Oil and Gas and Sulphur Operations in the Outer Continental Shelf-Oil and Gas Production Requirements, 20271-20294 [2010-8798]

Download as PDF Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations FOR FURTHER INFORMATION CONTACT: PART 1003—COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND ALASKA NATIVE VILLAGES Amy C. White, Regulations and Standards Branch, 703–787–1665. SUPPLEMENTARY INFORMATION: 1. The authority citation for part 1003 continues to read as follows: Background ■ Authority: 42 U.S.C. 3535(d) and 5301 et seq. 2. In § 1003.506, redesignate paragraph (a)(3) as paragraph (a)(4), add a new paragraph (a)(3) and revise paragraph (b) to read as follows: ■ § 1003.506 Reports. (a) * * * (3) Program performance. Data on program outputs and outcomes, in a form prescribed by HUD. * * * * * (b) Minority business enterprise reports. Grantees shall submit to HUD, by October 10, a report on contract and subcontract activity during the fiscal year. * * * * * Dated: April 6, 2010. Sandra Henriquez, Assistant Secretary for Public and Indian Housing. [FR Doc. 2010–8924 Filed 4–16–10; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF THE INTERIOR Minerals Management Service 30 CFR Part 250 [MMS–2008–OMM–0034] RIN 1010–AD12 Oil and Gas and Sulphur Operations in the Outer Continental Shelf—Oil and Gas Production Requirements WReier-Aviles on DSKGBLS3C1PROD with RULES AGENCY: Minerals Management Service (MMS), Interior. ACTION: Final rule. SUMMARY: The MMS is amending the regulations regarding oil and natural gas production requirements. This is a complete rewrite of these regulations, addressing issues such as production rates, burning oil, and venting and flaring natural gas, to ensure appropriate development of these natural resources. The final rule eliminates most restrictions on production rates and clarifies limits on the amount of natural gas that can be flared or vented. The final rule is written using plain language, so it is easier to read and understand. DATES: Effective Date: This rule is effective on May 19, 2010. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 Notice of Proposed Rulemaking On March 6, 2007, the MMS published a Notice of Proposed Rulemaking (NPR) in the Federal Register (72 FR 9884). This NPR requested comments on proposed revisions to 30 CFR part 250, subpart K, Oil and Gas Production Rates. The MMS accepted comments on the NPR until June 4, 2007 (90 days). We received eight comments on the NPR. These comments came from producers of oil and natural gas in the Outer Continental Shelf (OCS) and from the State of Alaska. The MMS made revisions to the proposed rule based on these comments. Mandate of the Outer Continental Shelf Lands Act Under the OCS Lands Act (OCSLA), MMS has the responsibility to issue regulations governing oil and natural gas production operations on the OCS. Our regulations related to oil and natural gas operations are primarily based on three responsibilities given to the MMS by the OCSLA, these include: 1. Safety; 2. Protection of the environment; and 3. Conservation of resources. The primary purpose of the final rule is to establish criteria for oil and natural gas production to ensure conservation of resources. These regulations help ensure that the American people received the maximum benefit from oil and natural gas production by maximizing the amount of oil and natural gas that is produced and marketed. For example, these regulations establish the criteria for natural gas flaring and venting and set limits on the time that natural gas may be flared or vented. These regulations are designed to work with other MMS regulations related to safety and protection of the environment and our other responsibilities under other Federal laws. The MMS regulates air quality under the authority of the Clear Air Act (CAA), for areas in the Gulf of Mexico located west of 87.5° longitude (western Gulf of Mexico) and the Environmental Protection Agency (EPA) has authority for air quality elsewhere on the OCS. The MMS must coordinate with EPA to implement the CAA requirements. The EPA is responsible for setting National Ambient Air Quality Standards (NAAQS); MMS enforces those standards for oil and natural gas operations on the OCS. Our air quality PO 00000 Frm 00033 Fmt 4700 Sfmt 4700 20271 requirements are located at 30 CFR subpart C—Pollution Prevention and Control. In addition to the Subpart C regulations, oil and gas operators must submit projected air emissions for their entire project as part of their Development and Production Plan (DPP) or their Development Operations Coordination Document (DOCD) at 30 CFR 250.249. Requests to flare or vent natural gas must not exceed the volume approved by MMS in the DPP or DOCD. The MMS also reviews the flaring and venting requests to determine if they trigger an air quality review under 30 CFR subpart C. However, the flaring and venting limits set in these final regulations are low enough that additional air quality review is seldom required. With regards to greenhouse gas emissions, MMS recognizes that this is an important issue. The CAA requires MMS to coordinate our air quality regulations with EPA. If EPA establishes a NAAQS for greenhouse gas emissions, MMS would be responsible for enforcing those standards in the western Gulf of Mexico and we would develop regulations to implement that authority under the regulations at 30 CFR subpart C, as appropriate. Purpose of These Revisions The MMS is revising subpart K to: (1) Update the structure and readability of the rule, bringing it into compliance with the Department of the Interior (DOI) plain language guidance; (2) Eliminate unnecessary requirements; (3) Clarify limits on the amount of natural gas that may be flared or vented during certain situations; (4) Improve collection of data on flaring and venting; and (5) Incorporate several existing Notices to Lessees (NTLs). The DOI requires agencies to write regulations in plain language, that is in a style that will ensure the regulations are easy to read and clear. The MMS follows DOI’s plain language guidelines when creating new regulations or updating existing regulations. These regulations were originally written before plain language standards were required; we are updating the entire subpart to comply with those standards. Some requirements from the current subpart K regulations are eliminated by the final rule because they are unnecessary in today’s petroleum industry. For example, MMS required operators to establish maximum production rates (MPRs) for producing well completions, and maximum efficient rates (MERs) for producing reservoirs, in OCS Order No. 11 in 1974, E:\FR\FM\19APR1.SGM 19APR1 WReier-Aviles on DSKGBLS3C1PROD with RULES 20272 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations during a period of oil shortages and energy crises. In 1988, MMS reduced the MER requirement. Currently, MERs are required only on sensitive reservoirs (primarily oil reservoirs with associated gas caps). Determining and maintaining production rates imposes a significant burden on operators. Based on the past 30 years of experience, MMS concluded that maximum rate requirements and production balancing requirements can be largely eliminated without detriment to efforts for conservation and maximization of ultimate recovery. However, the final rule will allow the Regional Supervisor to set production rates in cases where excessive production rates could harm ultimate recovery from the reservoir. The final rule clarifies limits on the length of time of natural gas that may be flared or vented in certain situations. The final rule requires approval from the Regional Supervisor to flare or vent natural gas except for situations that are described in the rule. The situations that don’t require Regional Supervisor approval (provided the activities are completed within a specific time frame in most cases) include: (1) When the gas is lease use gas (produced natural gas which is used on or for the benefit of lease operations such as gas used to operate production facilities) or is used as an additive necessary to burn waste products, such as H2S. (2) During the restart of a facility that was shut in because of weather conditions, such as a hurricane. (3) During the blow down of transportation pipelines downstream of the royalty meter. (4) During the unloading or cleaning of a well, drill-stem testing, production testing, other well-evaluation testing, or the necessary blow down to perform these procedures. (5) When properly working equipment yields flash gas (natural gas released from liquid hydrocarbons as a result of a decrease in pressure, an increase in temperature, or both) from storage vessels or other low-pressure production vessels, and you cannot economically recover this flash gas. (6) When the equipment works properly but there is a temporary upset condition, such as a hydrate or paraffin plug. (7) When equipment fails to work properly, including equipment maintenance and repair, or when you must relieve system pressures. We explain the length of time that gas may be flared or vented for each situation and clarify when approval from the Regional Supervisor is required. Regardless of the reason for VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 flaring or venting natural gas, the lessee or operator must report the amounts to MMS. The final rule requires separate reporting of the amount of natural gas flared and the amount of natural gas vented. This separate reporting requirement is in response the GAO report recommending that MMS collect these numbers separately. The MMS will publish the raw data on our Web site, along with other oil and natural gas production data. The Department of Energy’s Energy Information Administration uses this production data for their statistics and analysis. This requirement will improve the quality of the data that is available on natural gas emissions. The final rule clarifies required information submittals to MMS, including requirements relating to the documents submitted to MMS and the timing of those submissions. For example, there are additional requirements on notifying adjoining operators regarding production within 500 feet of a common lease or unit line. The final rule provides more detail as to when the notification must occur, what the notice must include, and how to verify the notification with MMS. There are several Notices to Lessees (NTLs) that will be rescinded when the final rule becomes effective. However, if necessary, MMS will issue additional NTLs to provide guidance. We will rescind the following NTLs: • NTL No. 97–16, Production Within 500 Feet of a Unit or Lease Line, effective August 1, 1997. • NTL No. 98–23, Interim Reporting Requirements for 30 CFR part 250, subpart K, Oil and Gas Production Rates, effective October 15, 1998. • NTL No. 99–G20, Downhole Commingling Applications, effective September 7, 1999. • NTL No. 2006–N06, Flaring and Venting Approvals, effective December 19, 2006. This NTL also provides contact information for each Region and provides sample field records. These two items are not addressed in the final rule. The MMS will issue a new NTL to include only this information, after the effective date of this final rule. GAO Report In July 2004, the GAO issued a report on world-wide emissions from vented and flared natural gas titled, Natural Gas Flaring and Venting—Opportunities to Improve Data and Reduce Emissions (GAO–04–809). This report is available on the GAO Web site at: http:// www.gao.gov/new.items/d04809.pdf. This report reviewed the flaring and venting data available, the extent of PO 00000 Frm 00034 Fmt 4700 Sfmt 4700 flaring and venting, their contributions to greenhouse gas emissions, and opportunities for the Federal Government to reduce flaring and venting. The report concluded that more accurate records are needed on flaring and venting to determine the amount of the resource that is lost and the volume of greenhouse gas emissions these practices contribute to the atmosphere each year. The report also stated that the impact of methane (a naturally occurring gas released during venting) on the earth’s atmosphere is about 23 times greater than that of carbon dioxide (a byproduct of flaring). The GAO made two recommendations to the Secretary of the Interior: (1) Consider the cost and benefit of requiring that companies flare the natural gas, whenever possible, when flaring or venting is necessary; and (2) consider the cost and benefit of requiring that companies use flaring and venting meters to improve oversight. In addition, there was a recommendation to the Secretary of Energy to consider consulting with EPA (Environmental Protection Agency), MMS, and BLM (Bureau of Land Management), on how to best collect separate statistics on flaring and venting. The MMS conducted analyses to assess the costs and benefits of requiring flare/vent meters and of requiring flaring instead of venting. The first analysis supported the recommendation to require meters, provided that the facilities process more than 2,000 barrels of oil per day (bopd). This requirement is included in the final rule. The second analysis indicated that a regulatory change to require flaring instead of venting may be appropriate. However, the cost of implementing this requirement could be significant, and input from potentially affected parties is necessary. We requested comments on this issue in the proposed rule. Commenters pointed out that converting existing facilities that are equipped to vent natural gas to be able to flare natural gas may require significant redesign for safety. They also pointed out that there are many factors in determining whether to flare natural gas or vent natural when designing a facility. These factors include the operating philosophy, nature and type of reservoir, facility design limitations or capabilities, operating practices, safety, and economics. Industry comments were consistent in recommending that in addition to the considering requiring flaring instead of venting, that MMS work with them to find ways to reduce overall natural gas emissions. They also stated that a E:\FR\FM\19APR1.SGM 19APR1 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations requirement for flaring instead of venting should be only for new facilities. They requested that MMS hold a workshop to discuss the issue. The MMS plans to work directly with interested parties to study the costs and benefits of requiring that companies flare the natural gas, whenever possible, when flaring or venting is necessary, as recommended in the GAO report. We will hold a workshop to discuss the issue of flaring instead of venting, shortly after this final rule is published. This workshop and additional costbenefit analysis will consider greenhouse gas issues associated with flaring and venting. The workshop will be the first step in considering how to best implement this recommendation. The MMS will decide how to move forward with the rulemaking on flaring natural gas after we hold the workshop. Our next step would likely be an advance notice of proposed rulemaking to further vet our approach with industry and other stakeholders. To improve data collection, as the GAO report suggested, MMS will require operators to report flaring and venting volumes to MMS separately. Previously, MMS only collected information on the total natural gas flared and vented. Operators did not need to differentiate between the two categories. WReier-Aviles on DSKGBLS3C1PROD with RULES Oil and Gas Industry Contributions to Greenhouse Gases in the Federal OCS Most natural gas production involves extracting natural gas from wells drilled into underground gas reservoirs; however, some natural gas is generated as a by-product of oil production. During oil and natural gas production it may become necessary to burn or release natural gas for a number of operational reasons, including safety. These operations may be associated with unloading or cleaning of a well, production testing, or relieving system pressure during equipment failure. The controlled burning of natural gas is called flaring, while the controlled release of unburned gases directly into the atmosphere is called venting. Most flaring and venting occurs at the end of a flare stack or boom which ensures that natural gas can be safely disposed of in VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 emergency and shutdown situations. It is virtually impossible to produce oil and natural gas without any flaring or venting and it would be impractical to shut in production every time an upset occurs. It is estimated that operators in the Gulf of Mexico Outer Continental Shelf (OCS) flare and vent less than 0.5 percent of the gas produced, making this area a world leader in the conservation of natural gas resources. Both flaring and venting on the OCS are highly regulated by the Minerals Management Service (MMS). Federal regulations (30 CFR 250, Subpart K) specify the limited circumstances under which offshore oil and gas operators may flare or vent natural gas. These final regulations strictly limit the amount of time operators may flare or vent. In some cases, operators request additional time in order to complete equipment repairs. We evaluate each of these requests on a case-by-case basis, with conservation as a primary focus. Even though they are already a world leader, MMS continuously strives to improve our oversight of OCS flaring and venting. In most places around the world, for example, there is minimal reporting or tracking of flare and/or vent volumes. In the Federal OCS, MMS requires operators to continuously record these volumes and report them each month. These final regulations will require operators to install flare/vent meters on large platforms and also to report gas flared separately from gas vented. These regulatory changes would provide more accurate measurements of GHG emissions. Given the existing restrictions on OCS flaring and venting, there is minimal opportunity to further reduce the overall volume of gas flared and vented. However, the global warming potential (GWP) of GHG emissions could be reduced if MMS were to require operators to flare instead of vent (when the release of natural gas is necessary). Such a requirement would reduce the GWP of GHG emissions by converting most methane to carbon dioxide as it is released. As previously stated, MMS is planning a workshop to address this topic. It is difficult to estimate the impact that flaring instead of venting would PO 00000 Frm 00035 Fmt 4700 Sfmt 4700 20273 have on GHG emissions until we begin to gather more accurate data from the requirement to install flare/vent meters and to report flare volumes separately from vent volumes. Furthermore, it is impractical, if not impossible, to eliminate all venting. Even if 100% of the released OCS gas could be flared instead of vented, the impact on total U.S. GHG emissions would be very small. In 2005, U.S. greenhouse gas (GHG) emissions totaled 7.986 × 10 9 tons of carbon dioxide equivalent (CO2e). Of that total, only 24.7 × 10 6 tons of CO2e, or 0.31 percent, were related to OCS oil and gas production (including platform and non-platform sources), flaring and venting activities represent only a fraction of that amount. Under MMS oversight, OCS oil and gas operators are already ahead of the curve in terms of limiting GHG emissions. Based on several assumptions, estimates, and existing analyses, MMS roughly approximated the impact that might occur if it were to mandate flaring over venting. These estimates indicate that such a requirement would reduce total US GHG emissions by less than 0.05%. However, the accuracy of these estimates will improve after the regulatory change becomes final. Reported OCS flare and vent volumes could increase or decrease based solely on improved reporting accuracy. In any event, further analysis may shed light on whether flaring rather than venting natural gas is cost effective from a greenhouse gas perspective, even if the total amount of greenhouse gases is small. Public Comments on the Proposed Rule The MMS received eight sets of comments on the NPR from industry trade groups and representatives and one comment from the State of Alaska. The MMS reviewed and responded to these comments as appropriate. To help convey the comments, we summarized and combined similar comments. The results are explained in the following two tables. Table 1 contains our responses to general comments and Table 2 addresses comments on specific sections. E:\FR\FM\19APR1.SGM 19APR1 20274 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations TABLE 1—MMS RESPONSE TO GENERAL COMMENTS Comment MMS response Measurement (1) Measurement accuracy for flared or vented gas envisioned by rule is not achievable given the wide range of conditions to which the meter would be exposed. (2) Retrofitting may be a problem due to space limitations and safety concerns. (3) If deferment of this part of the rule is not acceptable, it is recommended that meters be limited to new facilities under construction 6 months after date that final rule is published. (4) Defer requirement to install meters on all offshore complexes processing 2,000 bopd to develop a best practice with industry that would have broad applicability to all facilities on the OCS, not just those processing 2,000 bopd. (5) The number of facilities impacted by the rule has been underestimated since multiple facilities may be involved in processing/handling production streams. (6) Cost impact of the rule has been underestimated. (7) Set a thousand cubic feet (MCF) volume per day vented, calculated by test, rather than having a mandatory metering system. (8) These meters should not be subject to the requirements of Subpart L. (9) Cost is a huge burden to smaller facilities; increase meter requirement to facilities with average throughput of 10,000 bopd or more. (10) Revise time to install meters from 120 days to 180 days to accommodate design, shipping, and labor. (11) Revise accuracy to 15 percent. (12) Meter high flow events, calculate others. (13) What if we don’t have a flow when we schedule a calibration? Most of our flaring/venting is done during upset or emergency situations. Flare pilot must be kept on at all times, hence, inert gas such as nitrogen cannot be used as it will pose a safety issue by extinguishing the pilot flame. WReier-Aviles on DSKGBLS3C1PROD with RULES (14) The time required to bring an existing facility into compliance would far exceed 120 days. (15) Establish best practices for existing facilities to reduce overall levels of gas vented/flared. (16) Multiple meters would be required on most facilities. