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April 25, 2013
In Reply Refer To:
3160 (310) P
Instruction Memorandum No. 2013-112
Expires:  09/30/2014
To:                   All Field Office Officials
From:               Assistant Director, Minerals and Realty Management
Subject:           Fiscal Year 2013 Oil and Gas Inspection and Enforcement Strategy Matrices Instructions and Strategy Goal                                                       DD: 05/10/2013
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) 2013.
Policy/Action:  For FY 2013, the Bureau of Land Management (BLM) will continue the risk-based strategy for production inspections, records analysis/record verification inspections, and idle well inspections.  Inspections for drilling, 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 risked-based and in the Automated Fluid Minerals Support System (AFMSS). For FY 2013, 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 being the lowest and 10 being 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 1 details the risk and weighting factors for the production inspections and idle wells.
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 and staffing limitations, however, the BLM has not yet automated the records analysis/records verification inspections, or the environmental inspection portions of the strategy. Therefore, for FY 2013, the FOs will need to plan these inspections manually using the attached spreadsheet (attachment 2).   
For FY 2013, the minimum high risk factor is 5.0 for production inspections and 4.0 for idle well inspections.  For production inspections, the goal is to inspect all high risk factor cases (overall production inspection risk factor of 5.0 and above) and at least one-third of the cases with overall risk factors lower than 5.0.  For idle well inspections in FY 2013, the goal is to have each FO inspect 20 percent of the high risk factor wells (risk rating greater than 4.0). 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 5.0 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 environmental inspections, the goal is to inspect all wells/facilities rated as high priority. 
Creating the Inspection Strategy Matrices
For FY 2013, the FOs are to 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 3 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.
For the records analysis/records verification portions of the strategy and the environmental inspection portions of the strategy, the FOs will use the spreadsheet provided. Attachment 4 provides the instructions for completing the spreadsheet. For the FOs with Indian Trust responsibility, the FOs must complete a separate spreadsheet for their Federal data and for their Indian Trust data.
In addition to completing the technical inspection strategy in AFMSS, the FOs must complete and return the attached Excel spreadsheet in attachment 2 to the Washington Office Division of Fluid Minerals (WO-310) and their state office (SO) by May 10, 2013.
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 start with the highest rated risk-based production inspection cases and idle wells and then proceed in priority order using the risk-based strategy when doing inspections for each type of inspection. 
If a FO is not able to meet the goals identified, the FO must submit a memorandum to WO-310, through the SO, outlining specifically what the FO needs to meet the goal.  This memorandum must include the number and type of inspectors or technicians that the FO requires to meet the goal, the number and types of vacancies related to oil and gas I&E that the FO currently has, and the efforts to fill these vacancies.  The FO must include its request for additional funding in the next feedback communication to the WO on budget (i.e., Planning Target Allocations (PTA), Annual Work Plan (AWP)), with a copy of the request to WO-310.
The FOs will then determine, based on present staffing and not PTA funding, how many inspections the FO will plan.  In determining the number of each type of inspection, use the following priorities.
For production, drilling, and abandonment inspectors (Petroleum Engineering Technicians (PET)): 
1.  High Priority drilling wells
2.  High Priority plugging and abandonment operations
3.  Federal and Indian production cases with a risk factor of 5.0 and above  (Conduct inspections in risk-factor order considering location of cases to minimize travel times and cost.)
4.  Idle well inspections
5.  Production accountability inspections, such as Records Analysis (RA) and Records Verification (RV)
6.  Production inspections on cases that have had a change of operator (see attachment 5 for details)
7.  Well production testing that may occur during or after drilling operations but before placing the well on a producing well status (see attachment 5 for details)
8.  High Priority workover operations
9.  One-third of Federal and Indian production cases with a risk factor below 5.0 (FOs must conduct inspections in risk-factor order, highest to lowest, and not randomly.) 

