New Mexico Bureau of Land Management (BLM) Policy for Temporarily Abandoned (TA) and Shut-In (SI) Wells
EMS Transmission: 09/07/2016
Instruction Memorandum No. NM-2016-017
To: DMs and FMs
From: State Director
Subject: New Mexico Bureau of Land Management (BLM) Policy for Temporarily Abandoned (TA) and Shut-In (SI) Wells
Program Area: Fluid Minerals Operations and Leasing
Purpose: This Instruction Memorandum (IM) provides guidance to the BLM Field Offices and operators concerning the New Mexico State Office (NMSO) BLM policy requirements for documenting and placing inactive wells on Federal and Indian leases into TA or SI status.
Policy: All inactive wells on Federal and Indian leases will require approval for TA or SI status from the authorized officer (AO) in the appropriate BLM Field Office. Wells may be temporarily abandoned for no more than 30 days and wells may be shut-in for no more than 90 days without approval from the AO. To be considered for TA or SI well status, operators must first submit Form 3160-5 Sundry Notice (SN) - Notice of Intent (NOI) via mail hardcopy or via the appropriate BLM electronic submission system to the proper field office with all of the required justification and documentation. The specific timeframes and requirements for gaining TA and SI status approval are provided in attachments 1 and 2, respectively.
For wells on Indian leases, the BLM will notify the Bureau of Indian Affairs (BIA) of any SI or TA status changes within five working days of final approval. If the AO determines that a well on an Indian lease is no longer capable of producing in paying quantities, the AO must notify the BIA in writing and coordinate with the BIA before issuing a 60-day Written Order. The BIA will make the final determination.
The BLM Field Office Staff must update the specific codes indicating shut-in or temporarily abandoned for Sundry Notice Type and Well Status in the Automated Fluid Minerals Support System (AFMSS) database within 10 working days of a status change. The list of the specific AFMSS codes is provided in attachment 3.
Temporarily Abandoned (TA) Wells
A temporarily abandoned well is defined as an idle well which is physically or mechanically incapable of producing oil and/or gas of sufficient value to exceed direct operating costs (i.e. in paying quantities), but may have value as a recompletion candidate, service completion for enhanced recovery, or water disposal. The well may also be currently incapable of water or gas injection but had been actively injecting immediately prior to the status change. Federal regulation 43 CFR § 3162.3-4(c) states that, “No well may be temporarily abandoned for more than 30 days without the prior approval of the AO. The AO may authorize a delay in the permanent abandonment of a well for a period of 12 months. When justified by the operator, the AO may authorize additional delays, no one of which may exceed an additional 12 months. . . .”
The operator must seek TA status approval from the AO if wells are to be temporarily abandoned for more than 30 days. The AO will require the operator to perform a Mechanical Integrity Test (MIT) and isolate the perforations from the surface in an acceptable manner. TA status approval is at the discretion of the AO and will be effective for a period up to 1 year from the date of NOI approval and can be renewed annually thereafter not to exceed 5 consecutive years, provided the operator annually submits Form 3160-5 SN-NOI with all required justification and documentation. If the well was in SI status immediately prior to the application for TA status, the time period spent in SI status will count toward the 5-year limit. Wells that have been in TA status prior to the issuance date of this policy must re-apply to remain in TA status and are subject to all requirements of this policy. At the end of the 5-year limit, the operator must permanently plug and abandon the well or re-apply for TA status consideration and demonstrate mechanical integrity. TA status approval in these cases is at the discretion of the AO on a case-by-case basis. The operator shall promptly plug and abandon those inactive wells not granted TA status by the AO (43 CFR § 3162.3-4(a)). Attachment 1 outlines the detailed procedures for TA status approval.
Shut-in (SI) Wells
A shut-in well is defined as an inactive well which is physically and mechanically capable of producing oil and/or gas in paying quantities or capable of service (injection or monitoring) use, but is temporarily not producing or injecting/monitoring. To clarify the distinction between an SI well and a TA well, all equipment to produce an SI well must remain onsite. This includes all production equipment as well as flowlines and associated fluid storage facilities. However, the AO may authorize at their discretion the removal of specific equipment on a case-by-case basis upon receipt of sufficient documentation and justification from the operator when approving the SN-NOI. Operators must submit this information with the SN-NOI.
The operator must seek SI status approval from the AO if wells are to be shut-in for more than 90 days. The AO will require the operator to submit recent production/injection history, or if the well has been inactive for more than 12 consecutive months, perform a Production/Injection Verification Test. SI status approval is at the discretion of the AO and will be effective for a period up to 1 year from the date of NOI approval and can be renewed annually thereafter not to exceed 2 years, provided the operator annually submits Form 3160-5 SN-NOI with all required justification and documentation. After 2 consecutive years of SI status, the operator can then apply for TA status annually for a period up to 3 years with sufficient justification. Only under extraordinary circumstances will the AO authorize a well to be maintained in SI status for a period longer than 2 years. These specific instances must be evaluated closely and documented by the AO, and operators must submit all substantiating documentation in their SN-NOI submission. Wells in SI status longer than 2 consecutive years must continue to demonstrate production capability annually. Long-term SI status wells must also demonstrate mechanical integrity after 5 consecutive years of SI status and every 5 years thereafter. Wells that have been in SI status prior to the issuance date of this policy must re-apply to remain in SI status and are subject to all requirements of this policy. SI status approval in all cases is at the discretion of the AO on a case-by-case basis. Failure to request SI status for a well inactive more than 90 days will result in the well being considered by the BLM to be temporarily abandoned and subject to all requirements for TA status wells. Attachment 2 outlines the detailed procedures for SI status approval.