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00036 Fmt 4700 The MMS agrees. We will revise the accuracy requirement from 2 percent to 5 percent. This is established technology in the North Sea and Canada, and a 5 percent accuracy requirement has been adopted by regulatory bodies in those regions. Also, flare/vent meters with this accuracy are already used on some Gulf of Mexico (GOM) facilities. Installation of meters is necessary to improve oversight of MMS’s flare/ vent program. A cost-benefit analysis conducted by MMS supports GAO’s recommendation to install meters on all facilities that process more than 2,000 bopd. The Regional Supervisor will work with operators on a case-by-case basis if a safety or space issue is demonstrated, as a departure under § 250.142. Installation of meters is necessary to improve oversight of MMS’s flare/ vent program. The cost-benefit analysis concluded that meters on all facilities processing over 2,000 bopd is appropriate, not just new facilities. Also, metering flare/vent volumes on all (existing and future) facilities processing over 2,000 bopd better implements the GAO recommendations. The MMS has sufficient information to finalize the rule. Additional input from industry groups is not necessary and would delay implementation of GAO recommendations. We agree that there should be a best practice established for estimating volumes of gas flared or vented from facilities processing less than 2,000 bopd. However, metering is more accurate, and requiring meters on those facilities that process more than 2,000 bopd is consistent with the GAO recommendations. The commenter did not provide an alternate, documented number; therefore, MMS must use our best analysis. A higher cost estimate was provided by the commenter. We used the cost model that was submitted by the commenter in our cost-benefit analysis and determined that the difference is negligible and that a 2,000 bopd threshold for metering is still appropriate. Volume estimates calculated from a test are far less accurate than metered volumes and would not achieve the improvements recommended by GAO. Flare/vent meters are subject to the requirements of Subpart K. See responses (2) and (6). Also see discussion concerning the Regulatory Flexibility Act. The MMS agrees. We will revise the time allowed to install meters from 120 to 180 days for facilities processing more than 2,000 bopd when this final rule becomes effective. The time allowed to install meters on facilities that begin producing above 2,000 bopd, after this final rule is published, will also be revised from 90 to 120 days. The MMS disagrees. See response (1). The MMS disagrees. See response (2). At a minimum, calibration/verification of secondary devices associated with flare/vent meters can be performed in a no-flow situation in accordance with American Petroleum Institute’s (API) Manual of Petroleum Measurement Standards (MPMS) Chapter 14 Section 10. Also, contingent upon the meter type, verification may include the performance of manufacturer recommended inspections and diagnostics. However, after further review, we determined that calibrating meters once a year is adequate. The MMS agrees. See response (10). The limits on flaring and venting set by these regulations are minimal, additional reductions in the levels of natural gas flared or vented would not reduce the need for meters. However, MMS does agree that industry should establish best practices for reducing the amount of natural gas flared or vented and we will include this topic as part of the flaring and venting workshop we are planning. The MMS anticipates 2 or 3 meters on most facilities where meters are required. That is, one for each pressure system (High Pressure (HP), Intermediate Pressure (IP), and Low Pressure (LP)) that exists on the facility. The meters would likely be located near the base of the flare boom just before the piping for that pressure system exits the facility. Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations 20275 TABLE 1—MMS RESPONSE TO GENERAL COMMENTS—Continued Comment MMS response (17) Wait for completion of API RP on measurement and allocation. (18) Future workshop should be planned to discuss solutions and best practices. (19) Where did 2,000 bopd come from? The MMS has sufficient information to finalize the rule. As API Recommended Practices (RP) are published, MMS will consider incorporating these into our regulations. The MMS will hold a workshop after this final rule is issued. This will be included as a topic as part of our workshop on flaring and venting. The MMS conducted a cost-benefit analysis looking at equipment costs, gas prices, and platform life to determine a minimum production rate that could support the installation of flare/vent meters. Also see Regulatory Flexibility Act discussion. Flaring/Venting (20) Converting to flare on existing facilities may require redesign for safety. (21) Limiting the flaring or venting of gas-well gas to 2 hours and allowing 48 continuous hours for oil-well gas when a hydrate plug forms is not consistent with prior guidance and actions. Previous MMS guidance made no distinction between gas-well gas and oil-well gas if the plug (hydrate) formed naturally. (22) Short comment period for response did not allow industry to develop detailed comments on flaring versus venting. (23) Retain records for 2 years instead of 6 years. The MMS is still evaluating the flare versus vent issue and will hold an industry workshop to collect additional information. We have always distinguished between gas-well gas and oil-well gas. The prior regulation stated that ‘‘lessees must not flare or vent gaswell gas beyond the time required to eliminate an emergency unless the Regional Supervisor approves.’’ MMS policy has consistently been to allow 2 hours to eliminate the flare or vent under this rule. We added an exception for hydrate plugs under § 250.1160(a)(6). The MMS included information in the preamble on the flaring versus venting issue because it was addressed in the GAO report, and we wanted operators to be aware that MMS is considering possible changes to the regulations to address this issue in the future. The MMS is still evaluating this issue and we may hold a workshop to collect additional information, before proposing new regulations on this issue. There was no change proposed here; this is merely a clarification that existing law (30 U.S.C. 1713, implemented at 30 CFR part 212) applies to flare/vent records. Those records must be maintained for 6 years (in accordance with 30 U.S.C. 1713 and 30 CFR part 212), in addition to being maintained on the facility for 2 years and available for inspection by MMS personnel. Miscellaneous WReier-Aviles on DSKGBLS3C1PROD with RULES (24) How much of the MMS budget is being supported by the cost recovery program at this time; is an evaluation of the fee structure being carried out to adjust for actual agency needs? (25) The OOC, in conjunction with API, will commit to the development of a technical document or RP that would address quantification, including volume, mass, and composition of flare and vent quantities within the oil and gas production process. The OOC proposes to start working on this document now, concurrent with the subpart K final rulemaking; document and workshops to industry could occur within 18 months. (26) For the protection of the State of Alaska’s correlative rights, require approval for operators to produce within 500 ft of a lease or unit line even if adjacent acreage is unleased, allow State to comment. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00037 Fmt 4700 The total discretionary budget for MMS in Fiscal Year 2007 was $288.2 million. Total revenue generated by cost recovery fees that year totaled $11.9 million or 4.1 percent of the total MMS discretionary budget. The MMS recently adjusted these fees by the Implicit Price Deflator for the Gross Domestic Product, as provided by regulation. The MMS plans to review cost recovery fees in the coming year. Should this review result in a need to change the fees significantly, rulemaking will be required and a proposed rule will be published in the Federal Register for public review and comment. Fees are established in accordance with the Independent Offices Appropriation Act of 1952, 31 U.S.C. 9701. It should be noted that MMS does not determine or adjust cost recovery fees to meet a predetermined funding target, but rather to reflect the cost of actual services provided. The MMS has sufficient information to finalize this final rule. As API RPs are published, MMS will consider incorporating these into our regulations. The MMS does not agree that this final rule violates State correlative rights. The MMS understands the State of Alaska’s interest in protecting its correlative rights in the event of development and production from an OCS lease adjacent to State unleased lands. Under the MMS regulatory process, the State of Alaska will receive and will have the opportunity to comment on each OCS Development and Production Plan (DPP) (30 CFR part 250 subpart B). A DPP will include information on surface and bottom hole locations to enable the State of Alaska to determine if its correlative rights are at risk. The State of Alaska is entitled to copies of the Application(s) for Permit to Drill (APD) to monitor and assure that activities are conducted in accordance with an approved DPP. Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 20276 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations TABLE 2—MMS RESPONSE TO COMMENTS ON SPECIFIC REQUIREMENTS Citation/comment MMS response § 250.1153(b)(2)—Consider completions with downhole gauges instead of requiring bottomhole pressure surveys. The MMS is not implementing this suggestion in the final rule. This configuration results in a single pressure measurement, which is not a survey. A survey is required in order to establish a pressure gradient, which is used to correct reservoir pressures to a common datum. As stated in § 250.1153(d), industry may continue to request departures from this requirement, if necessary. Wording in the final rule will change from oil-well gas or gas-well gas to natural gas. This wording covers the venting or flaring of all natural gas regardless of the well type. The commenter is correct, approval under this subpart will not be required for this situation since the activity is downstream of the royalty meter; however, flaring or venting must be reported after the fact in accordance with this final rule. Approvals may be required under subparts H and J of this part. The MMS agrees. The wording was modified to be consistent with the Condition column. § 250.1160(a)—Add gas-well flash gas ............................. § 250.1160(a)(3)(i)—Neither lease nor pipeline operator needs MMS approval to blowdown pipelines downstream of royalty meters. § 250.1160(a)(4)—Include unloading or cleaning of a well in addition to testing under the Additional requirements column. § 250.1160(a)(5)—Define the amount of routine flaring or venting that is considered uneconomic. § 250.1160(a)(6)—The time necessary to unload a well after an upset is remedied should be granted under § 250.1160(a)(4) and should not be included in the 48 continuous hours or 144 cumulative hours allowed under § 260.1160(a)(6) (upset due to hydrate plugs, etc.). § 250.1160(a)(7)—The cumulative time allowed in paragraph (a)(4) should also be included in (a)(7)(iv). The hours accumulated to restore/optimize production should not impact the hours accrued due to equipment failures. § 250.1160(b)—Subpart C is sufficient to regulate pollution issues, mentioning Subpart C in Subpart K is redundant and confusing. Production upsets are not anticipated and therefore would not lend themselves to prior approval. WReier-Aviles on DSKGBLS3C1PROD with RULES § 250.1160(e)—If MMS approves flaring or venting, the volume should not be considered avoidably lost unless information provided was incorrect. Revise wording to state RS will evaluate flaring and venting requests to determine if situation exceeds those in § 250.1160(a). § 250.1160(f)—If MMS approves flaring or venting, the volume should not be considered avoidably lost unless information provided was incorrect. Revise wording to state flaring or venting in excess of situations in § 250.1160(a) without approval, or if approval was obtained with misleading information, will be considered avoidably lost. § 250.1161(c)—Industry supports addressing small leaks from valves, etc., if all safety concerns are addressed. § 250.1162(a)—Include all liquid hydrocarbons, not just condensate. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Since economic conditions vary with time, MMS cannot specify a fixed volume higher than 50 MCF per day. The Additional requirements column clearly indicates that a monthly average volume equal to 50 MCF per day or less is assumed by MMS to be uneconomic. If your facility averages more than 50 MCF per day, you will be expected to capture the gas or demonstrate that the volume is uneconomic and continue to monitor the economic viability as costs and prices change. The initial cause of the problem will determine where the incident falls (either § 250.1160(a)(2), (a)(4), (a)(6), or (a)(7)). For example, an operator may flare oilwell gas without prior approval for 48 continuous hours in order to remediate a hydrate plug. However, that operator may not continue to flare without approval for an additional 48 hours in order to unload the well after the hydrate plug is remediated. In this example, the initial cause of the problem was a hydrate plug; therefore, the operator will only be authorized to flare oil-well gas for up to 48 continuous hours without approval (under § 250.1160(a)(6)). The initial cause of the problem will determine where the incident falls (either § 250.1160(a)(2), (a)(4), (a)(6), or (a)(7)) and therefore the time allotted to perform the work related to the incident. If an equipment failure results in a need to flare or vent under § 250.1160(a)(7), any additional procedures needed to restore production (e.g., well blow down), must be performed within the time allotted under § 250.1160(a)(7). The operator would need to request approval from the Regional Supervisor if additional time is needed. The MMS agrees that it is not necessary to mention subpart C in subpart K. The MMS also agrees that production upsets may not lend themselves to prior approval. Paragraph (a) details the periods allowable during production upsets before MMS approval is required. Regardless of whether or not operators need and receive prior approval under (a), however, they are still obligated to follow their approved Development Operations Coordination Document (DOCD) or DPP under subpart B. We reworded § 250.1160(b) to clarify that MMS flare or vent approvals granted under subpart K do not exempt operators from the requirement to follow their DOCD or DPP. Before flaring and/or venting an amount that exceeds the limits specified in their DOCD or DPP, operators must submit and receive approval of a revised DOCD or DPP. The subject paragraph was eliminated since negligence related to flaring and venting is adequately covered in the subsequent paragraph. Additional wording referencing § 250.1160(a) is not necessary. Although MMS does not intend to commonly determine gas to be avoidably lost after we have approved the flaring or venting, the Regional Supervisor must retain full authority to make that determination. The MMS agrees. Small leaks from valves, fittings, flanges, pressure relief valves or similar components are considered fugitive emissions and are more appropriately addressed under 30 CFR 250.107 (‘‘What must I do to protect health, safety, property, and the environment?’’). Note that this paragraph was reworded and renumbered as 30 CFR 250.1160(f). The MMS agrees. The word condensate will be replaced with liquid hydrocarbons. Frm 00038 Fmt 4700 Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations 20277 TABLE 2—MMS RESPONSE TO COMMENTS ON SPECIFIC REQUIREMENTS—Continued Citation/comment MMS response § 250.1163(a)—Metering—defer this part until a workshop can be held with industry; work in conjunction with API to develop a Technical Bulletin; not enough time to retrofit existing facilities; high degree of measurement accuracy is unrealistic; if not deferred, limit to new facilities; and pulling a portion of the metering requirement may conflict with the Administration and Procedures Act. § 250.1163(a)(3)—OGOR–B submitted to MRM will not accommodate multiple facility submissions. Flared or vented gas at a host facility would have to be allocated back to the lease. The MMS has sufficient information to finalize this rule. Additional input from industry groups is not necessary and would delay implementation of GAO recommendations. The meter accuracy requirement has been changed from 2 percent to 5 percent. We changed the time to install the meters on existing facilities from 120 days to 180 days based on an industry comment. Thus rulemaking is consistent with the Administrative Procedure Act (5 U.S.C. § 553, Rulemaking). § 250.1163(b)(1)—Reporting separate flaring or venting on OGOR B will require modification to current reporting requirements. § 250.1163(b)(2)—Lease use already reported on OGOR B. § 250.1163(b)(3)—Reporting flaring or venting from multiple facilities separately on a single lease is redundant and requires changes from industry and MRM. These records are kept at each facility and could be requested from the operator as needed to eliminate this burdensome requirement. § 250.1163(c)—Industry sends a letter summarizing pertinent flaring or venting information after receiving oral approval to flare or vent; requiring actual flaring or venting records be kept on location is redundant. § 250.1164(b)(1)—Subpart C is sufficient to regulate pollution issues. § 250.1167–General—Requiring the following additional information is burdensome and redundant to data previously submitted in other documents (e.g. CIDs). § 250.1167(a)(3)—net sand isopach. § 250.1167(a)(4)—net hydrocarbon isopach. § 250.1167(b)(2)—amplitude maps. § 250.1167(d)(1)—estimated recoverable reserves for each completion in a reservoir. § 250.1167(e)(2)—reservoir name and whether it is competitive. After reviewing and responding to the comments, MMS changed the Note—The proposed rule did not have a § 250.1163(a)(3), this comment presumably refers to § 250.1163(b)(3). The MMS agrees that modified reporting on Form MMS–4054 Part B (OGOR–B) is required in order to implement this GAO recommendation. In order to implement this, § 250.1163(a)(1) of the final rule will require operators to notify MMS of all facilities that process more than 2,000 bopd and therefore require meters. The Regional Supervisor will then establish Facility Measurement Point (FMP) numbers for those metering locations. These FMP numbers will be used on the OGOR–B forms to identify the facilities where flaring and venting occurs. Further, in order to ease the reporting burden, the language will be modified from that in the proposed rule. Instead of requiring operators to associate all flared and vented volumes with the facilities where the flaring and venting occurred, such reporting (on OGOR–B forms) is only required for those facilities which are required to install flare/vent meters (§ 250.1160(b)(3)). For other facilities, operators must continue to report flared and vented volumes by lease or unit (§ 250.1163(b)(4)) (note that flared and vented volumes must be separated regardless of whether reporting is by facility, lease, or unit). Additionally, MRM will send guidance to operators on all other reporting requirements necessitated by this regulatory change. See response § 250.1163(a)(3). The MMS agrees. Section 250.1163(b)(2) requires reporting lease use gas on Form MMS–4054, which is the OGOR. This rule does not impose additional lease use reporting requirements. The wording was modified slightly to clarify this issue. See response § 250.1163(a)(3). The MMS disagrees. Summary information submitted in a letter following an oral approval is only a portion of the required records to be saved on location. A complete record must be maintained on each facility for routine inspections by MMS personnel. The MMS agrees. This paragraph was deleted. Data submitted for an early application would often be obsolete interpretations and result in inaccurate conclusions. Furthermore, receiving the data in separate submittals will expedite MMS review of industry applications. appropriate rule language as specified in the MMS comment response. Table 3 compares the changes from the NPR to this final rule. WReier-Aviles on DSKGBLS3C1PROD with RULES TABLE 3—CHANGES FROM THE PROPOSED RULE TO THIS FINAL RULE Citation—description, or reason for the change Proposed rule language Final rule language § 250.105—Removed the phrase ‘‘in the field’’ from the definition of Flaring. This phrase is not necessary, since all activities under this regulation take place in the field. Also, changed ‘‘gas’’ to ‘‘natural gas’’ for clarity. Flaring means the burning of gas in the field as it is released into the atmosphere. Flaring means the burning of natural gas as it is released into the atmosphere. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00039 Fmt 4700 Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 20278 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations TABLE 3—CHANGES FROM THE PROPOSED RULE TO THIS FINAL RULE—Continued Citation—description, or reason for the change Proposed rule language Final rule language § 250.105—Revised the definition of Sensitive reservoir to state that it is a reservoir in which the production rate will affect ultimate recovery. This is a more accurate and inclusive definition. § 250.1150—Revised wording back to the text in the existing rule, changed ‘‘without harming ultimate recovery’’ to ‘‘while maximizing ultimate recovery’’. This wording is more consistent with our mission and with the requirements of the final rule. § 250.1151(c)—Revised language to clarify submittal requirement for the required form (either form MMS–126 or MMS–128). Three copies of the form must be submitted, one of those copies is a public information copy. A public information copy of the supporting documents is not required, therefore only two copies of the supporting information must be submitted. Sensitive reservoir means a reservoir in which high reservoir production rates will decrease ultimate recovery. Sensitive reservoir means a reservoir in which the production rate will affect ultimate recovery. You must produce wells and reservoirs at You must produce wells and reservoirs at rates that provide for economic developrates that provide for economic development without harming ultimate recovery and ment while maximizing ultimate recovery without adversely affecting correlative rights. and without adversely affecting correlative rights. You must submit an original and one copy of the form required by paragraph (a) of this section, as listed in the table in § 250.1167. You must include one public information copy with each submittal in accordance with §§ 250.190 and 250.196, and mark that copy ‘‘Public Information’’. § 250.1153(d)—Clarified language on request- The Regional Supervisor may grant a deparing a departure from conducting a static ture from the requirement to run a static bottomhole pressure survey to specify what bottomhole pressure survey. You must reinformation must be included with the request. quest a departure by letter, along with Form MMS–140, Bottomhole Pressure Survey Report. You must include sufficient justification to support the departure request. § 250.1154(a)(3)—Simplified wording—changed ‘‘secondary or tertiary’’ to ‘‘enhanced’’. The term enhanced includes secondary and tertiary recovery techniques. § 250.1154(b)—Restructured the paragraph, adding two subparagraphs. The reservoir is undergoing secondary or tertiary recovery. For the purposes of this subpart, near-critical fluids are those fluids that occur in high temperature, high-pressure reservoirs where it is not possible to define the liquidgas contact or fluids in reservoirs that are near bubble point or dew point conditions. WReier-Aviles on DSKGBLS3C1PROD with RULES § 250.1155—Revised language to clarify sub- You must submit an original and three copies mittal requirements for form MMS–127. Three of Form MMS–127 and supporting informacopies of form MMS–127 must be submitted, tion, as listed in the table in § 250.1167 to one is a public information copy. A public inthe Regional Supervisor. You must include formation copy of the supporting documents one public information copy with each subis not required, therefore only two copies of mittal in accordance with §§ 250.190 and the supporting information must be submitted. 