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February 26, 2013


In Reply Refer To:

3100 (310) P




EMS TRANSMISSION 04/04/2013                                                             

Instruction Memorandum No. 2013-075

Expires:  09/30/2014


To:                   All State and Center Directors

From:               Assistant Director, Minerals and Realty Management

Subject:           Functions Required by the Bureau of Land Management to Implement Gas Storage Agreement Payment Verification through the National Operations Center

DD:  04/15/2013 

Program Area:  Fluid Minerals.

Purpose:  This Instruction Memorandum (IM) identifies the functions the Bureau of Land Management (BLM) National Operations Center (NOC) will perform in implementing payment verification for Gas Storage Agreements (GSA) on Federal lands.

Policy/Action:  To help meet the Department of the Interior production verification responsibilities, the NOC Production Accountability Section (OC0851) will provide payment verification for GSAs.  The Fluid Minerals Division (WO-310) will provide coordination and policy support to the NOC in performing this function.


The NOC Production Accountability Section will review, in consultation with WO-310 and BLM state offices, one-third of all GSAs each year (12 to 13 annually) beginning in fiscal year (FY) 2013 until the NOC reviews all 36 GSAs.  The BLM state offices will nominate GSAs for priority consideration for the first year of the review by April 15, 2013.  For the initial review, the NOC will analyze data reported during the 7 previous years, and the NOC will complete the initial review of all current GSAs within 3 years.  After the initial review, the NOC Production Accountability Section will review all GSAs on a 3-year cycle.  States will continue to access potential risks of proper storage volumes verification.  The NOC’s review of these agreements will mirror the same procedures it established for conducting Production Accountability reviews.


The NOC will obtain documentation of payment for storage (rental), injection, and withdrawal activities by GSA operators required as part of the review by direct access to the Office of Natural Resources Revenue (ONRR) Brio database.  If any data is missing or incomplete from Brio reports or the reports provided by the BLM state offices, only then will the NOC request the necessary information from the GSA operator.


As part of the review, the NOC will compare the volumes submitted to the BLM with the volumes reported to the ONRR on Form MMS-2014.  The NOC will also verify that the GSA operator has made the correct payments in accordance with the latest negotiated fee schedule. 


As of the effective date of this IM, the BLM state offices with GSAs will:


1.      Provide the NOC (OC0581) a list, in order of priority, of one-third of the GSAs to be reviewed in FY 2013 by April 15, 2013; and

2.      Provide the NOC (OC0581) with copies of statements on injection and withdrawal for those GSAs identified for review during each year.


If the NOC does not complete the required one-third, then the NOC will continue its review with the next state-identified priority GSA.

Timeframe:  This IM is effective immediately.

Budget Impact:  Implementation of this IM will have a modest impact on the BLM budget, as the workload will be assumed by existing staff and completed in increments as staffing permits.

Background:  The BLM is responsible for monitoring the 36 GSAs established on Federal lands within depleted gas reservoirs, salt caverns, or aquifers.  These agreements generally allow for injection of gas during summer months for later withdrawal during peak usage in winter months.  As specified in the terms of GSA contacts, the BLM requires operators to report gas storage activities to the BLM at least quarterly or some other time period as specified in the contract.  The GSA operator pays storage fees to the ONRR Office of Audit and Compliance Management and reports on Form MMS-2014.  Regulations require the BLM to verify that operators pay proper fees for gas storage activities to ensure that the public receives market value for use of Federal storage space.  The NOC will share findings and issues with the BLM state offices as the NOC begins and completes reviews and after determining either negative or positive findings.


Manual/Handbook Sections Affected:  WO-310 will amend and incorporate this policy into BLM Manual 3160-11, Underground Storage of Natural Gas, and the Model Underground Gas Storage Agreement Form.

Coordination:  WO-310 coordinated preparation of this IM with BLM field office staff, the Department of the Interior Solicitor’s Office, the NOC, and the ONRR.

Contact:  If you have any questions or concerns regarding this IM, please contact me at 202‑208-4201; Steven Wells, Division Chief, WO-310, at 202-912-7143 or s1wells@blm.gov; or Jamie Sellar-Baker, Chief, NOC Branch of Program Operations, at 303-236-0402 or jsellarb@blm.gov.


Signed by:                                                                      Authenticated by:

Michael D. Nedd                                                            Catherine Emmett

Assistant Director, Minerals & Realty Management          Division of IRM Governance, WO-560

Last updated: 04-04-2013