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FY 2018 Oil and Gas Inspection and Enforcement Strategy Matrices Instructions and Strategy Goals

IM 2017-104
Instruction Memorandum

UNITED STATES DEPARTMENT OF THE INTERIOR

BUREAU OF LAND MANAGEMENT

WASHINGTON, D.C. 20240

http://www.blm.gov

August 21, 2017

In Reply Refer To:

3160 (310) P

EMS TRANSMISSION 09/08/2017

Instruction Memorandum No. 2017-104

Expires:  09/30/2020

To:                         All Field Office Officials

From:                    Assistant Director, Energy, Minerals, and Realty Management

Subject:                Fiscal Year 2018 Oil and Gas Inspection and Enforcement Strategy Matrices Instructions and Strategy Goals        DD:  10/31/2017

Program Area:  Oil and Gas Management, Inspection and Enforcement.

Purpose:  This Instruction Memorandum (IM) provides the 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) 2018.

Policy/Action:  For FY 2018, all offices are to complete 100 percent of the high-priority inspections and to share resources across FO boundaries to accomplish this goal.  The Bureau of Land Management (BLM) will continue the risk-based strategy for production inspections, records analysis/record verification inspections, and idle well inspections.  Drilling inspection prioritization will follow the guidance in attachment 1.  Inspection prioritization for abandonment, environmental, and workovers will continue to follow guidance in the BLM Handbook H-3160-5, Inspection and Enforcement Documentation and Strategy Development Handbook.  

The BLM’s goal is to have the entire I&E strategy be risk-based and in the Automated Fluid Minerals Support System (AFMSS).  The BLM has automated the risk ratings for the production inspection and the idle well inspection portions of the strategy in AFMSS.  The risk factors are on a scale of 1 to 10, with 1 for the lowest and 10 for the highest risk.  The AFMSS also applies a weighting factor for each of the risk factors based on the importance of the risk.  Using these weighting factors, AFMSS averages all of the risk factors for an identified type of inspection to arrive at an overall risk rating.  Attachment 2 details the risk and weighting factors for the production and idle wells inspections.

The AFMSS carries the risk information forward to a matrix in AFMSS for the FOs to plan their technical field inspections (e.g., drilling, abandonment, production) based on their available workforce and their workload.  Due to budget, other rulemaking priorities, staffing, and resources limitations, however, the BLM has not yet automated the records analysis/records verification inspections, or the environmental inspection portions of the strategy as part of the redesign for A2 (AFMSS 2).  Therefore, for FY 2018, the FOs must plan these inspections manually using the attached spreadsheet (attachment 3).    

For FY 2018, the risk factors remain the same as FY 2017; the minimum high-risk factor is 4.0 for production inspections and 4.0 for idle well inspections.  Stabilizing the risk factors at the FY 2014 level allows for more consistent reporting from year to year and for more reliable planning for future years.  Production inspections drew the attention of the Government Accountability Office as they identified the Department of the Interior in high risk of assuring production accounting.  In response, the BLM goal is to inspect all (100 percent) of high-risk/priority cases (overall production inspection risk factor of 4.0 and above) and at least one-third of the cases with overall rating factors lower than 4.0.  For idle well inspections in FY 2018, the goal is to have each FO inspect 20 percent of the high-risk factor wells (risk rating of 4.0 and above).  For records analysis/records verification inspections, the goal is to complete a records analysis on 10 percent of the cases with a production inspection overall rating of 4.0 or higher and to complete a records verification inspection on 10 percent of the remainder of the production inspection cases.  The cases selected for review are to be a mix of various operators and geographic locations.  For drilling, abandonment, and environmental inspections, the goal is to inspect all wells/facilities rated as high-priority. 

Creating the Inspection Strategy Matrices

For FY 2018, the FOs must create the I&E strategy using a combination of AFMSS and spreadsheets.  For the technical field inspections (e.g., drilling, abandonment, production), the FOs will use the matrix in AFMSS (IEP.13S screen).  Attachment 4 provides the instructions for running the risk-based reports for production inspections and idle well inspections, along with instructions for completing the matrix in AFMSS.  The AFMSS database will automatically create the FY 2018 priorities on October 1, 2017, which will allow the FOs to run the risk-based reports and create their strategy matrices anytime thereafter.  Offices need to be aware that the AFMSS database is dynamic and changes to data, such as a change of operator, can change a production inspection case ranking.  Therefore, the production inspection goals within the matrix can change until the FO saves an official version of the strategy.  After the FO saves an official version of the strategy, the production inspection goal remains constant throughout the fiscal year.  

For the records analysis/records verification and the environmental inspection portions of the strategy, the FOs will use the spreadsheet provided.  Attachment 5 provides the instructions for completing the spreadsheet.  For the FOs with Indian Trust responsibility, the FOs must complete two separate spreadsheets:  one for Federal data and one for Indian Trust data. 