250.196, and mark that copy ‘‘Public Information.’’ § 250.1155(b)—Added language to clarify that At least once during the calendar year ........... the structure maps and well logs, required as supporting information for form MMS–127, are not required as part of the annual submittal. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00040 Fmt 4700 Sfmt 4700 You must submit to the Regional Supervisor an original and two copies of the appropriate form required by paragraph (a) of this section; one of the copies of the form must be a public information copy in accordance with §§ 250.186 and 250.197, and marked ‘‘Public Information.’’ You must submit two copies of the supporting information as listed in the table in § 250.1167 with form MMS–126. The Regional Supervisor may grant a departure from the requirement to run a static bottomhole pressure survey. To request a departure, you must submit a justification, along with Form MMS–140, Bottomhole Pressure Survey Report, showing a calculated bottomhole pressure or any measured data. The reservoir is undergoing enhanced recovery. For the purposes of this subpart, near-critical fluids are: (1) Those fluids that occur in high temperature, high-pressure reservoirs where it is not possible to define the liquidgas contact; or (2) Fluids in reservoirs that are near bubble point or dew point conditions. You must submit to the Regional Supervisor an original and two copies of Form MMS– 127; one of the copies must be a public information copy in accordance with §§ 250.186 and 250.197, and marked ‘‘Public Information.’’ You must also submit two copies of the supporting information, as listed in the table in § 250.1167.* * * At least once during the calendar year, but you do not need to resubmit unrevised structure maps (§ 250.1167(a)(2)) or previously submitted well logs (§ 250.1167(c)(1)). E:\FR\FM\19APR1.SGM 19APR1 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations 20279 TABLE 3—CHANGES FROM THE PROPOSED RULE TO THIS FINAL RULE—Continued Citation—description, or reason for the change Proposed rule language Final rule language § 250.1156(a)—Clarified that approval is needed before producing from a reservoir within in a well that is less than 500 ft. from a lease line. Reworded the section to clarify instructions on submitting the service fee and supporting information. Removed the phrase, ‘‘whether it is necessary to,’’ from the sentence on how the Regional Supervisor will determine whether to approve the request. Added the parenthetical phrase record title and operating rights to clarify the meaning of lease interest and to be consistent with the definition of lessee in 30 CFR part 250 subpart A. You must obtain approval from the Regional Supervisor before you start producing from a well that has any portion of the completed interval less than 500 feet from a unit or lease line. Submit to MMS the service fee listed in § 250.125 and the Regional Supervisor will determine whether approval of your request will maximize ultimate recovery, avoids the waste of natural resources or whether it is necessary to protect correlative rights. You do not need to obtain approval if the adjacent leases or units have the same unit, lease, and royalty interests as the lease or unit you plan to produce. You do not need to obtain approval if the adjacent block is unleased. § 250.1157—Added wording to state that the Regional Supervisor will determine whether the request to produce gas-cap-gas from an oil reservoir maximizes ultimate recovery. This informs the applicant of the basis for the decision to approve or disapprove the request. We also restructured the section to improve readability. You must request and receive written approval from the Regional Supervisor before producing gas from each completion in an oil reservoir that is known to have an associated gas cap. If the oil reservoir is not initially known to have an associated gas cap, but your oil well begins to show characteristics of a gas well, you must request and receive written approval from the Regional Supervisor to continue producing the well. You must include the service fee listed in § 250.125 and the supporting information, as listed in the table in § 250.1167, with your request. § 250.1158(b)—Changed ‘‘commingled’’ to ‘‘proposed for commingling,’’ since the reservoirs are only proposed for commingling at this stage of the process. If one or more of the commingled reservoirs is a competitive reservoir, you must notify the operators of all leases that contain the reservoir that you intend to downhole commingle the reservoirs. If the Regional Supervisor sets an MPR for a producing well completion, or an MER for a reservoir, you may not exceed those rates except due to normal variations and fluctuations in production rates, as set by the Regional Supervisor. You must receive approval from the Regional Supervisor to flare or vent oil-well gas or gas-well gas at your facility, * * * You must obtain approval from the Regional Supervisor before you start producing from a reservoir within a well that has any portion of the completed interval less than 500 feet from a unit or lease line. Submit to MMS the service fee listed in § 250.125, according to the instructions in § 250.126, and the supporting information, as listed in the table in § 250.1167, with your request. The Regional Supervisor will determine whether approval of your request will maximize ultimate recovery, avoid the waste of natural resources, or protect correlative rights. You do not need to obtain approval if the adjacent leases or units have the same unit, lease (record title and operating rights), and royalty interests as the lease or unit you plan to produce. You do not need to obtain approval if the adjacent block is unleased. (a) You must request and receive approval from the Regional Supervisor: (1) Before producing gas-cap gas from each completion in an oil reservoir that is known to have an associated gas cap. (2) To continue production from a well if the oil reservoir is not initially known to have an associated gas cap, but the oil well begins to show characteristics of a gas well. (b) For either request, you must submit the service fee listed in § 250.125, according to the instructions in § 250.126, and the supporting information, as listed in the table in § 250.1167, with your request. (c) The Regional Supervisor will determine whether your request maximizes ultimate recovery. If one or more of the reservoirs proposed for commingling is a competitive reservoir, you must notify the operators of all leases that contain the reservoir that you intend to downhole commingle the reservoirs. If the Regional Supervisor sets an MPR for a producing well completion and/or an MER for a reservoir, you may not exceed those rates except due to normal variations and fluctuations in production rates as set by the Regional Supervisor. You must request and receive approval from the Regional Supervisor to flare or vent natural gas at your facility, You may not exceed 48 cumulative hours of flaring or venting per testing operation on a single completion without Regional Supervisor approval. You may not exceed 48 cumulative hours of flaring or venting per unloading or cleaning or testing operation on a single completion without Regional Supervisor approval. You must inform the Regional Supervisor and receive approval to flare or vent gas before you exceed the volume specified in your DPP submitted under subpart B of this part, even if the flaring or venting does not require approval under paragraph (a) of this section. The Regional Supervisor will determine whether your proposed flaring or venting complies with air emission thresholds under subpart C of this part. The Regional Supervisor will evaluate your request for gas flaring or venting and determine if the loss of hydrocarbons is due to negligence, or could be avoided. Regardless of the requirements in paragraph (a) of this section, you must not flare or vent gas over the volume approved in your Development Operations Coordination Document (DOCD) or your Development and Production Plan (DPP). WReier-Aviles on DSKGBLS3C1PROD with RULES § 250.1159(b)—Changed ‘‘or’’ to ‘‘and/or.’’ ......... § 250.1160(a)—Per industry comment, we changed oil-well gas or gas-well gas to natural gas. This wording covers the venting or flaring of all natural gas regardless of the well type. § 250.1160(a)(4), Additional requirements column—Per industry comment, we added during unloading or cleaning of a well to make wording consistent with wording under the Condition column. § 250.1160(b)—Per industry comment, we simplified the wording and clarified that the operators are accountable for estimated maximum flare/vent volumes provided to MMS in DPPs and DOCDs and removed reference to 30 CFR part 250 subpart C. § 250.1160(e)—Per industry comment, we deleted this paragraph and renumbered the section, since negligence in flaring or venting of gas is covered in § 250.1160(f). VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00041 Fmt 4700 Sfmt 4700 Deleted entire paragraph. E:\FR\FM\19APR1.SGM 19APR1 20280 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations TABLE 3—CHANGES FROM THE PROPOSED RULE TO THIS FINAL RULE—Continued Citation—description, or reason for the change Proposed rule language Final rule language § 250.1161—Revised introductory paragraph to improve clarity. You may flare or vent oil-well gas and gaswell flash gas for a period that the Regional Supervisor will specify, and which will not exceed 1 year, if the Regional Supervisor approves your request for one of the following reasons: § 250.1161(c)—Moved to § 250.1160(f). Clarified how MMS will handle small emissions that are not caught by a capture system. Emissions that occur from leaking valves, fittings, flanges, pressure relief valves and similar components, are considered fugitive emissions. These emissions are more appropriately addressed under safety regulations than conservation regulations. Section 250.1161(c) was renumbered to § 250.1160(f) because this paragraph provides general guidance to operators and is therefore more appropriately listed under § 250.1160. § 250.1162(a)—Per industry comments, we replaced the term condensate with liquid hydrocarbons to allow burning of oil in limited cases. In addition, we deleted the statement ‘‘In most cases, the Regional Supervisor will not allow you to burn more than 300 barrels of condensate in total during unloading or cleaning of a well, drill-stem testing, production testing, or other well-evaluation testing.’’ We decided it is better to make this decision on a case-by-case basis. Also changed ‘‘feasible’’ to ‘‘technically feasible.’’ § 250.1161(c) The Regional Supervisor determines that an improperly working valve, pipe fitting, or similar component results in flaring or venting of less than 10 MCF per day, and that it is prudent to repair the leak at a later date. The Regional Supervisor may exempt this flaring or venting from the time limits set in § 250.1160. You must request and receive approval from the Regional Supervisor to flare or vent gas for an extended period of time. The Regional Supervisor will specify the approved period of time, which will not exceed 1 year. The Regional Supervisor may deny your request if it does not ensure the conservation of natural resources or is not consistent with national interests relating to development and production of minerals of the OCS. The Regional Supervisor may approve your request for one of the following reasons: § 250.1160(f) Fugitive emissions from valves, fittings, flanges, pressure relief valves or similar components do not require approval under this subpart unless specifically required by the Regional Supervisor. WReier-Aviles on DSKGBLS3C1PROD with RULES § 250.1162(b)—We eliminated this paragraph and renumbered the subsequent paragraph because this is covered in § 250.1162(c). § 250.1163(a)—Per industry comments, we changed the requirement to install meters on facilities that already process more than 2,000 bopd from 120 days after the rule is published to 180 days after the rule is effective. Per industry comments, we changed the requirement to install meters on facilities that begin to process more than 2,000 bopd, after the rule is effective, from 90 days to 120 days after the facility begins to process more than the 2,000 bopd. § 250.1163(a)(1)—Per industry comment, we added a new paragraph to require a one-time notification to the Regional Supervisor if a facility processes more than 2,000 bopd. This will trigger FMP assignments to simplify reporting. We renumbered the subsequent paragraphs. § 250.1163(a)(2)—Per industry comment, we revised the accuracy requirement from 2 percent to 5 percent. This is established technology in the North Sea and Canada, and a 5 percent accuracy requirement has been adopted by regulatory bodies in those regions. Also, flare/vent meters with this accuracy are already used on some Gulf of Mexico facilities. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 You must request and receive approval from the Regional Supervisor to burn any produced liquid hydrocarbons. The Regional Supervisor may allow you to burn condensate if you demonstrate that transporting it to market or re-injecting it is not feasible or poses a significant risk of harm to offshore personnel or the environment. In most cases, the Regional Supervisor will not allow you to burn more than 300 barrels of condensate in total during unloading or cleaning of a well, drill-stem testing, production testing, or other well-evaluation testing. The Regional Supervisor will evaluate your request for liquid hydrocarbon burning, and determine if the loss of hydrocarbons is due to negligence or could be avoided. If your facility processes more than an average of 2,000 bopd during May 2010, you must install flare/vent meters within 120 days after May 2010. If your facility processes more than an average of 2,000 bopd during a calendar month after May 2010, you must install flare/vent meters within 90 days after the end of the month in which the average amount of oil processed exceeds 2,000 bopd. You must request and receive approval from the Regional Supervisor to burn any produced liquid hydrocarbons. The Regional Supervisor may allow you to burn liquid hydrocarbons if you demonstrate that transporting them to market or re-injecting them is not technically feasible or poses a significant risk of harm to offshore personnel or the environment. Paragraph deleted and subsequent paragraph renumbered. If your facility processes more than an average of 2,000 bopd during May 2010, you must install flare/vent meters within 180 days after May 2010. If your facility processes more than an average of 2,000 bopd during a calendar month after May 2010, you must install flare/vent meters within 120 days after the end of the month in which the average amount of oil processed exceeds 2,000 bopd. No language proposed .................................... You must notify the Regional Supervisor when your facility begins to process more than an average of 2,000 bopd in a calendar month. The flare/vent meters must measure all flared and vented gas within 2 percent accuracy. The flare/vent meters must measure all flared and vented gas within 5 percent accuracy. PO 00000 Frm 00042 Fmt 4700 Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations 20281 TABLE 3—CHANGES FROM THE PROPOSED RULE TO THIS FINAL RULE—Continued Proposed rule language Final rule language § 250.1163(a)(3)—Per industry comment, we changed the calibration requirement from at least once every 6 months to at least once every year. § 250.1163(a)(4)—Added a new paragraph to clarify that meters should not be removed if the amount of oil the facility processes later drops below 2,000 bopd. § 250.1163(b)(2)—Simplified wording from, ‘‘gas used as pilot lights, instrument gas, purge gas used to prevent oxygen from entering the flare or vent stack, sparge gas used to regenerate glycol, and blanket gas used to maintain pressure in low pressure vessels)’’ to ‘‘instrument gas, and gas used to maintain pilot lights ’’ Per industry comment, we changed ‘‘on the facility’’ to ‘‘on the lease.’’ § 250.1163(b)(3)—Per industry comment, we added language to clarify that this only applies to facilities that are required to have meters. You must calibrate the meters regularly, in accordance with the manufacturer’s recommendation, or at least once every 6 months, whichever is shorter. No language proposed .................................... You must calibrate the meters regularly, in accordance with the manufacturer’s recommendation, or at least once every year, whichever is shorter. You must use and maintain the flare/vent meters for the life of the facility. You may classify and report gas used to operate equipment on the facility (such as gas used to power engines, gas used as pilot lights, instrument gas, purge gas used to prevent oxygen from entering the flare or vent stack, sparge gas used to regenerate glycol, and blanket gas used to maintain pressure in low pressure vessels) as lease use gas. You must report the amount of gas flared and vented at each facility on a lease or unit basis. Gas flared and vented from multiple facilities on a single lease or unit must be reported separately. You may classify and report gas used to operate equipment on the lease, such as gas used to power engines, instrument gas, and gas used to maintain pilot lights, as lease use gas. § 250.1163(b)(4)—Per industry comment, added a new paragraph to clarify that if a facility is not required to have meters, the operator may report the amounts of gas flared or vented on a lease or unit basis. This reduces the reporting burden on industry. No language proposed .................................... § 250.1163(c)—Restructured section. Split the introductory paragraph into subparagraphs and renumbered the section to conform. Removed reference to part 212, clarifying that the retention period for these records is 6 years, as specified in 30 U.S.C. 1713. The MMS promulgated regulations under this law at 30 CFR part 212, but specific reference to part 212 is not necessary here. Revised paragraph (2) to make consistent with language in § 250.1163(d)(1)(ii). WReier-Aviles on DSKGBLS3C1PROD with RULES Citation—description, or reason for the change You must prepare and maintain records detailing gas flaring, gas venting, and liquid hydrocarbon burning for each facility. You must maintain these records for the period specified in part 212 of this title. You must keep these records on the facility for 2 years and have them available for inspection by MMS representatives. After 2 years, you must maintain the records, allow MMS representatives to inspect the records upon request, and provide copies to the Regional Supervisor upon request, but you are not required to keep them on the facility. The records must include, at a minimum: § 250.1163(c)(3)(ii)—Renumbered from § 250.1163(c)(2). Added that the records must include the number of hours of gas flaring, gas venting, and liquid hydrocarbon burning on a monthly cumulative basis. This number is normally recorded by operators. This specifies that operators are required to add up the monthly cumulative on the field records because inspectors need this to verify that the operators are in compliance with §§ 250.1160(a)(6)(iii) and (a)(7)(iii). VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 (1 O=’xl’) Daily volumes of gas flared, gas vented, and liquid hydrocarbons burned;. (2) Number of hours of gas flaring, gas venting, and liquid hydrocarbon burning, on a daily basis; (3) A list of the wells contributing to gas flaring, gas venting, and liquid hydrocarbon burning, along with gas-oil ratio data; (4) Reasons for gas flaring, gas venting, and liquid hydrocarbon burning; and (5) Documentation of all required approvals. Number of hours of gas flaring, gas venting, and liquid hydrocarbon burning, on a daily basis; PO 00000 Frm 00043 Fmt 4700 Sfmt 4700 If flare/vent meters are required at one or more of your facilities, you must report the amount of gas flared and vented at each of those facilities separately from those facilities that do not require meters and separately from other facilities with meters. Added new paragraph: (4) If flare/vent meters are not required at your facility: (i) You may report the gas flared and vented on a lease or unit basis. Gas flared and vented from multiple facilities on a single lease or unit may be reported together. (ii) If you choose to install meters, you may report the gas volume flared and vented according to the method specified in paragraph (b)(3) of this section. You must prepare and maintain records detailing gas flaring, gas venting, and liquid hydrocarbon burning for each facility for 6 years. (1) You must maintain these records on the facility for at least the first 2 years and have them available for inspection by MMS representatives. (2) After 2 years, you must maintain the records, allow MMS representatives to inspect the records upon request and provide copies to the Regional Supervisor upon request, but are not required to keep them on the facility. (3) The records must include, at a minimum: (i) Daily volumes of gas flared, gas vented, and liquid hydrocarbons burned; (ii) Number of hours of gas flaring, gas venting, and liquid hydrocarbon burning, on a daily and monthly cumulative basis; (iii) A list of the wells contributing to gas flaring, gas venting, and liquid hydrocarbon burning, along with gas-oil ratio data; (iv) Reasons for gas flaring, gas venting, and liquid hydrocarbon burning; and (v) Documentation of all required approvals. Number of hours of gas flaring, gas venting, and liquid hydrocarbon burning, on a daily and monthly cumulative basis; E:\FR\FM\19APR1.SGM 19APR1 20282 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations TABLE 3—CHANGES FROM THE PROPOSED RULE TO THIS FINAL RULE—Continued Citation—description, or reason for the change Proposed rule language Final rule language § 250.1163(d)—Removed citations §§ 212.50 and 212.51. Restructured the section, to improve clarity. Retained the requirement to keep meter recordings for 6 years. Also added requirement for maintaining calibration and maintenance records. If your facility is required to have flare/vent meters, you must maintain the meter recordings for the period specified in §§ 212.50 and 212.51 of this title. You must keep these recordings on the facility for 2 years and have them available for inspection by MMS representatives. After 2 years, you must maintain the recordings, allow MMS representatives to inspect the recordings upon request, and provide copies to the Regional Supervisor upon request, but are not required to keep them on the facility. These recordings must include the begin times, end times, and volumes for all flaring and venting incidents. § 250.1163(e)—Deleted reference to § 250.140, because that section only applies to oral approvals. If your flaring or venting of gas, or burning of liquid hydrocarbons, required written or oral approval, you must submit documentation to the Regional Supervisor summarizing the location, dates, number of hours, and volumes of gas flared, gas vented, and liquid hydrocarbons burned under the approval, as required under § 250.140. You may not emit more than 15 lbs of SO2 per hour per mile from shore, without approval from the Regional Supervisor. If your facility is required to have flare/vent meters: (1) You must maintain the meter recordings for 6 years. (i) You must keep these recordings on the facility for 2 years and have them available for inspection by MMS representatives. (ii) After 2 years, you must maintain the recordings, allow MMS representatives to inspect the recordings upon request and provide copies to the Regional Supervisor upon request, but are not required to keep them on the facility. (iii) These recordings must include the begin times, end times, and volumes for all flaring and venting incidents. (2) You must maintain flare/vent meter calibration and maintenance records on the facility for 2 years. If your flaring or venting of gas, or burning of liquid hydrocarbons, required written or oral approval, you must submit documentation to the Regional Supervisor summarizing the location, dates, number of hours, and volumes of gas flared, gas vented, and liquid hydrocarbons burned under the approval. § 250.1164(b)(1)—Per industry comment, we deleted this paragraph since air quality guidelines are governed by Subpart C (Pollution Prevention and Control). § 250.1164(b)(2)—Added a reference to § 250.303 to clarify the authority for requesting additional air quality modeling analysis and the requirements for the analysis. WReier-Aviles on DSKGBLS3C1PROD with RULES § 250.1164(c)—Deleted first sentence in introductory paragraph regarding reporting flared and vented gas containing H2S, because the reporting requirement is covered in paragraph (b) of this section. § 250.1165(b)—Removed the reference to supporting data (structure map and well log section) and cited § 250.1167 for the required supporting information for Form MMS–127. § 250.1165(c)—Changed citation from § 216.53 to § 210.102 to conform with changes made in the Minerals Revenue Management regulations. