U.S. DEPARTMENT OF THE INTERIORBUREAU OF LAND MANAGEMENT
UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
WASHINGTON, D.C. 20240
December 1, 2010
In Reply Refer To:
3160 (310) P
EMS TRANSMISSION 12/03/2010
Instruction Memorandum No. 2011-023
To: All Field Officials
From: Assistant Director, Minerals and Realty Management
Subject: Fiscal Year 2011 Oil and Gas Inspection and Enforcement Strategy Matrices
Instructions and Strategy Goals DD: 12/20/2010
Program Area: Oil and Gas Management, Inspection and Enforcement.
Purpose: This Instruction Memorandum (IM) provides field offices (FO) with Oil and Gas Inspection and Enforcement (I&E) Strategy Inspection Plan Matrices instructions and goals for conducting Oil and Gas I&E activities in Fiscal Year (FY) 2011.
Policy/Action: For FY 2011, the BLM will begin to implement a new risk-based strategy. This change in strategy design has been required by both the General Accounting Office (GAO) and the Office of Inspector General for the Department of Interior (OIG).
The new risk-based strategy is based on risk factors for each type of inspection (see Attachment 1). Some of the risk factors will be the same for various inspection types, such as production rating, while including some additional factors for consideration. The risk factors are based on a scale of 1 to 10, with 1 being the lowest and 10 the highest. All of the risk factors are also weighted on importance of the risk. Using these weighting factors, all the risks factors for an identified type of inspection are averaged together to arrive at a final risk factor. Attachment 1 details the risk factors for each inspection type. This new risk-based strategy will identify which cases need to be inspected during the year, and the FOs will be required to inspect the highest rated cases identified by the risk-based strategy. Taking into consideration the number of inspection hours available to the FO annually, the FO will develop a plan to identify the number of inspections that will be completed during the year. The FOs will be required to start with the highest rated cases and then proceed in priority order.
The Washington Office (WO) will establish a minimum overall risk factor for each type of inspection. All cases above this minimum overall risk factor are to be inspected. For FY 2011, the minimum risk factor for production inspections, records verification (production accountability reviews), and well status checks will be 4.0. If a FO is not able to meet this goal, the FO will be required to submit an explanation of why the FO cannot meet the goal and what the FO needs to meet the goal including the number and type of inspectors or technicians that are required to meet the goal. The number and types of vacancies related to oil and gas I&E that the FO has are to be included in the request for additional funding. All vacancies are assumed to be fully funded by current base funding. In addition to sending a copy to the Fluid Minerals Division (WO-310), the request for additional funding must be included in the next feedback communication to the WO on budget (i.e., Planning Target Allocations (PTA), Annual Work Plan (AWP)).
The risk-based strategy will not be fully implemented this year as not all risk factors are currently being tracked in the Automated Fluid Minerals Support System (AFMSS). Inspections for drilling, abandonment, environmental, and workovers will continue to be estimated as in previous strategies. The risk factors for these inspection types are included so that FOs can understand how the new policy will be applied to them going forward. The AFMSS will need to be amended to handle the creation of this new risk-based strategy. Once AFMSS has been amended, most of the new strategy will be developed through AFMSS. For the FY 2011 strategy, the BLM will be implementing the production inspections, records verification (production accountability reviews), and well status checks for the risk factors that are presently available in AFMSS. The BLM has received the risk factors being used by the Office of Natural Resources Revenue (ONRR). The available risk factors from ONRR will be used in determining the overall risk factors for production, records verification, and well status. To assist in this transition, the WO will prepare spreadsheets for each FO containing all cases in AFMSS with the risk factors applied.
Once the spreadsheets for the FOs are completed, the spreadsheets will be sent to each FO for development of the strategy. The FOs will use this data along with estimates of the number of drilling, abandonment, environmental, and workover inspection goals in completing their strategies. The FOs will then determine, based on present staffing and not PTA funding, how many inspections will be planned. In determining the number of each type of inspection, the following priorities are to be used.
