2006 I&E Strategy Matrices and Strategy Goals within the AFMSS database. To ensure that timely matrices are completed, we will utilize a manual procedure for constructing the FY 2006 I&E Strategy Matrices by incorporating the use of an Excel Spreadsheet (attached). When the field offices have completed their backlog data entries, the matrices will be created within AFMSS. Instructions for preparing both the AFMSS version and Excel Spreadsheet matrices are included in Attachments 2 and 3, respectively. In addition, when creating your matrices, identify the following in the Special Consideration section, if applicable:   
 
·        Any inspection workload incurred in conjunction with the Idle/Orphan Well Liability Initiative. This workload can be identified within the matrices framework by adjusting case/operator priority ratings, adjusting average inspection hours that will be incurred following up on idle wells, and any additional plugging or workover activities that may occur as a result of reviewing those wells. Under Special Considerations, identify the Idle/Orphan workload planned so that this number is distinguished from normal plugging and workover operations.
 
·        The emphasis on Production Accountability continues to be a top priority. During the preparation of the matrices, indicate the estimated number of detailed production records reviews (coded as PI-PR) that you plan to conduct in FY 2006.
 
·        When prioritizing High FOGRMA production cases that have been inspected in the previous 3 years and no measurement problems or volume discrepancies were noted, a Records Verification/Records Review (coded as RV/RR) may be conducted that will suffice to meet the inspection requirement for FY 2006.  However, if during the RV/RR process review it is found that a reporting problem or volume discrepancy exists, the inspection must be elevated to a Production Inspection/Production Records Review (coded as PI/PR) and those activities performed that are part of the PI/PR inspection.
 
·        All drilling inspections rated High must meet the criteria rating as outlined in Attachment 1 priority rating standards.  Special care should be exercised in classifying field development drilling wells as High for routine casing and cementing operations.  

·All State Office I&E Coordinators will be responsible for ensuring proper rating of drilling inspection items.
 
·        Oversight and Guidance:  Inspection priorities for all inspections rated High will be reviewed by the State Office I&E Coordinators to ensure compliance with the priority rating standards.
 
·        Rating inspections correctly to the criteria in Attachment 1 ensures that inspection resources are maximized. Example:  All drilling wells should not be rated High if they do not meet the criteria in Attachment 1.
 
When determining the number of work-months available to accomplish the goals set forth in Attachment 1, be sure to account for overtime work-months included in the inspection time recorded in the Excel spreadsheet form. To accurately prepare the inspection plan matrix, it will be necessary to account for the regular time in the “I&E Inspection Work-months” column and the overtime in the “Overtime Work-months” column.  To ensure proper accounting of the work-months needed for the program, a base of 12 work-months must be used for each full time employee (FTE).
 
Timeframe: Inspection plan matrices must be completed using the Excel spreadsheet form that will be provided by November 25, 2005, whether or not AFMSS is operational for your field office. Submit the Excel spreadsheet electronically to Fred Oneyear.
 
Budget Impact:  Any changes in resource needs will be reflected in the inspection plan matrices for FY 2006. Obtaining additional resources in field offices with shortfalls to meet their workload will be subject to budget availability. 
 
Background:  The instructions for preparation of the Inspection Plan Matrices are provided on an annual basis to coincide with any current updates to AFMSS and/or other policy changes that may occur on an annual basis.   
 
Manual/Handbook Sections Affected:  I&E Strategy matrices and goals instructions will be updated in the National Oil and Gas Inspection and Enforcement Strategy Handbook. 
 
Coordination: Consideration must be given to Indian Trust responsibilities. Coordination must take place with applicable tribes and/or the Bureau of Indian Affairs regarding the prioritization of cases, to ensure their concerns are met. 
 
Interdisciplinary coordination must occur within field offices to ensure that all environmental priority ratings are coordinated with appropriate staff (NRS, ES, etc.). Coordination must also occur to ensure that idle/orphan well inspections related to that initiative, or other concerns, are incorporated and prioritized in the Inspection Plan Matrices. Coordination with Field Office and State Office budget teams must also occur to ensure that each is aware of the needs of the I&E program and that the Management Information System (MIS) Units of Accomplishments are an accurate reflection of Planned Strategy workload. Coordination between State and Field Offices is essential to ensure all inspection goals are met. Along with the use of MIS, the Quarterly Progress Report feature in AFMSS provides management an excellent tool to monitor the completion of I&E goals.  This report should be generated and reviewed at least at midyear and the end of the third quarter FY 2006, and any necessary adjustments should be implemented to ensure the accomplishment of the I&E Strategy goals identified in the matrices.
 
Contact:  Any questions regarding the Strategy goals should be referred to Fred Oneyear at (307) 261-7569. Technical questions regarding preparation of the Strategy Matrices on the Excel spreadsheet form should be referred to Carol Larson at (406) 233-3655.
 
Signed by:                                                                   
Authenticated by:
Thomas P. Lonnie                                                        
Robert M. Williams
Assistant Director                                                        
Policy and Records Group,WO-560
Minerals, Realty and Resource Protection
 
 
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Last updated: 10-21-2009