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 If the Regional Supervisor determines that flaring at a facility or group of facilities may significantly affect the air quality of an onshore area, the Regional Supervisor may require you to conduct an air quality modeling analysis to determine the potential effect of facility emissions. The Regional Supervisor may require monitoring and reporting, or may restrict or prohibit flaring, under §§ 250.303 and 250.304. Deleted paragraph and renumbered subsequent paragraphs. If the Regional Supervisor determines that flaring at a facility or group of facilities may significantly affect the air quality of an onshore area, the Regional Supervisor may require you to conduct an air quality modeling analysis, under § 250.303, to determine the potential effect of facility emissions. The Regional Supervisor may require monitoring and reporting, or may restrict or prohibit flaring, under §§ 250.303 and 250.304. The Regional Supervisor may require you to submit monthly reports of flared and vented gas containing H2S. You must report flared and vented gas containing H2S as required under § 250.1163. In addition, the Regional Supervisor may require you to submit monthly reports of flared and vented gas containing H2S. Before initiating enhanced recovery oper- Before initiating enhanced recovery operations, you must submit a proposed plan to ations, you must submit a proposed plan to the Regional Supervisor and receive apthe Regional Supervisor and receive approval for pressure maintenance, secondary proval for pressure maintenance, secondary or tertiary recovery, cycling, and similar reor tertiary recovery, cycling, and similar recovery operations intended to increase the covery operations intended to increase the ultimate recovery of oil and gas from a resultimate recovery of oil and gas from a reservoir. The proposed plan must include, for ervoir. The proposed plan must include, for each project reservoir, a brief geologic and each project reservoir, a geologic and engiengineering overview, structure map, well neering overview, Form MMS–127 and suplog section, Form MMS–127, and any addiporting data as required in § 250.1167, and tional information required by the Regional any additional information required by the Supervisor. Regional Supervisor. You must report to Minerals Revenue Man- You must report to Minerals Revenue Management the volumes of oil, gas, or other agement the volumes of oil, gas, or other substances injected, produced, or produced substances injected, produced, or produced for a second time under § 216.53 of this title. for a second time under § 210.102 of this title. PO 00000 Frm 00044 Fmt 4700 Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations 20283 TABLE 3—CHANGES FROM THE PROPOSED RULE TO THIS FINAL RULE—Continued Citation—description, or reason for the change Proposed rule language Final rule language § 250.1166(a)—Revised wording from ‘‘a greater ultimate recovery of oil and gas’’ to ‘‘maximize ultimate recovery of oil and gas.’’ The new wording is consistent with terminology used in the rest of the rule. For any development in the Alaska OCS Region, you must submit an annual reservoir management report to the Regional Supervisor. The report must contain information detailing the activities performed during the previous year and planned for the upcoming year that will provide for: (1) the prevention of waste; ............................. (2) the protection of correlative rights; and ..... For any development in the Alaska OCS Region, you must submit an annual reservoir management report to the Regional Supervisor. The report must contain information detailing the activities performed during the previous year and planned for the upcoming year that will: (1) provide for the prevention of waste; (2) provide for the protection of correlative rights; and (3) maximize ultimate recovery of oil and gas. You must submit the supporting information listed in the following table with the forms identified in columns 1 and 2 and for the approvals required under this subpart identified in columns 3 through 6: Additional items the Regional Supervisor may request. § 250.1167—Revised introductory paragraph to clarify that columns 1 and 2 are for forms and columns 3 through 6 are for approvals. § 250.1167(a)(3) and(4) (table)—Changed the submittal requirement for net sand isopach with total net sand penetrated for each well, identified at the penetration point, and net hydrocarbon isopach with net feet of pay for each well, identified at the penetration point, for Form SRI MMS–127 from Required to Additional items the Regional Supervisor may request. § 250.1167(c)(2) (table)—Added that the Regional Supervisor may request the structural cross-sections for production within 500-ft of a lease or unit line. § 250.1167(e)(5) (table)—Revised wording, from ‘‘will not harm ultimate recovery’’ to ‘‘will maximize ultimate recovery.’’ This change is consistent with terminology used throughout the rest of the rule. Final Rule Organization The final rule completely restructures subpart K. The final rule is divided into shorter, easier-to-read sections, that focus on only one topic. For example, in the current subpart K regulation, the (3) a greater ultimate recovery of oil and gas. You must submit the supporting information listed in the following table with the forms and for the approvals required under this subpart:. Required ........................................................... Not required ..................................................... Additional items the Regional Supervisor may request. Explanation of why the proposed completion scenario will not harm ultimate recovery. Explanation of why the proposed completion scenario will maximize ultimate recovery. requirements regarding burning liquid hydrocarbons, as well as those governing flaring or venting natural gas, were all together in one section. In the final rule, these same requirements are in five sections, making it easier for an operator to find the information that applies to a particular situation. The numbering for subpart K starts at § 250.1150 instead of § 250.1100 to accommodate other planned rulemaking. The final rule structure is shown in the following table: Current regulations Final rule § 250.1100 Definitions for production rates ........................................... § 250.105 Definitions § 250.1101 General requirements and classification of reservoirs ........ Oil and gas production rates ............................................... § 250.1103 WReier-Aviles on DSKGBLS3C1PROD with RULES § 250.1102 Well production testing ........................................................ § 250.1104 Bottomhole pressure survey ............................................... § 250.1105 Flaring or venting of gas and burning liquid hydrocarbons VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00045 Fmt 4700 § 250.105 Definitions. § 250.1150 What are the general reservoir production requirements? § 250.1154 How do I determine if my reservoir is sensitive? § 250.1155 What information must I submit for sensitive reservoirs? § 250.1156 What steps must I take to receive approval to produce within 500 feet of a unit or lease line? § 250.1157 How do I receive approval to produce gas-cap gas from an oil reservoir with an associated gas cap? Requirements for production rates are largely eliminated. Portions retained were combined with new information. § 250.1159 May the Regional Supervisor limit my well or reservoir production rates? § 250.1151 How often must I conduct well production tests? § 250.1152 How do I conduct well tests? § 250.1153 When must I conduct a static bottomhole pressure survey? § 250.1160 When may I flare or vent gas? § 250.1161 When may I flare or vent gas for extended periods of time? § 250.1162 When may I burn produced liquid hydrocarbons? § 250.1163 How must I measure gas flaring or venting volumes and liquid hydrocarbon burning volumes and what records must I maintain? Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 20284 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations Current regulations § 250.1106 Final rule Downhole commingling ....................................................... § 250.1107 Enhanced oil and gas recovery operations ........................ New ........................................................................................................... Procedural Matters WReier-Aviles on DSKGBLS3C1PROD with RULES Regulatory Planning and Review (Executive Order (E.O.) 12866) The Office of Management and Budget (OMB) has designated this rule significant for OMB review under Executive Order 12866. (1) The final rule will not have an annual effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. A cost-benefit and economic analysis is not required. This final rule revises the requirements for oil and gas production. The changes in the rule are not significant enough to have an impact on the economy or an economic sector, productivity, jobs, the environment, or other units of government. Some of the previous requirements will be relaxed. For example, limits on production rates were eliminated in most cases. This will allow the operators to produce the oil and gas at the rates that they determine are best, and will not have a significant effect on any sector of the economy. (2) The final rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency because MMS is the only Federal agency directly involved in setting production requirements for the offshore oil and natural gas industry. (3) This final rule will not alter the budgetary effects of entitlements, grants, user fees or loan programs or the rights or obligations of their recipients. (4) This final rule will raise novel legal or policy issues. Regulatory Flexibility Act The Department of the Interior certifies that this final rule will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The changes in this rule will affect lessees and operators of leases in the VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 § 250.1164 What are the requirements for flaring or venting gas containing H2S? § 250.1158 How do I receive approval to downhole commingle hydrocarbons? § 250.1165 What must I do for enhanced recovery operations? § 250.1159 May the Regional Supervisor limit my well or reservoir production rates? § 250.1166 What additional reporting is required for developments in the Alaska OCS Region? § 250.1167 What information must I submit with forms and for approvals? OCS. This includes about 130 active Federal oil and gas lessees. Small lessees that operate under this rule fall under the Small Business Administration’s (SBA) North American Industry Classification System (NAICS) codes 211111, Crude Petroleum and Natural Gas Extraction, and 213111, Drilling Oil and Gas Wells. For these NAICS code classifications, a small company is one with fewer than 500 employees. Based on these criteria, an estimated 70 percent of these companies are considered small. This final rule, therefore, will affect a substantial number of small entities, but the changes in the rule will not have a significant economic effect on a these entities. The only new requirement that will impose a cost to operators is a requirement to install flaring/venting meters on all facilities that process more than 2,000 bopd. The GAO report on flaring and venting natural gas, released in July 2004, recommended that MMS require these meters to improve oversight. The MMS agrees with this recommendation. The MMS regulations allow flaring and venting in very limited circumstances. These meters will help MMS: • Verify the amounts of natural gas that operators flare or vent into the environment; • Prevent waste of resources; • Collect the proper royalties on avoidably flared or vented gas; • Determine if an operator is violating MMS regulations; and • Assess the impacts on the environment. In determining the criteria for which facilities must install the meters, MMS considered the cost of the meters and the amount of production needed to justify the cost. To ensure that the requirement to install flare/vent meters will not produce an undue burden on small companies, it is limited to those facilities that process more than an average of 2,000 bopd. In the proposed rule, MMS estimated that 34 companies will have to install PO 00000 Frm 00046 Fmt 4700 Sfmt 4700 meters on 112 facilities at an average cost of $77,000 per facility, with a total cost to industry of $8,624,000 (112 × $77,000 = $8,624,000). Of those 34 companies, nine companies are considered small entities, based on the NAICS. These nine companies represent only 7 percent of the 130 operators in the OCS. We estimate that seven of these nine companies will need to install meters on one facility each; one company will need to install meters on two facilities; and one company will need to install meters on three facilities. This represents an average cost of $102,667 for each of the small companies (12 facilities × $77,000/9 companies). For the remaining companies, the average cost to install meters will be $308,000 per company (100 facilities × $77,000/25 companies). This does not represent an unfair burden to small companies because the cost of these meters is small in comparison to the revenues generated by the amount of oil processed by those facilities. Your comments are important. The Small Business and Agriculture Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small businesses about Federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency’s responsiveness to small business. If you wish to comment on the actions of MMS, call 1–888–734–3247. You may comment to the Small Business Administration without fear of retaliation. Allegations of discrimination/retaliation filed with the SBA will be investigated for appropriate action. Small Business Regulatory Enforcement Fairness Act The final rule is not a major rule under 5 U.S.C. 804(2) of the Small Business Regulatory Enforcement Fairness Act. This final rule: a. Will not have an annual effect on the economy of $100 million or more. E:\FR\FM\19APR1.SGM 19APR1 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations This final rule revises the requirements for oil and gas production. Most of the new requirements are paperwork requirements, and will not add significant time to development and production processes. One new requirement will add new costs for some operators. Operators will be required to install flare/vent meters on any facility that processes more than an average of 2,000 bopd. The MMS estimates that 34 companies will have to install meters on 112 facilities at an average cost of $77,000 per facility, with a total cost to industry of $8,624,000 (112 × $77,000 = $8,624,000). b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. The only change to this rule that has a cost associated with it is a new requirement to install meters on facilities that process more than an average of 2,000 bopd. As discussed previously, this requirement will not significantly increase the cost of doing business offshore and will not cause an increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. c. Will not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This final rule will eliminate the requirement for operators to set limits on production rates, allowing the operators to determine the best rate to produce their reservoirs. There are clearer limits on burning, flaring, and venting, which will encourage conservation of our natural resources. WReier-Aviles on DSKGBLS3C1PROD with RULES Unfunded Mandates Reform Act This final rule will not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The final rule will not have a significant or unique effect on State, local, or tribal governments or the private sector. A statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required. Takings Implication Assessment (E.O. 12630) Under the criteria in E.O. 12630, this final rule does not have significant takings implications. The final rule is not a governmental action capable of interference with constitutionally protected property rights. A Takings Implication Assessment is not required. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 Federalism (E.O. 13132) Under the criteria in E.O. 13132, this final rule does not have federalism implications. This final rule will not substantially and directly affect the relationship between the Federal and State governments. To the extent that State and local governments have a role in OCS activities, this final rule will not affect that role. A Federalism Assessment is not required. Civil Justice Reform (E.O. 12988) This rule complies with the requirements of E.O. 12988. Specifically, this rule: (a) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and (b) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards. Consultation With Indian Tribes (E.O. 13175) Under the criteria in E.O. 13175, we have evaluated this final rule and determined that it has no potential effects on federally recognized Indian tribes. There are no Indian or tribal lands in the OCS. Paperwork Reduction Act (PRA) This rulemaking is a total rewrite of regulations under 30 CFR Part 250, Subpart K, Oil and Gas Production Rates. The rule changes the information collection (IC) burden already approved for current subpart K regulations; therefore, a submission was made to OMB under 44 U.S.C. 3501 et seq. The OMB approved the collection of information under OMB Control Number 1010–0041, expiration date 3/31/2013, for a total of 43,396 burden hours and $9,234,392 non-hour cost burdens. The title of the collection of information for the rule is 30 CFR Part 250, Subpart K, Oil and Gas Production Requirements. Potential respondents comprise Federal oil and gas and sulphur lessees. Responses to this collection are mandatory or are required to obtain or retain a benefit. The frequency of response is on occasion, monthly, semi-annually, annually, and as a result of situations encountered depending upon the requirement. The information collection does not include questions of a sensitive nature. The MMS will protect proprietary information according to the Freedom of Information Act (5 U.S.C. 552) and its implementing regulations (43 CFR part 2), and 30 CFR 250.197, Data and PO 00000 Frm 00047 Fmt 4700 Sfmt 4700 20285 information to be made available to the public or for limited inspection, and 30 CFR part 252, OCS Oil and Gas Information Program. Proprietary information concerning geological and geophysical data will be protected according to 43 U.S.C. 1352. The information collected under subpart K is used in our efforts to conserve natural resources, prevent waste, and protect correlative rights, including the Government’s royalty interest. Specifically, MMS uses the information to: • Evaluate requests to burn liquid hydrocarbons and vent and flare gas to ensure that these requests are appropriate; • Determine if a maximum production or efficient rate is required; and, • Review applications for downhole commingling to ensure that action maximizes ultimate recovery. The IC burdens for these regulations include several changes from the burdens published in the preamble to the proposed rule. The changes and reasons for making them are: (1) On August 25, 2008 (73 FR 49943) a final rulemaking was published that increased the cost recovery fees required under § 250.125. These fees became effective on September 24, 2008, and the final rule includes these fees that affect subpart K. (2) The OMB approval of the information collection burden (1010– 0041) for the current subpart K regulations was due to expire before these final regulations became effective. As required by the Paperwork Reduction Act, to renew the OMB approval of 1010–0041, we consulted with several respondents and adjusted the burden estimates and number of responses accordingly. The burden estimates for the final rule reflect these updates. (3) Based on a public comment, we removed the requirements published in proposed § 250.1164(b)(1) to request Regional Supervisor approval for emitting more than 15 pounds of SO2, and § 250.1164(b)(2), submit to the Regional Supervisor air quality modeling analysis. The commenter stated that 30 CFR 250, subpart C, was sufficient to regulate pollution issues and MMS agreed. (4) We also added two IC requirements and burdens to the following IC burden table for the final regulations. (a) First, operators/lessees must provide notice to operator(s) of adjacent property(ies) of their request for MMS approval to produce within 500 feet of a unit or lease line or to commingle E:\FR\FM\19APR1.SGM 19APR1 20286 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations hydrocarbons. Sections 250.1156(b) and 250.1158(b) allow the notified party(ies) to submit letters of acceptance or objection to MMS. This provision was in the proposed rule, but was inadvertently omitted from the IC table in the proposed rule. (b) Second, is a new paragraph (1) under § 250.1163(a) that requires a notice to MMS when a facility begins to process more than an average of 2,000 BOPD per month. This change was made in response to a commenter’s concern that the current Oil and Gas Operations Report (OGOR)–B form does not allow for multiple facility submissions. Non-hour cost burdens 30 CFR part 250 subpart K Reporting & recordkeeping requirement Average number of annual responses Hour burden Annual burden hours WELL TESTS/SURVEYS and CLASSIFYING RESERVOIRS 1151(a)(1), (c); 1167 .. 1151(a)(2), (c); 1167 .. 1151(b) ....................... 1152(b), (c) ................ 1152(d) ....................... 1153 ........................... 1153(d) ....................... 1154; 1167 ................. 