UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
Washington, D.C. 20240
 
October 10, 2007
 
In Reply Refer To:
3160 (310) P
 
EMS TRANSMISSION 10/24/2007
Instruction Memorandum No. 2008-012
Expires: 09/30/2009
 
To:                   All Field Officials
 
From:               Assistant Director, Minerals, Realty and Resource Protection
 
Subject:            Fiscal Year (FY) 2008 Oil and Gas Inspection and Enforcement (I&E) Strategy Matrices Instructions and Strategy Goals          DD: 11/16/07                                                                                                                                                            
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 I&E activities in FY 2008.
 
Policy/Action: For FY 2008, the FOs 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. 
 
The Bureau of Land Management (BLM) personnel enforce 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 minimizing the loss of these resources. Attachment 1 provides detailed minimum strategy requirements for the various inspection types.  These inspections are critical to meeting the BLM’s fiduciary responsibilities for Indian revenues based on production of ever-increasing values of oil and gas.
 
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 BLM inspectors performing more intense and detailed inspections. 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 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 with in the future. These plans will be required when the Incidents of Noncompliance (INC) involve measurement and sales activities that have the potential to reduce the effectiveness of BLM’s production accountability efforts.
 
In a change to the production inspection, PETs are now required to check the isolation valve in the equalizer line (there may be multiple valves and lines if there are more than two production tanks on a facility) to ensure it is fully operational and can isolate the production tank for the sale of oil. The PETs should not take the equipment apart; they are to check and see if the valves are tight, or appear to have been tampered with (such as a loose handle, possibly indicating the ball inside the valve may have been removed). If even one valve is found to be missing the internal components, this finding is elevated immediately to the local BLM Law Enforcement, the BLM Washington Office (AD-300 and WO-310) and the IG, following standard protocol.
 
Cases rated High to the FOGRMA Standard for Production: 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, a Records Verification/Records Review (RV/RR) may be conducted to fulfill FOGRMA requirements at a minimum. The RV/RR may be performed by the Production Accountability Technician (PAT) or 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 FOGRMA High for compliance. For FY 2008, 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.
 
The FOs are encouraged to exceed these minimum strategy goals whenever possible. For those FOs 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 Inspection Plan Matrices for FY 2008. All High Priority inspections are important and must take priority over any Low Priority inspections.
 
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 wells.
2.   High Priority plugging and abandonment operations.
3.   Federal and Indian production cases rated High to FOGRMA criteria (see Attachment 2 for details).
4.   High Priority environmental inspections (see Attachment 2 for details).
5.   High Priority Production inspections on new producing oil and gas wells (see Attachment 2 for details).
6.   Cases that have had a change of Operator (see Attachment 2 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 2 for details).
8. High Priority workover operations.
9.   Thirty-three percent of the remaining Indian production cases.
    10.   Thirty-three percent of the remaining Federal production cases.
    11.   Interim Reclamation Inspections (see Attachment 2 for details).
 
Creating the Inspection Strategy Matrices
 
For those FOs that do not have responsibility for Indian data, the FY 2008 I&E Strategy Matrices will be created within their Automated Fluid Minerals Support System (AFMSS) databases. 
The 10 FOs that have responsibility for both Federal and Indian data will use a manual procedure for constructing a combined Federal and Indian FY 2008 I&E Strategy Matrices by incorporating the use of an Excel spreadsheet. Upon completion of the spreadsheet, the Federal portion of the Strategy is to be input into AFMSS. Instructions for preparing both the AFMSS and Excel spreadsheet matrices are included in Attachments 3 and 4, respectively. Attachment 5 shows the Excel spreadsheet. 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 2008.
 
·        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 2008. However, if during the RV/RR process review a reporting problem or volume discrepancy is found, the inspection must be elevated to a Production Inspection/Production Records Review (coded as PI/PR) and those activities performed then 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 (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 SO 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 wells 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 several different areas, including:
 
  • Coordination must take place with the applicable tribes and/or the the Bureau of Indian Affairs to ensure their concerns are met regarding the prioritization of cases.
 
  • Interdisciplinary coordination must occur within FOs to ensure that all environmental priority ratings are coordinated with appropriate staff such as Natural Resource Specialists or Environmental Scientists
 
  • Coordination must 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 FOs and SO 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 accomplishment are an accurate reflection of Planned Strategy workload. 
 
  • Coordination between State and FOs 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 2008, and any necessary adjustments should be implemented to ensure the accomplishment of the I&E Strategy goals identified in the matrices.  (For the 10 FOs having Federal and Indian data, only the Federal portion of the Quarterly Progress Report will be available through AFMSS.)
 
Timeframe: Inspection plan matrices must be completed by November 16, 2007. Submit the Excel spreadsheet electronically to William Gewecke.
 
Budget Impact: Any changes in resource needs will be reflected in the inspection plan matrices for FY 2008. Additional resources for FOs with shortfalls to meet their workload will be subject to budget availability.
 
Background: 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.   
 
Manual/Handbook Sections Affected:  The I&E Strategy matrices and goals instructions will be included in the Inspection and Enforcement Handbook which is under development. 
 
Coordination: This memorandum was coordinated with the WO-310 I&E Specialists, SO I&E Coordinators, and FO personnel.  
 
Contact: Any questions regarding the Strategy goals should be referred to William Gewecke at (202) 452-0337, or william_gewecke @blm.gov. Technical questions regarding preparation of the Strategy Matrices on the Excel spreadsheet form should be referred to Carol Larson at
(406) 233-3655, or carol_larson@blm.gov.
 
Signed by:                                                       
Authenticated by:
Michael D. Nedd                                             
Robert M. Williams
Assistant Director                                            
Division of IRM Governance,WO-560
Minerals Realty and Resource Protection
 
 
5 Attachments