In addition to completing the technical inspection strategy in AFMSS, the FOs must complete and return the Excel spreadsheet in attachment 3 to the Washington Office Division of Fluid Minerals (WO-310) and their state office (SO) by October 31, 2017.  The SOs should require the FOs to submit draft spreadsheets to the SO for review prior to the WO-310 due date; this oversight review by the SO ensures improved consistency and awareness within the state. 

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 planned for completion during the year.  Each FO must follow the “INSPECTION WORKLOADS – PRIORITY ORDER” in priority order as detailed in this IM. 

Increased Inspection Time for Production Inspections

The BLM published new oil and gas measurement regulations effective January 17, 2017.  The new regulations contain additional requirements and are more complex than the previous regulations.  These changes require inspectors to use additional forms, and will result in increased production inspection times.  Therefore, offices should increase their average field time for production inspections by 20 percent and increase their average office time for production inspections by 5 percent when completing the strategy matrix.  Attachment 4 contains instructions for determining the increased inspection times.  The increase in inspection times will result in a decrease of around 680 in the number of planned production inspections, which is a decrease of around 8.5 percent from FY 2017. 

Amending the Inspection Strategy Matrices

Due to the number of inspection databases, it is difficult for the WO-310 to know when a FO creates new versions of the matrix.  Therefore, FOs must notify the WO-310 and their SO by email of all “Official Versions” of the matrix (AFMSS or attachment 3) created after October 31, 2017, within 7 calendar days.  The first “Official Version” the FO saves sets the goals and expectations for the FY that subsequent “Official Versions” do not affect.

INSPECTION WORKLOADS – PRIORITY ORDER 

In determining the number of each type of inspection, use the following priorities.  Please keep in mind, however, that conducting high-priority production inspections is a top Department of the Interior and BLM Director’s priority.  FOs must take the necessary steps (e.g., sharing resources, using flexible work schedules) to conduct production inspections on all of the high-risk cases to meet the Director’s goal of completing 100 percent of the high-priority production inspections.  However, due to the time sensitivity of drilling and abandonment inspections, and the need to ensure protection of resources and public health and safety, drilling and abandonment inspections remain the highest priorities in addition to high-risk production inspections.   

For production, drilling, and abandonment inspectors (Petroleum Engineering Technicians (PET)):

1. High-priority drilling wells.

2. High-priority plugging operations.

3. 100 percent of Federal and Indian production cases with a risk factor of 4.0 and above.  If the FO anticipates not being able to accomplish all of these cases, immediately begin to coordinate with the SO for additional resources (staff) from other field offices.  

4. 20 percent of high-priority idle wells with a risk factor of 4.0 and above.

5. Production accountability inspections, such as Records Analysis (RA) and Records Verification (RV).

6. Well production testing that may occur during or after drilling operations, but before placing the well on a producing well status (see attachment 6 for details).

7. High-priority workover operations.

8. One-third of Federal and Indian production cases with a risk factor below 4.0.  (FOs should conduct inspections in risk-factor order, highest to lowest considering location of cases to minimize travel times and cost and not randomly.)

9. Production inspections on cases that have had a change of operator (see attachment 6 for details).

For Production Accountability Technicians (PAT)

1. Records Analysis (RA) inspections.

2. Records Verification (RV) inspections. 

For Surface Compliance Specialists: 

1. High-priority construction/drilling wells (surface compliance).

2. High-priority environmental inspections (see attachment 6 for details).

3. Interim Reclamation inspections (see attachment 6 for details).

4. Final Reclamation inspections. 

AFMSS Inspection “Type” and “Activity” Codes

In the past few years, the BLM added new Inspection Types and Inspection Activities to AFMSS and changed the definition of others (see attachment 7).  For FY 2018, all of the definitions are the same as in FY 2017. Attachment 7 replaces and supersedes appendix 1 in the Inspection and Enforcement Documentation and Strategy Development Handbook, H-3160-5, and all other definitions for “Inspection Type” and “Inspection Activity.” Attachment 8 contains clarification for using some of the codes.

Closing Inspections

Once an inspection is open in AFMSS, the inspection remains “Open” until the inspection is completed.  Do not close inspections at the end of the FY (including the end of FY 2016) and re-open after the start of the next FY in order to complete the inspection later.  However, inspections are not to remain open while enforcement actions (Incidents of Noncompliance (INC), Written Orders) are pending (see H-3160-5, Inspection and Enforcement Documentation and Strategy Development Handbook, IV.L.).  Therefore, in summary, close an inspection when the last inspection activity is complete; do not leave the inspection open because there is an outstanding enforcement action.