1155; 1165(b); 1166(c); 1167. Conduct well production test; submit Form MMS–126 (Well Potential Test Report) and supporting information (within 15 days after end of test period). Conduct well production test; submit Form MMS–128 (Semiannual Well Test Report) and supporting information (within 45 days after end of calendar half-year). Request extension of time to submit results of semi-annual well test. Request approval to conduct well testing using alternative procedures. Provide advance notice of time and date of well tests. Conduct static bottomhole pressure survey; submit Form MMS–140 (Bottomhole Pressure Survey Report) (within 60 days after survey). Submit a letter, along with Form MMS– 140, to request a departure from requirement to run a static bottomhole survey. Request approval, along with supporting information, to reclassify reservoir. Submit Form MMS–127 (Sensitive Reservoir Information Report) and supporting information (within 45 days after certain events or at least annually). 3 .............................. 1,325 forms ............. 3,975 0.1 to 3 * .................. 13,000 GOM forms 600 POCS forms. 3,100 0.5 ........................... 37 requests ............. 19 0.5 ........................... 37 requests ............. 19 0.5 ........................... 10 notices ................ 5 14 ............................ 1,270 surveys .......... 17,780 1 .............................. 120 survey departures. 120 6 .............................. 20 requests ............. 120 2.2 ........................... 2,189 forms ............. 4,816 18,608 responses 29,954 hours Subtotal APPROVALS PRIOR TO PRODUCTION 1156; 1167 ................. Request approval to produce within 500 feet of a unit or lease line; submit supporting information; pay service fee and include pay.gov payment confirmation with request; notify adjacent operators and provide MMS proof of notice date. 5 .............................. 33 requests ............. 165 $3,608 × 33 requests = $119,064 1156(b); 1158(b) ........ WReier-Aviles on DSKGBLS3C1PROD with RULES 1157; 1167 ................. Notify adjacent operators submit letters of acceptance or objection to MMS within 30 days after notice. Request approval to produce gas-cap gas in an oil reservoir with an associated gas cap, or to continue producing an oil well showing characteristics of a gas well with an associated gas cap; submit supporting information; pay service fee and include pay.gov payment confirmation with request. .5 ............................. 33 letters ................. 17 (rounded) 12 ............................ 51 requests ............. 612 $4,592 × 51 requests = $234,192 VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00048 Fmt 4700 Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations 20287 Non-hour cost burdens 30 CFR part 250 subpart K Reporting & recordkeeping requirement 1158; 1167 ................. Request approval to downhole commingle hydrocarbons; submit supporting information; pay service fee and include pay.gov payment confirmation with request; notify operators and provide proof of notice date. Hour burden Average number of annual responses 6 .............................. 48 applications ........ Annual burden hours 288 $5,357 × 48 applications = $257,136 165 responses Subtotal 1,082 hours $610,392 non-hour costs FLARING, VENTING, and BURNING HYDROCARBONS 1160; 1161; 1163(e) .. 1162; 1163(e) ............ Request approval to flare or vent natural gas or exceed specified volumes; submit documentation; report flare/vent information due to blow down of transportation pipelines within 72 hours after incident. Request approval to burn produced liquid hydrocarbons; submit documentation 1163(a) ....................... Notify MMS when facility begins to process more than an average of 2,000 bopd per month. 1,007 requests/ reports. 504 0.5 ........................... 60 requests/ reports. 30 112 meters × $77,000 ea = $8,624,000 One-time initial purchase and installation of gas meters to measure and record the amount of gas flared or vented. This is a non-hour cost burden required to comply with revised regulations with relatively small or no burden in subsequent years. 1163(a)(1) .................. 0.5 ........................... 1163(b); 1164(c) ........ 1163(c), (d) ................ 0.833 ....................... 112 notices .............. Report to MRM hydrocarbons produced, including measured gas flared/vented and liquid hydrocarbon burned—burden covered under 1010–0139. Maintain records for 6 years detailing gas flaring/venting, liquid hydrocarbon burning; and flare/vent meter recordings; make available for inspection or provide copies upon request. 93 (rounded) 0 13 ............................ 869 flare/vent platforms. 11,297 0.5 ........................... 60 liquid hydrocarbons. 3 operators × 12 mos. = 36. 30 1164(c) ....................... Submit monthly reports of flared or vented gas containing H2S. 2 .............................. 1160(b); 1164(b)(1), (2). H2S Contingency, Exploration, or Development and Production Plans and, Development Operations Coordination Documents—burdens covered under 1010–0141 and 1010– 0151. Monitor air quality and report—burdens covered under 1010–0057. 2,084 responses Subtotal 72 0 12,026 hours $8,624,000 non-hour costs OTHER REQUIREMENTS WReier-Aviles on DSKGBLS3C1PROD with RULES 1165 ........................... 1165(c) ....................... 1166 ........................... Submit proposed plan and supporting information for enhanced recovery operations; including Form MMS–127. 12 ............................ 14 plans .................. Submit periodic reports of volumes of oil, gas, or other substances injected, produced, or produced for a second time—burden covered under OMB approval 1010–0139. 0 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00049 1 .............................. 1 (req’d by State, MMS gets copy). 1 100 .......................... VerDate Nov<24>2008 Alaska Region only: submit annual reservoir management report and supporting information, including Form MMS–127. 168 1 new development not State lands. 100 Fmt 4700 Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 20288 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations Non-hour cost burdens 30 CFR part 250 subpart K Reporting & recordkeeping requirement 1150–1167 ................. General departure or alternative compliance requests not specifically covered elsewhere in subpart K. Hour burden Average number of annual responses 20 ............................ 1 .............................. 3 annual revisions ... 5 submissions ......... 60 5 24 responses 334 hours 20,881 responses 43,396 hours Subtotal TOTAL BURDEN Annual burden hours $9,234,392 non-hour cost burdens * Reporting burden for this form is estimated to average 0.1 to 3 hours per form depending on the number of well tests reported, including the time for reviewing instructions, gathering and maintaining data, and completing and reviewing the form. An agency may not conduct or sponsor, and you are not required to respond to, a collection of information unless it displays a currently valid OMB control number. The public may comment, at any time, on the accuracy of the IC burden in this rule and may submit any comments to the Department of the Interior; Minerals Management Service; Attention: Regulations and Standards Branch; Mail Stop 5438; 381 Elden Street; Herndon, Virginia 20170– 4817. National Environmental Policy Act of 1969 This rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed statement under the National Environmental Policy Act of 1969 is not required because the rule is covered by a categorical exclusion. This rule is excluded from the requirement to prepare a detailed statement because it falls within the MMS categorical exclusion covering the ‘‘[i]ssuance and modification of regulations, Orders, Standards, Notices to Lessees and Operators. Guidelines and field rules for which the impacts are limited to administrative, economic, or technological effects and the environmental impacts are minimal.’’ This categorical exclusion is documented in 516 Departmental Manual 15.4(C)(1). We have also determined that the rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under the National Environmental Policy Act. Data Quality Act In developing this rule, we did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (Pub. L. 106–554, app. C § 515, 114 Stat. 2763, 2763A–153– 154). Effects on the Energy Supply (E.O. 13211) This rule is not a significant energy action under the definition in E.O. 13211. A Statement of Energy Effects is not required. List of Subjects in 30 CFR Part 250 Continental shelf, Environmental protection, Oil and gas exploration, Public lands—mineral resources, reporting and recordkeeping requirements. Dated: December 23, 2009. Ned Farquhar, Acting Assistant Secretary—Land and Minerals Management. PART 250—OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER CONTINENTAL SHELF 1. The authority citation for part 250 continues to read as follows: ■ Authority: 31 U.S.C. 9701, 43 U.S.C. 1334. 2. Amend § 250.105 by revising the definition of Sensitive reservoir and adding in alphabetical order definitions for Flaring and Venting to read as follows: ■ § 250.105 Definitions. * * * * * Flaring means the burning of natural gas as it is released into the atmosphere. * * * * * Sensitive reservoir means a reservoir in which the production rate will affect ultimate recovery. * * * * * Venting means the release of gas into the atmosphere without igniting it. This includes gas that is released underwater and bubbles to the atmosphere. * * * * * 3. In § 250.125, revise paragraphs (a)(27) through (29) to read as follows: ■ For the reasons stated in the preamble, Minerals Management Service (MMS) amends 30 CFR part 250 as follows: ■ § 250.125 Service fees. (a) * * * SERVICE FEE TABLE Service—processing of the following: Fee amount 30 CFR citation WReier-Aviles on DSKGBLS3C1PROD with RULES . * * * * * (27) 500 Feet From Lease/Unit Line Production Request ................................................................................... (28) Gas Cap Production Request ....................................................................................................................... (29) Downhole Commingling Request .................................................................................................................. * VerDate Nov<24>2008 * 15:30 Apr 16, 2010 * Jkt 220001 PO 00000 * Frm 00050 Fmt 4700 * Sfmt 4700 E:\FR\FM\19APR1.SGM * 3,608 4,592 5,357 * 19APR1 * § 250.1156(a). § 250.1157. § 250.1158(a). * 20289 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations § 250.199 Paperwork Reduction Act statements—information collection. 4. In § 250.199, paragraph (e)(10) is revised to read as follows: ■ * * * * (e) * * * * 30 CFR subpart, title and/or MMS Form (OMB Control No.) Reasons for collecting information and how used * * * * * * * (10) Subpart K, Oil and Gas Production Rates (1010–0041), including To inform MMS of production rates for hydrocarbons produced on the Forms MMS–126, Well Potential Test Report; MMS–127, Sensitive OCS. To ensure economic maximization of ultimate hydrocarbon reReservoir Information Report; MMS–128, Semiannual Well Test Recovery. port; MMS–140 Bottomhole Pressure Survey Report. * * * * * * * Approvals Prior To Production Other Requirements Subpart K—Oil and Gas Production Requirements 250.1156 What steps must I take to receive approval to produce within 500 feet of a unit or lease line? 250.1157 How do I receive approval to produce gas-cap gas from an oil reservoir with an associated gas cap? 250.1158 How do I receive approval to downhole commingle hydrocarbons? 250.1165 What must I do for enhanced recovery operations? 250.1166 What additional reporting is required for developments in the Alaska OCS Region? 250.1167 What information must I submit with forms and for approvals? General Production Rates Sec. 250.1150 What are the general reservoir production requirements? 250.1159 May the Regional Supervisor limit my well or reservoir production rates? § 250.1150 What are the general reservoir production requirements? Flaring, Venting, And Burning Hydrocarbons You must produce wells and reservoirs at rates that provide for economic development while maximizing ultimate recovery and without adversely affecting correlative rights. § 250.490 [Amended] 5. In § 250.490, paragraph (o)(3), the citation ‘‘§ 250.1105’’ is revised to read ‘‘§ 250.1164’’. ■ 6. Revise subpart K to read as follows: ■ Well Tests and Surveys 250.1151 How often must I conduct well production tests? 250.1152 How do I conduct well tests? 250.1153 When must I conduct a static bottomhole pressure survey? Classifying Reservoirs 250.1154 How do I determine if my reservoir is sensitive? 250.1155 What information must I submit for sensitive reservoirs? 250.1160 When may I flare or vent gas? 250.1161 When may I flare or vent gas for extended periods of time? 250.1162 When may I burn produced liquid hydrocarbons? 250.1163 How must I measure gas flaring or venting volumes and liquid hydrocarbon burning volumes, and what records must I maintain? 250.1164 What are the requirements for flaring or venting gas containing H2S? General Well Tests and Surveys § 250.1151 How often must I conduct well production tests? (a) You must conduct well production tests as shown in the following table: You must conduct: And you must submit to the Regional Supervisor: (1) A well-flow potential test on all new, recompleted, or reworked well completions within 30 days of the date of first continuous production. Form MMS–126, Well Potential Test Report, along with the supporting data as listed in the table in § 250.1167, within 15 days after the end of the test period. Results on Form MMS–128, Semiannual Well Test Report, of the most recent well test obtained. This must be submitted within 45 days after the end of the calendar half-year. WReier-Aviles on DSKGBLS3C1PROD with RULES (2) At least one well test during a calendar half-year for each producing completion. (b) You may request an extension from the Regional Supervisor if you cannot submit the results of a semiannual well test within the specified time. (c) You must submit to the Regional Supervisor an original and two copies of the appropriate form required by paragraph (a) of this section; one of the copies of the form must be a public information copy in accordance with §§ 250.186 and 250.197, and marked ‘‘Public Information.’’ You must submit two copies of the supporting information as listed in the table in § 250.1167 with form MMS–126. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 § 250.1152 How do I conduct well tests? (a) When you conduct well tests you must: (1) Recover fluid from the well completion equivalent to the amount of fluid introduced into the formation during completion, recompletion, reworking, or treatment operations before you start a well test; (2) Produce the well completion under stabilized rate conditions for at least 6 consecutive hours before beginning the test period; (3) Conduct the test for at least 4 consecutive hours; (4) Adjust measured gas volumes to the standard conditions of 14.73 pounds PO 00000 Frm 00051 Fmt 4700 Sfmt 4700 per square inch absolute (psia) and 60° F for all tests; and (5) Use measured specific gravity values to calculate gas volumes. (b) You may request approval from the Regional Supervisor to conduct a well test using alternative procedures if you can demonstrate test reliability under those procedures. (c) The Regional Supervisor may also require you to conduct the following tests and complete them within a specified time period: (1) A retest or a prolonged test of a well completion if it is determined to be necessary for the proper establishment of a Maximum Production Rate (MPR) or a Maximum Efficient Rate (MER); and E:\FR\FM\19APR1.SGM 19APR1 20290 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations (2) A multipoint back-pressure test to determine the theoretical open-flow potential of a gas well. (d) An MMS representative may witness any well test. Upon request, you § 250.1153 When must I conduct a static bottomhole pressure survey? must provide advance notice to the Regional Supervisor of the times and dates of well tests. (a) You must conduct a static bottomhole pressure survey under the following conditions: If you have . . . Then you must conduct . . . (1) A new producing reservoir .................................................................. A static bottomhole pressure survey within 90 days after the date of first continuous production. Annual static bottomhole pressure surveys in a sufficient number of key wells to establish an average reservoir pressure. The Regional Supervisor may require that bottomhole pressure surveys be performed on specific wells. (2) A reservoir with three or more producing completions ...................... (b) Your bottomhole pressure survey must meet the following requirements: (1) You must shut-in the well for a minimum period of 4 hours to ensure stabilized conditions; and (2) The bottomhole pressure survey must consist of a pressure measurement at mid-perforation, and pressure measurements and gradient information for at least four gradient stops coming out of the hole. (c) You must submit to the Regional Supervisor the results of all static bottomhole pressure surveys on Form MMS–140, Bottomhole Pressure Survey Report, within 60 days after the date of the survey. (d) The Regional Supervisor may grant a departure from the requirement to run a static bottomhole pressure survey. To request a departure, you must submit a justification, along with Form MMS–140, Bottomhole Pressure Survey Report, showing a calculated bottomhole pressure or any measured data. Classifying Reservoirs WReier-Aviles on DSKGBLS3C1PROD with RULES § 250.1154 How do I determine if my reservoir is sensitive? (a) You must determine whether each reservoir is sensitive. You must classify the reservoir as sensitive if: (1) Under initial conditions it is an oil reservoir with an associated gas cap; (2) At any time there are near-critical fluids; or (3) The reservoir is undergoing enhanced recovery. (b) For the purposes of this subpart, near-critical fluids are: (1) Those fluids that occur in high temperature, high-pressure reservoirs where it is not possible to define the liquid-gas contact; or (2) Fluids in reservoirs that are near bubble point or dew point conditions. (c) The Regional Supervisor may reclassify a reservoir when available information warrants reclassification. (d) If available information indicates that a reservoir previously classified as non-sensitive is now sensitive, you must VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 submit a request to the Regional Supervisor to reclassify the reservoir. You must include supporting information, as listed in the table in § 250.1167, with your request. (e) If information indicates that a reservoir previously classified as sensitive is now non-sensitive, you may submit a request to the Regional Supervisor to reclassify the reservoir. You must include supporting information, as listed in the table in § 250.1167, with your request. § 250.1155 What information must I submit for sensitive reservoirs? You must submit to the Regional Supervisor an original and two copies of Form MMS–127; one of the copies must be a public information copy in accordance with §§ 250.186 and 250.197, and marked ‘‘Public Information.’’ You must also submit two copies of the supporting information, as listed in the table in § 250.1167. You must submit this information: (a) Within 45 days after beginning production from the reservoir or discovering that it is sensitive; (b) At least once during the calendar year, but you do not need to resubmit unrevised structure maps (§ 250.1167(a)(2)) or previously submitted well logs (§ 250.1167(c)(1)); (c) Within 45 days after you revise reservoir parameters; and (d) Within 45 days after the Regional Supervisor classifies the reservoir as sensitive under § 250.1154(c). Approvals Prior to Production § 250.1156 What steps must I take to receive approval to produce within 500 feet of a unit or lease line? (a) You must obtain approval from the Regional Supervisor before you start producing from a reservoir within a well that has any portion of the completed interval less than 500 feet from a unit or lease line. Submit to MMS the service fee listed in § 250.125, according to the instructions in § 250.126, and the supporting information, as listed in the PO 00000 Frm 00052 Fmt 4700 Sfmt 4700 table in § 250.1167, with your request. The Regional Supervisor will determine whether approval of your request will maximize ultimate recovery, avoid the waste of natural resources, or protect correlative rights. You do not need to obtain approval if the adjacent leases or units have the same unit, lease (record title and operating rights), and royalty interests as the lease or unit you plan to produce. You do not need to obtain approval if the adjacent block is unleased. (b) You must notify the operator(s) of adjacent property(ies) that are within 500 feet of the completion, if the adjacent acreage is a leased block in the Federal OCS. You must provide the Regional Supervisor proof of the date of the notification. The operators of the adjacent properties have 30 days after receiving the notification to provide the Regional Supervisor letters of acceptance or objection. If an adjacent operator does not respond within 30 days, the Regional Supervisor will presume there are no objections and proceed with a decision. The notification must include: (1) The well name; (2) The rectangular coordinates (x, y) of the location of the top and bottom of the completion or target completion referenced to the North American Datum 1983, and the subsea depths of the top and bottom of the completion or target completion; (3) The distance from the completion or target completion to the unit or lease line at its nearest point; and (4) A statement indicating whether or not it will be a high-capacity completion having a perforated or open hole interval greater than 150 feet measured depth. § 250.1157 How do I receive approval to produce gas-cap gas from an oil reservoir with an associated gas cap? (a) You must request and receive approval from the Regional Supervisor: (1) Before producing gas-cap gas from each completion in an oil reservoir that is known to have an associated gas cap. E:\FR\FM\19APR1.SGM 19APR1 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations (2) To continue production from a well if the oil reservoir is not initially known to have an associated gas cap, but the oil well begins to show characteristics of a gas well. (b) For either request, you must submit the service fee listed in § 250.125, according to the instructions in § 250.126, and the supporting information, as listed in the table in § 250.1167, with your request. (c) The Regional Supervisor will determine whether your request maximizes ultimate recovery. § 250.1158 How do I receive approval to downhole commingle hydrocarbons? (a) Before you perforate a well, you must request and receive approval from the Regional Supervisor to commingle hydrocarbons produced from multiple reservoirs within a common wellbore. The Regional Supervisor will determine whether your request maximizes ultimate recovery. You must include the service fee listed in § 250.125, according to the instructions in § 250.126, and the supporting information, as listed in the table in § 250.1167, with your request. (b) If one or more of the reservoirs proposed for commingling is a competitive reservoir, you must notify the operators of all leases that contain the reservoir that you intend to downhole commingle the