Forced-Pooling Requests

IM2022-057
Instruction Memorandum

United States Department of the Interior
BUREAU OF LAND MANAGEMENT
https://www.blm.gov

September 8, 2022

In Reply Refer To:
3105, 3160, 3180 (HQ-310) P

EMS TRANSMISSION 09/16/2022
Instruction Memorandum No. 2022-057

Expires:  09/30/2025

To:                   All Field Office Officials

From:              Assistant Director, Energy, Minerals and Realty Management

Subject:           Forced-Pooling Requests

Program Area: Federal and Indian Oil and Gas Agreements and Operations.

Purpose: This Instruction Memorandum (IM) supplements existing policy and guidance for the Bureau of Land Management (BLM) offices that review requests for State government forced-pooling of unleased Federal and Indian oil and gas. The IM requires BLM offices to review and respond to forced-pooling requests, when necessary.

Administrative or Mission Related: Mission Related.

Policy/Action: This IM sets forth the policy of requiring BLM offices to review requests for State forced-pooling of unleased Federal and/or Indian managed oil and gas and take appropriate action, when necessary. Although most State oil and gas regulatory agencies have the authority to force-pool unleased mineral interest owners for the purposes of oil and gas exploration and production, State forced-pooling does not apply to unleased Federal or Indian oil and gas. The BLM and/or Bureau of Indian Affairs (BIA) will approve a Federal and/or Indian oil and gas pooling request only through a Communitization Agreement or Unit Agreement; however, not all operators are aware of this and may attempt to force-pool Federal or Indian oil and gas through the State process.

State oil and gas regulatory agencies require the operators to request a hearing to determine whether to approve forced-pooling, which is reflected in the State government’s hearing dockets. Most State oil and gas regulatory agencies require the operators to notify affected oil and gas owners of their forced-pooling hearing requests. This includes the operator having to notify the BLM if Federal or Indian minerals are affected by their forced-pooling requests. Additionally, the BLM may receive notice of the operator’s forced pooling request due to certain States entering into a Memorandum of Understanding (MOU) with specific BLM offices, wherein these States have agreed to provide copies of all their hearing dockets.  The BLM staff should review the operator’s hearing requests and the States’ upcoming hearing dockets to determine whether a forced-pooling request includes unleased Federal or Indian minerals. If the forced-pooling request involves unleased Federal or Indian minerals, the BLM office must determine whether the operator is proposing to drill into and produce from the Federal or Indian minerals. When this occurs for unleased Federal minerals, the BLM must inform the operator of the process to properly lease the Federal minerals by submitting an expression of interest through the National Fluids Lease Sale System at (https://nflss.blm.gov/). For unleased Indian minerals, the BLM should inform the operator to contact the BIA for further instructions. The BLM must also inform the operator that drilling into and producing from unleased Federal or Indian minerals will be considered a mineral trespass and the operator may be subject to prosecution.

If the operator’s proposed well or wells will not penetrate the Federal or Indian minerals, and the BLM agrees with the forced-pooling request, the BLM must work with the operator to establish a Unit or Communitization Agreement to protect the Federal or Indian minerals from uncompensated drainage. For Federal minerals, the BLM will either: 1) if the lands are leasable, then establish an unleased lands account, which will allow the operator to pay the Federal royalties due from the allocated production and begin the process for including the lands in a future competitive lease sale or, 2) if the lands are not leasable, then work with the operator to establish a compensatory royalty agreement. For Indian minerals, the BLM will inform the BIA of the proposed pooling request containing unleased minerals.

While State pooling is not binding on Federal or Indian oil and gas, it is often in the BLM’s or the Indian mineral owner’s best interest to agree with the pooling request and to work with the operator to establish a Communitization or Unit agreement. This allows the operator to logically develop areas with mixed mineral ownership without stranding the Federal or Indian minerals.

If the BLM disagrees with the proposed forced-pooling request that is being considered by the State, the BLM should object to it in writing. Those offices with MOUs with State agencies should follow the process established in the MOU to raise their objection. For those offices that do not have an MOU with the State agency, the BLM must follow the State process for objecting to the pooling. Offices without MOUs with the State agencies are encouraged to establish MOUs regarding pooling, including the sharing of data and hearing dockets, as well as establishing a process for objecting to pooling.

Timeframe: Effective immediately.

Budget Impact: Minimal, as there may be some additional workload for those offices not currently reviewing forced-pooling requests.

Background: In December 2019, the U.S. Department of the Interior Office of the Inspector General (IG) issued a Management Advisory regarding the BLM’s procedures for addressing forced-pooling requests and mineral trespass. The IG investigated two cases where it found that producers notified the BLM of their intent to drill wells into proposed Units containing unleased Federal tracts and requested the BLM’s participation in accordance with State forced-pooling statutes. The IG found that the BLM did not respond to the requests and, subsequently, the producers improperly proceeded with drilling operations and initiated production from the wells without first obtaining Federal leases, resulting in mineral trespasses. The IG recommended that the BLM develop guidance on addressing forced-pooling requests for Federal and Indian tracts.

Manual/Handbook Sections Affected: The MS-3160-9 – Communitization (Rel. 3-215, 7/7/1988) and H-3180-1 Unitization (Rel. 3-102, 10/28/1984) will incorporate the policy contained in this IM in its next revision.

Coordination: This policy was coordinated with the DOI Office of the Solicitor, the BLM Headquarters Energy, Minerals, and Realty Management Directorate (HQ-300), Division of Fluid Minerals (HQ-310), the BIA, and State Offices. 

Contact: If you have questions or concerns regarding this IM, please contact me, at 970-256-4944. For program questions, your staff may contact Lonny Bagley, Acting Chief, Division of Fluid Minerals (HQ-310) at 307-261-7777 (lbagley@blm.gov) or Will Lambert, Petroleum Engineer, (HQ-310) at 406-896-5328 (wlambert@blm.gov).

 

Signed by:                         Authenticated by:
Nicholas Douglas             Robert M. Williams
Assistant Director            Division of Regulatory Affairs and Directives,(HQ-630)
Energy, Minerals and Realty
   Management

Fiscal Year

2022