Testing
Pursuant to Federal regulation 43 CFR § 3162.4-2, when required by the AO, the operator shall conduct periodic and reasonable tests to determine the presence, quantity, and quality of oil and/or gas and when needed, to demonstrate mechanical integrity of the downhole equipment. For all test procedures, the operator must schedule a date with the appropriate BLM Field Office and contact that office at least 48 hours prior to commencing testing operations so that the procedure can be witnessed by a BLM representative. All remedial work and test data must be provided to the BLM on Form 3160-5 Sundry Notice (SN) - Subsequent Report (SR). Wells seeking TA status approval will require a MIT initially and every 5 years thereafter. The BLM will not accept MITs conducted more than 12 months prior to SN-NOI submission. Wells seeking SI status approval will require a Production/Injection Verification Test if they have been non-producing or non-injecting for more than 12 months. Wells in SI status for 5 consecutive years or more that are seeking continued SI status will require an MIT and every 5 years thereafter.
TA and SI Status Wells on Extended Term Federal and Indian Leases
The AO must closely evaluate TA and SI status wells on leases in their extended term. Per Washington Office (WO) IM 2012-181, a TA status well cannot hold a Federal lease that is in its extended term; the AO shall send the operator a 60-day Written Order letter. In the case of Indian leases, the AO must notify the BIA in writing and coordinate with the BIA before issuing a 60-day Written Order. The BIA will make the final determination for extensions and terminations of Indian leases.
A shut-in well shall not extend a lease beyond its primary or fixed term unless the AO is satisfied that the well remains capable of production in paying quantities based on a recent test of the well. Operators of leases in their extended term that are continued solely by reason of a shut-in well (or wells) shall be required to test at least one well on the lease annually to confirm the lease remains capable of production in paying quantities (BLM Handbook H-3107-1). Further, the lease is considered held by production only if the AO determines that the well(s) have been shut-in for a valid reason (temporary lack of market, temporary low commodity prices, or temporary equipment malfunction). If the operator fails to submit annual production/injection verification or if the AO determines that there is not a valid reason for a well to be shut-in, the AO will issue a Written Order to the operator to place at least one well on the Federal lease in a producing status within 60 days of receipt of such written order in accordance with the regulations at 43 CFR § 3107.2-3. For cases involving Indian leases, the AO must coordinate with the BIA prior to issuing the 60-day Written Order, and the BIA will make the final determination.
Timeframe: This policy is effective upon issuance.
Budget Impact: None. Field Offices are presently conducting TA and SI well status approvals. This IM standardizes the policy across all BLM New Mexico and Oklahoma Field Offices.
Background: Historically, BLM NM/OK/TX/KS has lacked a statewide policy regarding the management of inactive wells. In response to requests from the Field Offices and operators alike, the NMSO developed this IM from individual Field Office policies and in conformity with Federal regulations to ensure that inactive wells on Federal and Indian leases are regulated in an acceptable, consistent manner and documented properly in AFMSS. This IM seeks to clarify the responsibilities of the BLM Field Offices and to provide clear guidance for operators who wish to maintain potentially productive and beneficial wells. Federal regulations allow an operator to retain inactive (TA or SI) wells on Federal and Indian leases as long as a legitimate future purpose or beneficial use for the well can be demonstrated to the satisfaction of the AO. Federal regulation 43 CFR § 3162.3-4(c) establishes that no well can be in TA status for more than 30 days without AO approval. Regulations at 43 CFR § 3161.2 delegate responsibility to the AO for approving, inspecting, and regulating all well operations on Federal and Indian leases. Additionally, 43 CFR § 3162.3-4.2 authorizes the AO to require periodic testing to demonstrate production capability and mechanical integrity. WO IM 2012-181 clarifies the BLM policy regarding idle wells (which includes SI and TA wells). The BLM Handbook H-3107-1 addresses the requirements for shut-in wells on leases in their extended term.
Coordination: This guidance has been coordinated with the Field Offices and the NMSO. If unique situations arise, please contact the NMSO, and new guidance may be necessary.
Contact: Questions regarding this IM should be directed to the NMSO Petroleum Engineer at(505)954-2088. For each AO, contact the Assistant Field Manager (AFM), Lands and Mineralsin the appropriate Field Office: Carlsbad Field Office at (575) 234-5972; Farmington Field Officeat (505) 564-7731; Oklahoma Field Office at (918) 421-4116; Roswell Field Office at (575)627-0250.
Signed by:
Amy Lueders
Amy Lueders
Authenticated by:
Veronica Maldonado
Program Management Analyst
3 Attachments:
1 - Procedure for Requesting Temporarily Abandoned (TA) Status for Wells on Federal and Indian Lands (2 pp)
2 - Procedure for Requesting Shut-In (SI) Status for Wells on Federal and Indian Lands (1p)
3 - Shut-In and Temporarily Abandoned Sundry Notice Type and Well Status Codes for AFMSS (1p)