reservoirs. Your request for approval of downhole commingling must include proof of the date of this notification. The notified operators have 30 days after notification to provide the Regional Supervisor with letters of acceptance or objection. If the notified operators do not respond within the specified period, the Regional Supervisor will assume the operators do not object and proceed with a decision. Production Rates § 250.1159 May the Regional Supervisor limit my well or reservoir production rates? (a) The Regional Supervisor may set a Maximum Production Rate (MPR) for a producing well completion, or set a Maximum Efficient Rate (MER) for a 20291 reservoir, or both, if the Regional Supervisor determines that an excessive production rate could harm ultimate recovery. An MPR or MER will be based on well tests and any limitations imposed by well and surface equipment, sand production, reservoir sensitivity, gas-oil and water-oil ratios, location of perforated intervals, and prudent operating practices. (b) If the Regional Supervisor sets an MPR for a producing well completion and/or an MER for a reservoir, you may not exceed those rates except due to normal variations and fluctuations in production rates as set by the Regional Supervisor. Flaring, Venting, and Burning Hydrocarbons § 250.1160 When may I flare or vent gas? (a) You must request and receive approval from the Regional Supervisor to flare or vent natural gas at your facility, except in the following situations: Condition Additional requirements (1) When the gas is lease use gas (produced natural gas which is used on or for the benefit of lease operations such as gas used to operate production facilities) or is used as an additive necessary to burn waste products, such as H2S. (2) During the restart of a facility that was shut in because of weather conditions, such as a hurricane. (3) During the blow down of transportation pipelines downstream of the royalty meter. The volume of gas flared or vented may not exceed the amount necessary for its intended purpose. Burning waste products may require approval under other regulations. (4) During the unloading or cleaning of a well, drill-stem testing, production testing, other well-evaluation testing, or the necessary blow down to perform these procedures. (5) When properly working equipment yields flash gas (natural gas released from liquid hydrocarbons as a result of a decrease in pressure, an increase in temperature, or both) from storage vessels or other low-pressure production vessels, and you cannot economically recover this flash gas. (6) When the equipment works properly but there is a temporary upset condition, such as a hydrate or paraffin plug. WReier-Aviles on DSKGBLS3C1PROD with RULES (7) When equipment fails to work properly, during equipment maintenance and repair, or when you must relieve system pressures. VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00053 Fmt 4700 Flaring or venting may not exceed 48 cumulative hours without Regional Supervisor approval. (i) You must report the location, time, flare/vent volume, and reason for flaring/venting to the Regional Supervisor in writing within 72 hours after the incident is over. (ii) Additional approval may be required under subparts H and J of this part. You may not exceed 48 cumulative hours of flaring or venting per unloading or cleaning or testing operation on a single completion without Regional Supervisor approval. You may not flare or vent more than an average of 50 MCF per day during any calendar month without Regional Supervisor approval. (i) For oil-well gas and gas-well flash gas (natural gas released from condensate as a result of a decrease in pressure, an increase in temperature, or both), you may not exceed 48 continuous hours of flaring or venting without Regional Supervisor approval. (ii) For primary gas-well gas (natural gas from a gas well completion that is at or near its wellhead pressure; this does not include flash gas), you may not exceed 2 continuous hours of flaring or venting without Regional Supervisor approval. (iii) You may not exceed 144 cumulative hours of flaring or venting during a calendar month without Regional Supervisor approval. (i) For oil-well gas and gas-well flash gas, you may not exceed 48 continuous hours of flaring or venting without Regional Supervisor approval. (ii) For primary gas-well gas, you may not exceed 2 continuous hours of flaring or venting without Regional Supervisor approval. (iii) You may not exceed 144 cumulative hours of flaring or venting during a calendar month without Regional Supervisor approval. (iv) The continuous and cumulative hours allowed under this paragraph may be counted separately from the hours under paragraph (a)(6) of this section. Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 20292 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations (b) Regardless of the requirements in paragraph (a) of this section, you must not flare or vent gas over the volume approved in your Development Operations Coordination Document (DOCD) or your Development and Production Plan (DPP). (c) The Regional Supervisor may establish alternative approval procedures to cover situations when you cannot contact the MMS office, such as during non-office hours. (d) The Regional Supervisor may specify a volume limit, or a shorter time limit than specified elsewhere in this part, in order to prevent air quality degradation or loss of reserves. (e) If you flare or vent gas without the required approval, or if the Regional Supervisor determines that you were negligent or could have avoided flaring or venting the gas, the hydrocarbons will be considered avoidably lost or wasted. You must pay royalties on the loss or waste, according to part 202 of this title. You must value any gas or liquid hydrocarbons avoidably lost or wasted under the provisions of part 206 of this title. (f) Fugitive emissions from valves, fittings, flanges, pressure relief valves or similar components do not require approval under this subpart unless specifically required by the Regional Supervisor. WReier-Aviles on DSKGBLS3C1PROD with RULES § 250.1161 When may I flare or vent gas for extended periods of time? You must request and receive approval from the Regional Supervisor to flare or vent gas for an extended period of time. The Regional Supervisor will specify the approved period of time, which will not exceed 1 year. The Regional Supervisor may deny your request if it does not ensure the conservation of natural resources or is not consistent with national interests relating to development and production of minerals of the OCS. The Regional Supervisor may approve your request for one of the following reasons: (a) You initiated an action which, when completed, will eliminate flaring and venting; or (b) You submit to the Regional Supervisor an evaluation supported by engineering, geologic, and economic data indicating that the oil and gas produced from the well(s) will not economically support the facilities necessary to sell the gas or to use the gas on or for the benefit of the lease. § 250.1162 When may I burn produced liquid hydrocarbons? (a) You must request and receive approval from the Regional Supervisor to burn any produced liquid VerDate Nov<24>2008 15:30 Apr 16, 2010 Jkt 220001 hydrocarbons. The Regional Supervisor may allow you to burn liquid hydrocarbons if you demonstrate that transporting them to market or reinjecting them is not technically feasible or poses a significant risk of harm to offshore personnel or the environment. (b) If you burn liquid hydrocarbons without the required approval, or if the Regional Supervisor determines that you were negligent or could have avoided burning liquid hydrocarbons, the hydrocarbons will be considered avoidably lost or wasted. You must pay royalties on the loss or waste, according to part 202 of this title. You must value any liquid hydrocarbons avoidably lost or wasted under the provisions of part 206 of this title. § 250.1163 How must I measure gas flaring or venting volumes and liquid hydrocarbon burning volumes, and what records must I maintain? (a) If your facility processes more than an average of 2,000 bopd during May 2010, you must install flare/vent meters within 180 days after May 2010. If your facility processes more than an average of 2,000 bopd during a calendar month after May 2010, you must install flare/ vent meters within 120 days after the end of the month in which the average amount of oil processed exceeds 2,000 bopd. (1) You must notify the Regional Supervisor when your facility begins to process more than an average of 2,000 bopd in a calendar month; (2) The flare/vent meters must measure all flared and vented gas within 5 percent accuracy; (3) You must calibrate the meters regularly, in accordance with the manufacturer’s recommendation, or at least once every year, whichever is shorter; and (4) You must use and maintain the flare/vent meters for the life of the facility. (b) You must report all hydrocarbons produced from a well completion, including all gas flared, gas vented, and liquid hydrocarbons burned, to Minerals Revenue Management on Form MMS– 4054 (Oil and Gas Operations Report), in accordance with § 210.102 of this title. (1) You must report the amount of gas flared and the amount of gas vented separately. (2) You may classify and report gas used to operate equipment on the lease, such as gas used to power engines, instrument gas, and gas used to maintain pilot lights, as lease use gas. (3) If flare/vent meters are required at one or more of your facilities, you must report the amount of gas flared and PO 00000 Frm 00054 Fmt 4700 Sfmt 4700 vented at each of those facilities separately from those facilities that do not require meters and separately from other facilities with meters. (4) If flare/vent meters are not required at your facility: (i) You may report the gas flared and vented on a lease or unit basis. Gas flared and vented from multiple facilities on a single lease or unit may be reported together. (ii) If you choose to install meters, you may report the gas volume flared and vented according to the method specified in paragraph (b)(3) of this section. (c) You must prepare and maintain records detailing gas flaring, gas venting, and liquid hydrocarbon burning for each facility for 6 years. (1) You must maintain these records on the facility for at least the first 2 years and have them available for inspection by MMS representatives. (2) After 2 years, you must maintain the records, allow MMS representatives to inspect the records upon request and provide copies to the Regional Supervisor upon request, but are not required to keep them on the facility. (3) The records must include, at a minimum: (i) Daily volumes of gas flared, gas vented, and liquid hydrocarbons burned; (ii) Number of hours of gas flaring, gas venting, and liquid hydrocarbon burning, on a daily and monthly cumulative basis; (iii) A list of the wells contributing to gas flaring, gas venting, and liquid hydrocarbon burning, along with gas-oil ratio data; (iv) Reasons for gas flaring, gas venting, and liquid hydrocarbon burning; and (v) Documentation of all required approvals. (d) If your facility is required to have flare/vent meters: (1) You must maintain the meter recordings for 6 years. (i) You must keep these recordings on the facility for 2 years and have them available for inspection by MMS representatives. (ii) After 2 years, you must maintain the recordings, allow MMS representatives to inspect the recordings upon request and provide copies to the Regional Supervisor upon request, but are not required to keep them on the facility. (iii) These recordings must include the begin times, end times, and volumes for all flaring and venting incidents. (2) You must maintain flare/vent meter calibration and maintenance records on the facility for 2 years. E:\FR\FM\19APR1.SGM 19APR1 20293 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations (e) If your flaring or venting of gas, or burning of liquid hydrocarbons, required written or oral approval, you must submit documentation to the Regional Supervisor summarizing the location, dates, number of hours, and volumes of gas flared, gas vented, and liquid hydrocarbons burned under the approval. § 250.1164 What are the requirements for flaring or venting gas containing H2S? (a) You may not vent gas containing H2S, except for minor releases during maintenance and repair activities that do not result in a 15-minute timeweighted average atmosphere concentration of H2S of 20 ppm or higher anywhere on the platform. (b) You may flare gas containing H2S only if you meet the requirements of §§ 250.1160, 250.1161, 250.1163, and the following additional requirements: (1) For safety or air pollution prevention purposes, the Regional Supervisor may further restrict the flaring of gas containing H2S. The Regional Supervisor will use information provided in the lessee’s H2S Contingency Plan (§ 250.490(f)), Exploration Plan, DPP, DOCD, and associated documents to determine the need for restrictions; and (2) If the Regional Supervisor determines that flaring at a facility or group of facilities may significantly affect the air quality of an onshore area, the Regional Supervisor may require you to conduct an air quality modeling analysis, under § 250.303, to determine the potential effect of facility emissions. The Regional Supervisor may require monitoring and reporting, or may restrict or prohibit flaring, under §§ 250.303 and 250.304. (c) The Regional Supervisor may require you to submit monthly reports of flared and vented gas containing H2S. Each report must contain, on a daily basis: (1) The volume and duration of each flaring and venting occurrence; (2) H2S concentration in the flared or vented gas; and (3) The calculated amount of SO2 emitted. Other Requirements § 250.1165 What must I do for enhanced recovery operations? (a) You must promptly initiate enhanced oil and gas recovery operations for all reservoirs where these operations would result in an increase in ultimate recovery of oil or gas under sound engineering and economic principles. (b) Before initiating enhanced recovery operations, you must submit a proposed plan to the Regional Supervisor and receive approval for pressure maintenance, secondary or tertiary recovery, cycling, and similar recovery operations intended to increase the ultimate recovery of oil and gas from a reservoir. The proposed plan must include, for each project reservoir, a geologic and engineering overview, Form MMS–127 and supporting data as required in § 250.1167, and any additional information required by the Regional Supervisor. (c) You must report to Minerals Revenue Management the volumes of oil, gas, or other substances injected, produced, or produced for a second time under § 210.102 of this title. § 250.1166 What additional reporting is required for developments in the Alaska OCS Region? (a) For any development in the Alaska OCS Region, you must submit an annual reservoir management report to the Regional Supervisor. The report must contain information detailing the activities performed during the previous year and planned for the upcoming year that will: (1) Provide for the prevention of waste; (2) Provide for the protection of correlative rights; and (3) Maximize ultimate recovery of oil and gas. (b) If your development is jointly regulated by MMS and the State of Alaska, MMS and the Alaska Oil and Gas Conservation Commission will jointly determine appropriate reporting requirements to minimize or eliminate duplicate reporting requirements. (c) Every time you are required to submit Form MMS–127 under § 250.1155, you must request an MER for each producing sensitive reservoir in the Alaska OCS Region, unless otherwise instructed by the Regional Supervisor. § 250.1167 What information must I submit with forms and for approvals? You must submit the supporting information listed in the following table with the forms identified in columns 1 and 2 and for the approvals required under this subpart identified in columns 3 through 6: WReier-Aviles on DSKGBLS3C1PROD with RULES WPT MMS– 126 (2 copies) (a) Maps: (1) Base map with surface, bottomhole, and completion locations with respect to the unit or lease line and the orientation of representative seismic lines or cross-sections .................................. (2) Structure maps with penetration point and subsea depth for each well penetrating the reservoirs, highlighting subject wells; reservoir boundaries; and original and current fluid levels ........... (3) Net sand isopach with total net sand penetrated for each well, identified at the penetration point ................................................. (4) Net hydrocarbon isopach with net feet of pay for each well, identified at the penetration point ................................................. (b) Seismic data: (1) Representative seismic lines, including strike and dip lines that confirm the structure; indicate polarity .......................................... (2) Amplitude extraction of seismic horizon, if applicable ................ (c) Logs: (1) Well log sections with tops and bottoms of the reservoir(s) and proposed or existing perforations ................................................. (2) Structural cross-sections showing the subject well and nearby wells .............................................................................................. (d) Engineering data: VerDate Nov<24>2008 17:33 Apr 16, 2010 Jkt 220001 PO 00000 Frm 00055 Fmt 4700 SRI MMS– 127 (2 copies) Gas cap production Downhole commingling Reservoir reclassification Production within 500-ft of a unit or lease line ................ ................ √ √ ................ √ √ √ √ √ √ √ ................ * √ √ ................ * √ √ ................ ................ ................ ................ √ √ √ √ ................ √ √ √ √ √ √ √ √ √ ................ ................ √ √ √ * Sfmt 4700 E:\FR\FM\19APR1.SGM 19APR1 20294 Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules and Regulations WPT MMS– 126 (2 copies) (1) Estimated recoverable reserves for each well completion in the reservoir; total recoverable reserves for each reservoir; method of calculation; reservoir parameters used in volumetric and decline curve analysis ....................................................................... (2) Well schematics showing current and proposed conditions ....... (3) The drive mechanism of each reservoir ..................................... (4) Pressure data, by date, and whether they are estimated or measured ...................................................................................... (5) Production data and decline curve analysis indicative of the reservoir performance ................................................................... (6) Reservoir simulation with the reservoir parameters used, history matches, and prediction runs (include proposed development scenario) .............................................................................. (e) General information: (1) Detailed economic analysis ........................................................ (2) Reservoir name and whether or not it is competitive as defined under § 250.105 ............................................................................ (3) Operator name, lessee name(s), block, lease number, royalty rate, and unit number (if applicable) of all relevant leases .......... (4) Geologic overview of project ....................................................... (5) Explanation of why the proposed completion scenario will maximize ultimate recovery .......................................................... (6) List of all wells in subject reservoirs that have ever produced or been used for injection ............................................................. SRI MMS– 127 (2 copies) Gas cap production Downhole commingling Reservoir reclassification Production within 500-ft of a unit or lease line ................ ................ ................ √ ................ √ † √ √ † √ √ ................ ................ √ √ √ √ ................ ................ √ √ √ ................ ................ √ √ √ ................ ................ * * * * ................ ................ * * ................ √ √ √ √ √ ................ ................ ................ ................ √ √ √ √ ................ √ √ √ ................ ................ √ √ ................ √ ................ ................ √ √ √ √ √ Required. † Each Gas Cap Production request and Downhole Commingling request must include the estimated recoverable reserves for (1) the case where your proposed production scenario is approved, and (2) the case where your proposed production scenario is denied. * Additional items the Regional Supervisor may request. Note: All maps must be at a standard scale and show lease and unit lines. The Regional Supervisor may waive submittal of some of the required data on a case-by-case basis. (f) Depending on the type of approval requested, you must submit the appropriate payment of the service fee(s) listed in § 250.125, according to the instructions in § 250.126. [FR Doc. 2010–8798 Filed 4–16–10; 8:45 am] BILLING CODE 4310–MR–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [Docket No. USCG–2010–0102] RIN 1625–AA08 Special Local Regulation for Marine Events; Temporary Change of Dates for Recurring Marine Events in the Fifth Coast Guard District Coast Guard, DHS. Temporary final rule. AGENCY: WReier-Aviles on DSKGBLS3C1PROD with RULES ACTION: SUMMARY: The Coast Guard proposes to temporarily change the enforcement period of special local regulations for recurring marine events in the Fifth Coast Guard District. These regulations apply to only two recurring marine events that conduct power boat races. Special local regulations are necessary VerDate Nov<24>2008 17:31 Apr 16, 2010 Jkt 220001 to provide for the safety of life on navigable waters during the event. This action is intended to restrict vessel traffic in portions of the Western Branch, Elizabeth River, VA, and North Atlantic Ocean, Ocean City, MD during each event. DATES: Effective Date: This rule is effective in the CFR on April 19, 2010. This rule is effective with actual notice for purposes of enforcement from April 17, 2010 through May 31, 2010. ADDRESSES: Documents indicated in this preamble as being available in the docket are part of docket USCG–2010– 0102 and are available online by going to http://www.regulations.gov, inserting USCG–2010–0102 in the ‘‘Keyword’’ box, and then clicking ‘‘Search.’’ They are also available for inspection or copying at the Docket Management Facility (M–30), U.S. Department of Transportation, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: If you have questions on this temporary rule, call LT Tiffany Duffy, Project Manager, Sector Hampton Roads, Waterways Management Division, United States Coast Guard; telephone 757–668–5580, e-mail PO 00000 Frm 00056 Fmt 4700 Sfmt 4700 Tiffany.A.Duffy@uscg.mil. If you have questions on viewing or submitting material to the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202–366–9826. SUPPLEMENTARY INFORMATION: Regulatory Information The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are ‘‘impracticable, unnecessary, or contrary to the public interest.’’ Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because delaying the effective date would be contrary to the public interest since immediate action is needed to ensure the public’s safety during the Virginia State Hydroplane Championships and the Geico Offshore Grand Prix. Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal E:\FR\FM\19APR1.SGM 19APR1