This allows the BLM to accurately count and report the number of inspections the BLM completes each FY.  Closing an incomplete inspection and re-opening it the follow year, as was the past practice, has led to inconsistent reporting of accomplishments.  The goal remains to close all open inspections by the end of each FY; however, there are circumstances that may prevent that from occurring. 

Completing Inspection Data Entry

Offices must enter all FY 2018 completed inspections in AFMSS by September 21, 2018.  This will allow the State Inspection and Enforcement (I&E) coordinators and the WO-310 one week prior to the end of the fiscal year to reconcile any anomalies.  The WO-310 will begin pulling end-of-year reports on October 1, 2018.

Additional Guidance

The National Operations Center (NOC) Fluid Minerals Section is available to assist FOs in performing production accountability reviews (RA and RV) and will issue an Information Bulletin (IB) when it is ready to accept new cases.  State I&E Coordinators may then submit a list of potential leases or agreements for NOC review, ranked in priority order per each FO.  

In development of the strategy matrices, the FOs must coordinate several different areas, including: 

• Coordination must take place with the applicable Tribes and/or the Bureau of Indian Affairs to ensure the BLM is aware of their concerns regarding the prioritization of cases.

• Interdisciplinary coordination must occur within the FOs to ensure that the FO coordinates all environmental priority ratings with appropriate staff such as Natural Resource Specialists or Environmental Scientists.

• Coordination between the SO and reporting FOs is essential to ensure the FOs meet all of the inspection goals, particularly high-priority drilling, plugging, production, and environmental inspections.

• Coordination among states must take place to enhance the sharing of resources to accomplish the nationwide goal of completing 100 percent of the high-priority production inspections. 

FOs must elevate all suspected oil and gas theft immediately to the local BLM Law Enforcement, the BLM Washington Office (AD-300 and WO-310), and the BLM Law Enforcement Special Investigations Group (SIG) following standard protocol as outlined in IM WO-IM-2013-056, Oil and Gas Theft Reporting Guidelines and Format.  Attachment 9 contains links to this and other useful IMs, IBs, and other resources.

Timeframe:  FOs must complete the technical field inspection matrix in AFMSS and save it in AFMSS as “Official” by October 31, 2017.  If the FOs save a new “Official” version of the matrix (AFMSS or attachment 3) after October 31, 2017, they must notify Michael Wade (mwade@blm.gov) and William Lambert (wlambert@blm.gov) via email within 7 calendar days.  FOs must also submit the completed matrix spreadsheets (attachment 3) to WO-310 and their SO by October 31, 2017 (SOs set their own internal deadline to ensure they provide time to review prior to WO).  Field offices must enter all FY 2018 completed inspections in AFMSS by September 21, 2018.  SOs must send a memorandum to WO-310 by October 15, 2018, with the results of the drilling priority ranking review as identified in Attachment 1.

Budget Impact:  The I&E budget increased in FY 2016 and 2017, allowed for the hiring of additional inspectors.  All FOs should have the capacity to accomplish all of the goals of the strategy once the new inspectors are fully trained.    

Background:  The BLM provides instructions for preparing the Inspection Plan Matrices 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:  BLM Handbook H-3160-5, Inspection and Enforcement Documentation and Strategy Development Handbook, will incorporate the interim policy contained in this IM during its next revision. 

Coordination:  WO-310 coordinated preparation of this IM with 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, or your staff may contact Steven Wells, Chief, Division of Fluid Minerals, at 202 912-7143 (s1wells@blm.gov).  For questions regarding the Strategy goals or Strategy amendments, contact William Lambert at 406-896-5328 (wlambert@blm.gov) or Michael Wade at 303-239-3737 (mwade@blm.gov).  

 

Signed by:                                                                        Authenticated by: 

Timothy R. Spisak                                                           Robert M. Williams

Acting, Assistant Director                                               Division of IT Policy and Planning,WO-870

Energy, Minerals, and Realty Management

 

9 Attachments      

     1 – Instructions for Prioritization of Drilling Inspections (3 pp)

     2 – Risk and Rating Factors for Production and Idle Wells Inspections (6 pp)

     3 – Records Analysis/Records Verification and Environmental Inspection Strategy Spreadsheet for FY18 (1 p)

     4 – Instructions for Running the Risk-based Reports in AFMSS (23 pp)

     5 – Instructions for Completing the Records Analysis/Records Verification and Environmental Inspection Strategy Spreadsheet (4 pp)

     6 – Selected Inspection Workload Explanations (5 pp)

     7 – Complete Re-write of Appendix 1 of the Strategy and Documentation Handbook (12 pp)

     8 – Clarification of Specific Codes (4 pp)

     9 – Useful Links (2 pp)