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
 
October 13, 2006
 
In Reply Refer To:
3160 (310) P
 
EMS TRANSMISSION 11/16/2006
Instruction Memorandum No. 2007-019
Expires: 09/30/2008
 
To:                  All Field Officials
 
From:              Assistant Director, Minerals, Realty and Resource Protection
 
Subject:          Fiscal Year 2007 (FY 2007) Oil and Gas Inspection and Enforcement (I&E) Strategy Matrices Instructions and Strategy Goals DD: 12/11/2006
 
Program Area: Oil and Gas Management
 
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 2007.
 
Policy/Action: For FY 2007, the FO inspectors are required 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 the remaining Federal and Indian production cases. Any additional inspection time should first be allocated to performing additional Indian production case inspections. 
 
Field Office officials are responsible is to ensure that all production is properly measured and accounted. Attachment 1 provides detailed minimum strategy requirements for the various inspection types. Inspectors will place additional emphasis on witnessing activities where problems in measurement and sales have occurred on producing cases. In addition, the operator/producer will be required to explain the event and submit a corrective action plan for the Bureau of Land Management’s (BLM) 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 have been 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 with which the operator/producer must comply. These plans will be required when the Incidents of Noncompliance (INC) involve measurement and sales activities.
 
Cases rated High to the FOGRMA Standard for Production: At a minimum, a Records Verification/Records Review (RV/RR) will be conducted to fulfill FOGRMA requirements for cases that are rated High for production and have been inspected for the past 3 years with no measurement problems or volume discrepancies detected. The RV/RR may be performed by the Production Accountability Technician (PAT) or Petroleum Engineering Technician (PET).  This technique will allow PATs and PETs to focus on cases that have a higher potential for measurement problems.
 
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 2007, 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. 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 2007.   
 
Please note that emphasis continues to be placed on Environmental/Surface Inspection (ES) types. High Priority environmental inspections should receive the same attention as other High Priority inspection types. High Priority environmental drilling (DW-SD) and environmental plugging (PD-SA) inspections will take precedence over Low priority environmental production (ES-SP) inspections. 
 
INSPECTION WORKLOADS –PRIORITY ORDER
 
1. High Priority drilling operations (DW).
2.   High Priority plugging and abandonment operations (PD).
3.   Federal and Indian production cases rated High to Federal Oil and Gas Royalty Management Act (FOGRMA) criteria (PI).
4.   High Priority environmental inspections (ES).
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 (WK).
9.   Thirty-three (33) percent of the remaining Indian production cases (PI).
    10.   Thirty-three (33) percent of the remaining Federal production cases (PI).
    11.   Interim Reclamation Inspections (ES/IR).
 
Creating the Inspection Strategy Matrices
 
For those FOs that do not have responsibility for Indian data, the FY 2007 I&E Strategy Matrices will be created within their Automated Fluid Minerals Support System (AFMSS) databases. Due to the continued shut down of the AFMSS databases for Indian data, we understand that the affected FOs cannot create the FY 2007 I&E Strategy Matrices within AFMSS until this database comes back online. Additionally, it will not be possible for these FOs to complete a Strategy Matrix within AFMSS for Federal data until the backlog of data entry is completed. To ensure that timely matrices are completed, these offices will use a manual procedure for constructing a Federal and Indian FY 2007 I&E Strategy Matrices by incorporating the use of an Excel Spreadsheet (attached). Separate matrices should be created for Federal and Indian data. When a FO has completed its backlog of Federal data, the matrices will be created within AFMSS. Instructions for preparing both the AFMSS and Excel Spreadsheet matrices are included in Attachments 2 and 3, respectively. In addition, when creating the 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 on follow up of 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 2007.
 
·        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 2007. 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 operations (DW) as High for routine casing and cementing operations. 
All State Office (SO) 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 to the correct criteria in Attachment 1 ensures that inspection resources are maximized. Example: All drilling operations (DW) should not be rated High if they do not meet the criteria in Attachment 1.
 
     In development of the strategy matrices, FOs need to coordinate:
 
  • with the applicable tribes and/or Bureau of Indian Affairs regarding the prioritization of cases to ensure their concerns are met;
 
  • within FOs to ensure that all environmental priority ratings are covered by appropriate staff (NRS, ES, etc.); 
 
  • to ensure that idle/orphan well inspections related to the Idle/Orphan Well Liability Initiative, or other concerns, are incorporated and prioritized in the Inspection Plan Matrices; 
 
  • with SO and FO budget teams 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; and 
 
  • with the SO to ensure that 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 2007, and any necessary adjustments should be implemented to ensure the accomplishment of the I&E Strategy goals identified in the matrices.
 
Timeframe: Inspection plan matrices must be completed by December 11, 2006. Submit the Excel spreadsheet electronically to William Gewecke and Fred Oneyear.
 
Background: The BLM enforces the standards and requirements of applicable laws, regulations and Onshore Orders, and their increased visibility on producing cases provides additional oversight of measurement and sales functions.  These inspections are critical to meeting our fiduciary responsibilities for Indian revenues based on production of ever-increasing values of oil and gas. The instructions for preparing 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.   
 
Budget Impact: Any changes in resource needs will be reflected in the inspection plan matrices for FY 2007. Obtaining additional resources in FOs with shortfalls to meet their workload will be subject to budget availability. 
 
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: This memorandum was coordinated with the WO-310 I&E Specialists, State Office I&E Coordinators, and Field Office personnel.  
 
Contact: Any questions regarding the Strategy goals should be referred to William Gewecke at 202-452-0337 or 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                                                        
Division of IRM Governance, WO-560
Minerals, Realty and Resource Protection
 
 
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Last updated: 10-21-2009