Agencies

[Federal Register Volume 75, Number 74 (Monday, April 19, 2010)]
[Rules and Regulations]
[Pages 20271-20294]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-8798]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

[MMS-2008-OMM-0034]
RIN 1010-AD12


Oil and Gas and Sulphur Operations in the Outer Continental 
Shelf--Oil and Gas Production Requirements

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The MMS is amending the regulations regarding oil and natural 
gas production requirements. This is a complete rewrite of these 
regulations, addressing issues such as production rates, burning oil, 
and venting and flaring natural gas, to ensure appropriate development 
of these natural resources. The final rule eliminates most restrictions 
on production rates and clarifies limits on the amount of natural gas 
that can be flared or vented. The final rule is written using plain 
language, so it is easier to read and understand.

DATES: Effective Date: This rule is effective on May 19, 2010.

FOR FURTHER INFORMATION CONTACT: Amy C. White, Regulations and 
Standards Branch, 703-787-1665.

SUPPLEMENTARY INFORMATION:

Background

Notice of Proposed Rulemaking

    On March 6, 2007, the MMS published a Notice of Proposed Rulemaking 
(NPR) in the Federal Register (72 FR 9884). This NPR requested comments 
on proposed revisions to 30 CFR part 250, subpart K, Oil and Gas 
Production Rates. The MMS accepted comments on the NPR until June 4, 
2007 (90 days). We received eight comments on the NPR. These comments 
came from producers of oil and natural gas in the Outer Continental 
Shelf (OCS) and from the State of Alaska. The MMS made revisions to the 
proposed rule based on these comments.

Mandate of the Outer Continental Shelf Lands Act

    Under the OCS Lands Act (OCSLA), MMS has the responsibility to 
issue regulations governing oil and natural gas production operations 
on the OCS. Our regulations related to oil and natural gas operations 
are primarily based on three responsibilities given to the MMS by the 
OCSLA, these include:
    1. Safety;
    2. Protection of the environment; and
    3. Conservation of resources.
    The primary purpose of the final rule is to establish criteria for 
oil and natural gas production to ensure conservation of resources. 
These regulations help ensure that the American people received the 
maximum benefit from oil and natural gas production by maximizing the 
amount of oil and natural gas that is produced and marketed. For 
example, these regulations establish the criteria for natural gas 
flaring and venting and set limits on the time that natural gas may be 
flared or vented. These regulations are designed to work with other MMS 
regulations related to safety and protection of the environment and our 
other responsibilities under other Federal laws.
    The MMS regulates air quality under the authority of the Clear Air 
Act (CAA), for areas in the Gulf of Mexico located west of 87.5[deg] 
longitude (western Gulf of Mexico) and the Environmental Protection 
Agency (EPA) has authority for air quality elsewhere on the OCS. The 
MMS must coordinate with EPA to implement the CAA requirements. The EPA 
is responsible for setting National Ambient Air Quality Standards 
(NAAQS); MMS enforces those standards for oil and natural gas 
operations on the OCS. Our air quality requirements are located at 30 
CFR subpart C--Pollution Prevention and Control. In addition to the 
Subpart C regulations, oil and gas operators must submit projected air 
emissions for their entire project as part of their Development and 
Production Plan (DPP) or their Development Operations Coordination 
Document (DOCD) at 30 CFR 250.249. Requests to flare or vent natural 
gas must not exceed the volume approved by MMS in the DPP or DOCD.
    The MMS also reviews the flaring and venting requests to determine 
if they trigger an air quality review under 30 CFR subpart C. However, 
the flaring and venting limits set in these final regulations are low 
enough that additional air quality review is seldom required.
    With regards to greenhouse gas emissions, MMS recognizes that this 
is an important issue. The CAA requires MMS to coordinate our air 
quality regulations with EPA. If EPA establishes a NAAQS for greenhouse 
gas emissions, MMS would be responsible for enforcing those standards 
in the western Gulf of Mexico and we would develop regulations to 
implement that authority under the regulations at 30 CFR subpart C, as 
appropriate.