INSPECTION WORKLOADS – PRIORITY ORDER
Forproduction, drilling, and abandonment inspectors (PETs):
Creating the Inspection Strategy Matrices
For all FOs, the FY 2011 I&E Strategy Matrices are to be created using the spreadsheets for production, records verification, and well status and estimates for the remaining inspection types. This data is to be entered into the strategy matrix in AFMSS. Attachment 3 gives details on how to enter the production and records verification inspections into the matrix. For the FOs with Indian Trust responsibility, a Strategy Matrix must be created in Non-Indian AFMSS as well as the Indian AFMSS. In addition, when creating the matrices, identify the following in a separate memorandum, as applicable:
All state office (SO) I&E Coordinators will be responsible for ensuring the proper rating of drilling inspection items.
In development of the strategy matrices, FOs must coordinate several different areas, including:
Along with the use of the BLM’s budget system, the Quarterly Progress Report feature in AFMSS provides management an excellent tool to monitor the completion of I&E goals. This report must be generated and reviewed at least at midyear and the end of the third quarter FY 2011, and any necessary adjustments implemented to ensure the accomplishment of I&E Strategy goals identified in the matrices.
Petroleum Engineering Technicians (PET) are reminded that it is 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 the valve 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 to 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 to be elevated immediately to the local BLM Law Enforcement, the BLM Washington Office (AD-300 and WO-310), and the OIG following standard protocol as outlined in IM 2009-115. Inspections must document the fact that the equalizer valves were checked.
Timeframe: Inspection plan matrices must be completed and official strategy matrix must be entered into both Indian and Non-Indian AFMSS by December 20, 2010.
Budget Impact: Any changes in resource needs will be reflected in the inspection plan matrices for FY 2011. Additional resources for FOs with shortfalls to meet their workloads will be subject to budget availability.
Background: The GAO report 10-313 recommendations 10 and 11 requires the BLM to change the yearly strategy to a risk-based strategy and requires goals be set for certain types of inspections. The OIG report CR-IS-MOA-0004-2009 Recommendations 2, 4, and 5 require that beneficial use cases be inspected to ensure that gas or oil used on lease is reasonable and properly accounted. To meet these requirements, the BLM has developed this new risk-based strategy.
In the past, the Inspection Strategy has been based on the amount of production, operator compliance, and High or Low Priority ratings. Production inspections were based on whether the average monthly production met the Federal Oil and Gas Royalty Management Act (FOGRMA) High category or if the operator had a compliance rating which made it a FOGRMA High. The remaining inspection types (drilling, abandonment, environmental, workover, etc.) were rated as either High or Low based on standards for each type of inspection. This strategy required that all production and compliance cases rated FOGRMA High and one third of the remaining cases were inspected annually. Drilling, abandonment, environmental, workover, etc., cases rated High were also inspected annually. The FOs would then evaluate the number of inspection hours available to develop a plan for which inspections would be completed during the year. Certain types of inspections (drilling and abandonment) were estimated based on what the FO expected would occur during the year. This old strategy did not establish, other than the FOGMRA Highs, which cases were to be inspected during the year.
Manual/Handbook Sections Affected: The required changes will be made to the Inspection and Enforcement Documentation and Strategy Development Handbook.
Coordination: This memorandum was coordinated with the WO-310 I&E Specialists, SO I&E Coordinators, NOC personnel, and FO personnel.
Contact: If you have any questions concerning the content of this IM, please contact me at
202-208-4201. Any questions regarding the Strategy goals should be referred to William Gewecke at 202-912-7152, or firstname.lastname@example.org. Technical questions regarding preparation of the Strategy Matrices should be referred to Carol Larson at 406-233-3655, or email@example.com.
Signed by: Authenticated by:
Michael Nedd Robert M. Williams
Assistant Director Division of IRM Governance,WO-560
Minerals and Realty Management
|Last updated: 12-03-2010|
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