For Production Accountability Technicians (PAT)

1.  Production accountability inspections (RA, RV) 

For surface compliance specialists: 

1.      High Priority construction/drilling wells (surface compliance)

2.      High Priority environmental inspections (see attachment 5 for details)
3.      Interim Reclamation inspections (see attachment 5 for details)
4.      High Priority workover operations (surface compliance)
5.      Final Reclamation inspections   
AFMSS Inspection “Type” and “Activity” Codes
With the change to a risk-based strategy and the need to more accurately describe and account for accomplishments in the I&E program, the BLM added some new Inspection Types and Inspection Activities to AFMSS and changed the definition of others as detailed (see attachment 6). Attachment 6 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.”
The BLM added a new Records Analysis inspection type code (RA) this year to capture and account for a complete review of all of the production records associated with a case for a specified time. With this change, the FOs will no longer use the Production Records Review (PR) activity code with the Production Inspection (PI) type code. If the FO completes a production records analysis, the FO will use a separate RA inspection type to capture the work performed.
The BLM also added a new Beneficial Use inspection type code (BU). The FOs will use the BU code when reviewing records for beneficial use not associated with any other inspection type. Attachment 7 contains clarification for using the RA, RV, and BU codes.
The BLM added new inspection activity codes to better track the actual work performed during production inspections. These activity codes are Gas Sampling (GS), Meter Tube Inspection (MT), and Orifice Plate inspection (OP). These changes are necessary due to recommendations made by both the Government Accountability Office (GAO) and the Office of Inspector General (OIG) for the Department of the Interior. 
Additional Guidance
The National Operations Center (NOC) Fluid Minerals Section is available to assist FOs in performing production accountability reviews (see IB-OC-2013-025).  State I&E Coordinators may submit a list of potential leases or agreements for NOC review, ranked in priority order per each FO.   The NOC issued IM-OC-2011-037, dated April 7, 2011, with details on procedures in working with the NOC Fluid Minerals Section.
All drilling inspections rated “High” must meet the criteria rating as outlined in the Inspection and Enforcement Documentation and Strategy Development Handbook.  Exercise special care in classifying field development drilling wells as High for routine casing and cementing operations.  
All SO I&E Coordinators will be responsible for ensuring the proper rating of drilling inspection items.  
  • Oversight and Guidance:  The SO I&E Coordinators will review the inspection priorities for all inspections rated High to ensure compliance with the priority rating standards. 
  • Rating inspections to the correct criteria ensure that the FOs maximize inspection resources.  Example:  FOs should not rate all drilling wells as High if the wells do not meet the criteria in the Inspection and Enforcement Documentation and Strategy Development Handbook.   
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.   
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 8 contains links to this and other useful IMs, Information Bulletins, and other resources.
Timeframe:  FOs must complete the technical field inspection matrix in AFMSS and save it in AFMSS as “Official” by May 10, 2013.  FOs must also submit the matrix spreadsheets to WO-310 and to their SO by May 10, 2013.
Budget Impact:  The inspection plan matrices for FY 2013 will reflect any changes in resource needs.  The budget will dictate availability of additional resources for FOs with shortfalls to meet their workloads. The FOs will continue to explore shared resources to help meet inspection needs that match industry activity.
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.
Two years ago, the BLM implemented a risk-based strategy as suggested by both the GAO and the OIG and agreed to by the BLM. The WO-310 created and sent out risk-based spreadsheets to each of the offices to be used to complete their I&E strategy. There were issues with this method because the WO created the spreadsheets before the end of the FY. These spreadsheets did not include the AFMSS data entry that occurred during the last 2 months of the FY. Last year, the WO-310 sent out Brio queries rather than sending out the spreadsheets, and required that each office create their own spreadsheets. This created other issues because some offices were unfamiliar with running Brio queries, leading to inconsistencies between the various offices. Therefore, the WO-310 decided to automate the strategy as we advance the capacity of AFMSS; however, due to limited resources, WO-310 was able to automate only the field inspections performed by PETs (e.g., drilling, abandonment, production, idle well) at this time. 
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, contact William Lambert at 406-896-5328 (wlambert@blm.gov) or Michael Wade at 303-236-1930 (mwade@blm.gov). For technical questions regarding preparation of the Strategy Matrices, contact Carol Larson at 406-233-3655 (clarson@blm.gov).
Signed by:                                                                   Authenticated by:
Michael Nedd                                                               Robert M. Williams
Assistant Director                                                        Division of IRM Governance,WO-560
Minerals and Realty Management
8 Attachments     

Last updated: 04-29-2013