Purpose of These Revisions

    The MMS is revising subpart K to:
    (1) Update the structure and readability of the rule, bringing it 
into compliance with the Department of the Interior (DOI) plain 
language guidance;
    (2) Eliminate unnecessary requirements;
    (3) Clarify limits on the amount of natural gas that may be flared 
or vented during certain situations;
    (4) Improve collection of data on flaring and venting; and
    (5) Incorporate several existing Notices to Lessees (NTLs).
    The DOI requires agencies to write regulations in plain language, 
that is in a style that will ensure the regulations are easy to read 
and clear. The MMS follows DOI's plain language guidelines when 
creating new regulations or updating existing regulations. These 
regulations were originally written before plain language standards 
were required; we are updating the entire subpart to comply with those 
standards.
    Some requirements from the current subpart K regulations are 
eliminated by the final rule because they are unnecessary in today's 
petroleum industry. For example, MMS required operators to establish 
maximum production rates (MPRs) for producing well completions, and 
maximum efficient rates (MERs) for producing reservoirs, in OCS Order 
No. 11 in 1974,

[[Page 20272]]

during a period of oil shortages and energy crises. In 1988, MMS 
reduced the MER requirement. Currently, MERs are required only on 
sensitive reservoirs (primarily oil reservoirs with associated gas 
caps). Determining and maintaining production rates imposes a 
significant burden on operators. Based on the past 30 years of 
experience, MMS concluded that maximum rate requirements and production 
balancing requirements can be largely eliminated without detriment to 
efforts for conservation and maximization of ultimate recovery. 
However, the final rule will allow the Regional Supervisor to set 
production rates in cases where excessive production rates could harm 
ultimate recovery from the reservoir.
    The final rule clarifies limits on the length of time of natural 
gas that may be flared or vented in certain situations. The final rule 
requires approval from the Regional Supervisor to flare or vent natural 
gas except for situations that are described in the rule. The 
situations that don't require Regional Supervisor approval (provided 
the activities are completed within a specific time frame in most 
cases) include:
    (1) When the gas is lease use gas (produced natural gas which is 
used on or for the benefit of lease operations such as gas used to 
operate production facilities) or is used as an additive necessary to 
burn waste products, such as H2S.
    (2) During the restart of a facility that was shut in because of 
weather conditions, such as a hurricane.
    (3) During the blow down of transportation pipelines downstream of 
the royalty meter.
    (4) During the unloading or cleaning of a well, drill-stem testing, 
production testing, other well-evaluation testing, or the necessary 
blow down to perform these procedures.
    (5) When properly working equipment yields flash gas (natural gas 
released from liquid hydrocarbons as a result of a decrease in 
pressure, an increase in temperature, or both) from storage vessels or 
other low-pressure production vessels, and you cannot economically 
recover this flash gas.
    (6) When the equipment works properly but there is a temporary 
upset condition, such as a hydrate or paraffin plug.
    (7) When equipment fails to work properly, including equipment 
maintenance and repair, or when you must relieve system pressures.
    We explain the length of time that gas may be flared or vented for 
each situation and clarify when approval from the Regional Supervisor 
is required. Regardless of the reason for flaring or venting natural 
gas, the lessee or operator must report the amounts to MMS. The final 
rule requires separate reporting of the amount of natural gas flared 
and the amount of natural gas vented. This separate reporting 
requirement is in response the GAO report recommending that MMS collect 
these numbers separately. The MMS will publish the raw data on our Web 
site, along with other oil and natural gas production data. The 
Department of Energy's Energy Information Administration uses this 
production data for their statistics and analysis. This requirement 
will improve the quality of the data that is available on natural gas 
emissions.
    The final rule clarifies required information submittals to MMS, 
including requirements relating to the documents submitted to MMS and 
the timing of those submissions. For example, there are additional 
requirements on notifying adjoining operators regarding production 
within 500 feet of a common lease or unit line. The final rule provides 
more detail as to when the notification must occur, what the notice 
must include, and how to verify the notification with MMS.
    There are several Notices to Lessees (NTLs) that will be rescinded 
when the final rule becomes effective. However, if necessary, MMS will 
issue additional NTLs to provide guidance. We will rescind the 
following NTLs:
     NTL No. 97-16, Production Within 500 Feet of a Unit or 
Lease Line, effective August 1, 1997.
     NTL No. 98-23, Interim Reporting Requirements for 30 CFR 
part 250, subpart K, Oil and Gas Production Rates, effective October 
15, 1998.
     NTL No. 99-G20, Downhole Commingling Applications, 
effective September 7, 1999.
     NTL No. 2006-N06, Flaring and Venting Approvals, effective 
December 19, 2006.

This NTL also provides contact information for each Region and provides 
sample field records. These two items are not addressed in the final 
rule. The MMS will issue a new NTL to include only this information, 
after the effective date of this final rule.

GAO Report

    In July 2004, the GAO issued a report on world-wide emissions from 
vented and flared natural gas titled, Natural Gas Flaring and Venting--
Opportunities to Improve Data and Reduce Emissions (GAO-04-809). This 
report is available on the GAO Web site at: http://www.gao.gov/new.items/d04809.pdf. This report reviewed the flaring and venting data 
available, the extent of flaring and venting, their contributions to 
greenhouse gas emissions, and opportunities for the Federal Government 
to reduce flaring and venting.
    The report concluded that more accurate records are needed on 
flaring and venting to determine the amount of the resource that is 
lost and the volume of greenhouse gas emissions these practices 
contribute to the atmosphere each year. The report also stated that the 
impact of methane (a naturally occurring gas released during venting) 
on the earth's atmosphere is about 23 times greater than that of carbon 
dioxide (a byproduct of flaring). The GAO made two recommendations to 
the Secretary of the Interior: (1) Consider the cost and benefit of 
requiring that companies flare the natural gas, whenever possible, when 
flaring or venting is necessary; and (2) consider the cost and benefit 
of requiring that companies use flaring and venting meters to improve 
oversight. In addition, there was a recommendation to the Secretary of 
Energy to consider consulting with EPA (Environmental Protection 
Agency), MMS, and BLM (Bureau of Land Management), on how to best 
collect separate statistics on flaring and venting.
    The MMS conducted analyses to assess the costs and benefits of 
requiring flare/vent meters and of requiring flaring instead of 
venting. The first analysis supported the recommendation to require 
meters, provided that the facilities process more than 2,000 barrels of 
oil per day (bopd). This requirement is included in the final rule.
    The second analysis indicated that a regulatory change to require 
flaring instead of venting may be appropriate. However, the cost of 
implementing this requirement could be significant, and input from 
potentially affected parties is necessary. We requested comments on 
this issue in the proposed rule. Commenters pointed out that converting 
existing facilities that are equipped to vent natural gas to be able to 
flare natural gas may require significant redesign for safety. They 
also pointed out that there are many factors in determining whether to 
flare natural gas or vent natural when designing a facility. These 
factors include the operating philosophy, nature and type of reservoir, 
facility design limitations or capabilities, operating practices, 
safety, and economics. Industry comments were consistent in 
recommending that in addition to the considering requiring flaring 
instead of venting, that MMS work with them to find ways to reduce 
overall natural gas emissions. They also stated that a

[[Page 20273]]

requirement for flaring instead of venting should be only for new 
facilities. They requested that MMS hold a workshop to discuss the 
issue. The MMS plans to work directly with interested parties to study 
the costs and benefits of requiring that companies flare the natural 
gas, whenever possible, when flaring or venting is necessary, as 
recommended in the GAO report. We will hold a workshop to discuss the 
issue of flaring instead of venting, shortly after this final rule is 
published. This workshop and additional cost-benefit analysis will 
consider greenhouse gas issues associated with flaring and venting. The 
workshop will be the first step in considering how to best implement 
this recommendation. The MMS will decide how to move forward with the 
rulemaking on flaring natural gas after we hold the workshop. Our next 
step would likely be an advance notice of proposed rulemaking to 
further vet our approach with industry and other stakeholders.
    To improve data collection, as the GAO report suggested, MMS will 
require operators to report flaring and venting volumes to MMS 
separately. Previously, MMS only collected information on the total 
natural gas flared and vented. Operators did not need to differentiate 
between the two categories.

Oil and Gas Industry Contributions to Greenhouse Gases in the Federal 
OCS

    Most natural gas production involves extracting natural gas from 
wells drilled into underground gas reservoirs; however, some natural 
gas is generated as a by-product of oil production. During oil and 
natural gas production it may become necessary to burn or release 
natural gas for a number of operational reasons, including safety. 
These operations may be associated with unloading or cleaning of a 
well, production testing, or relieving system pressure during equipment 
failure. The controlled burning of natural gas is called flaring, while 
the controlled release of unburned gases directly into the atmosphere 
is called venting. Most flaring and venting occurs at the end of a 
flare stack or boom which ensures that natural gas can be safely 
disposed of in emergency and shutdown situations. It is virtually 
impossible to produce oil and natural gas without any flaring or 
venting and it would be impractical to shut in production every time an 
upset occurs. It is estimated that operators in the Gulf of Mexico 
Outer Continental Shelf (OCS) flare and vent less than 0.5 percent of 
the gas produced, making this area a world leader in the conservation 
of natural gas resources.
    Both flaring and venting on the OCS are highly regulated by the 
Minerals Management Service (MMS). Federal regulations (30 CFR 250, 
Subpart K) specify the limited circumstances under which offshore oil 
and gas operators may flare or vent natural gas. These final 
regulations strictly limit the amount of time operators may flare or 
vent. In some cases, operators request additional time in order to 
complete equipment repairs. We evaluate each of these requests on a 
case-by-case basis, with conservation as a primary focus.
    Even though they are already a world leader, MMS continuously 
strives to improve our oversight of OCS flaring and venting. In most 
places around the world, for example, there is minimal reporting or 
tracking of flare and/or vent volumes. In the Federal OCS, MMS requires 
operators to continuously record these volumes and report them each 
month. These final regulations will require operators to install flare/
vent meters on large platforms and also to report gas flared separately 
from gas vented. These regulatory changes would provide more accurate 
measurements of GHG emissions.
    Given the existing restrictions on OCS flaring and venting, there 
is minimal opportunity to further reduce the overall volume of gas 
flared and vented. However, the global warming potential (GWP) of GHG 
emissions could be reduced if MMS were to require operators to flare 
instead of vent (when the release of natural gas is necessary). Such a 
requirement would reduce the GWP of GHG emissions by converting most 
methane to carbon dioxide as it is released. As previously stated, MMS 
is planning a workshop to address this topic.
    It is difficult to estimate the impact that flaring instead of 
venting would have on GHG emissions until we begin to gather more 
accurate data from the requirement to install flare/vent meters and to 
report flare volumes separately from vent volumes. Furthermore, it is 
impractical, if not impossible, to eliminate all venting. Even if 100% 
of the released OCS gas could be flared instead of vented, the impact 
on total U.S. GHG emissions would be very small.
    In 2005, U.S. greenhouse gas (GHG) emissions totaled 7.986 x 10 \9\ 
tons of carbon dioxide equivalent (CO2e). Of that total, 
only 24.7 x 10 \6\ tons of CO2e, or 0.31 percent, were 
related to OCS oil and gas production (including platform and non-
platform sources), flaring and venting activities represent only a 
fraction of that amount. Under MMS oversight, OCS oil and gas operators 
are already ahead of the curve in terms of limiting GHG emissions.
    Based on several assumptions, estimates, and existing analyses, MMS 
roughly approximated the impact that might occur if it were to mandate 
flaring over venting. These estimates indicate that such a requirement 
would reduce total US GHG emissions by less than 0.05%. However, the 
accuracy of these estimates will improve after the regulatory change 
becomes final. Reported OCS flare and vent volumes could increase or 
decrease based solely on improved reporting accuracy. In any event, 
further analysis may shed light on whether flaring rather than venting 
natural gas is cost effective from a greenhouse gas perspective, even 
if the total amount of greenhouse gases is small.

Public Comments on the Proposed Rule

    The MMS received eight sets of comments on the NPR from industry 
trade groups and representatives and one comment from the State of 
Alaska. The MMS reviewed and responded to these comments as 
appropriate. To help convey the comments, we summarized and combined 
similar comments. The results are explained in the following two 
tables. Table 1 contains our responses to general comments and Table 2 
addresses comments on specific sections.

[[Page 20274]]



                Table 1--MMS Response to General Comments
------------------------------------------------------------------------
                  Comment                           MMS response
------------------------------------------------------------------------
                               Measurement
------------------------------------------------------------------------
(1) Measurement accuracy for flared or      The MMS agrees. We will
 vented gas envisioned by rule is not        revise the accuracy
 achievable given the wide range of          requirement from 2 percent
 conditions to which the meter would be      to 5 percent. This is
 exposed.                                    established technology in
                                             the North Sea and Canada,
                                             and a 5 percent accuracy
                                             requirement has been
                                             adopted by regulatory
                                             bodies in those regions.
                                             Also, flare/vent meters
                                             with this accuracy are
                                             already used on some Gulf
                                             of Mexico (GOM) facilities.
(2) Retrofitting may be a problem due to    Installation of meters is
 space limitations and safety concerns.      necessary to improve
                                             oversight of MMS's flare/
                                             vent program. A cost-
                                             benefit analysis conducted
                                             by MMS supports GAO's
                                             recommendation to install
                                             meters on all facilities
                                             that process more than
                                             2,000 bopd. The Regional
                                             Supervisor will work with
                                             operators on a case-by-case
                                             basis if a safety or space
                                             issue is demonstrated, as a
                                             departure under Sec.
                                             250.142.
(3) If deferment of this part of the rule   Installation of meters is
 is not acceptable, it is recommended that   necessary to improve
 meters be limited to new facilities under   oversight of MMS's flare/
 construction 6 months after date that       vent program. The cost-
 final rule is published.                    benefit analysis concluded
                                             that meters on all
                                             facilities processing over
                                             2,000 bopd is appropriate,
                                             not just new facilities.
                                             Also, metering flare/vent
                                             volumes on all (existing
                                             and future) facilities
                                             processing over 2,000 bopd
                                             better implements the GAO
                                             recommendations.
(4) Defer requirement to install meters on  The MMS has sufficient
 all offshore complexes processing 2,000     information to finalize the
 bopd to develop a best practice with        rule. Additional input from
 industry that would have broad              industry groups is not
 applicability to all facilities on the      necessary and would delay
 OCS, not just those processing 2,000        implementation of GAO
 bopd.                                       recommendations. We agree
                                             that there should be a best
                                             practice established for
                                             estimating volumes of gas
                                             flared or vented from
                                             facilities processing less
                                             than 2,000 bopd. However,
                                             metering is more accurate,
                                             and requiring meters on
                                             those facilities that
                                             process more than 2,000
                                             bopd is consistent with the
                                             GAO recommendations.
(5) The number of facilities impacted by    The commenter did not
 the rule has been underestimated since      provide an alternate,
 multiple facilities may be involved in      documented number;
 processing/handling production streams.     therefore, MMS must use our
                                             best analysis.
(6) Cost impact of the rule has been        A higher cost estimate was
 underestimated.                             provided by the commenter.
                                             We used the cost model that
                                             was submitted by the
                                             commenter in our cost-
                                             benefit analysis and
                                             determined that the
                                             difference is negligible
                                             and that a 2,000 bopd
                                             threshold for metering is
                                             still appropriate.
(7) Set a thousand cubic feet (MCF) volume  Volume estimates calculated
 per day vented, calculated by test,         from a test are far less
 rather than having a mandatory metering     accurate than metered
 system.                                     volumes and would not
                                             achieve the improvements
                                             recommended by GAO.
(8) These meters should not be subject to   Flare/vent meters are
 the requirements of Subpart L.              subject to the requirements
                                             of Subpart K.
(9) Cost is a huge burden to smaller        See responses (2) and (6).
 facilities; increase meter requirement to   Also see discussion
 facilities with average throughput of       concerning the Regulatory
 10,000 bopd or more.                        Flexibility Act.
(10) Revise time to install meters from     The MMS agrees. We will
 120 days to 180 days to accommodate         revise the time allowed to
 design, shipping, and labor.                install meters from 120 to
                                             180 days for facilities
                                             processing more than 2,000
                                             bopd when this final rule
                                             becomes effective. The time
                                             allowed to install meters
                                             on facilities that begin
                                             producing above 2,000 bopd,
                                             after this final rule is
                                             published, will also be
                                             revised from 90 to 120
                                             days.
(11) Revise accuracy to 15 percent.         The MMS disagrees. See
                                             response (1).
(12) Meter high flow events, calculate      The MMS disagrees. See
 others.                                     response (2).
(13) What if we don't have a flow when we   At a minimum, calibration/
 schedule a calibration? Most of our         verification of secondary
 flaring/venting is done during upset or     devices associated with
 emergency situations. Flare pilot must be   flare/vent meters can be
 kept on at all times, hence, inert gas      performed in a no-flow
 such as nitrogen cannot be used as it       situation in accordance
 will pose a safety issue by extinguishing   with American Petroleum
 the pilot flame.                            Institute's (API) Manual of
                                             Petroleum Measurement
                                             Standards (MPMS) Chapter 14
                                             Section 10. Also,
                                             contingent upon the meter
                                             type, verification may
                                             include the performance of
                                             manufacturer recommended
                                             inspections and
                                             diagnostics. However, after
                                             further review, we
                                             determined that calibrating
                                             meters once a year is
                                             adequate.
(14) The time required to bring an          The MMS agrees. See response
 existing facility into compliance would     (10).
 far exceed 120 days.
(15) Establish best practices for existing  The limits on flaring and
 facilities to reduce overall levels of      venting set by these
 gas vented/flared.                          regulations are minimal,
                                             additional reductions in
                                             the levels of natural gas
                                             flared or vented would not
                                             reduce the need for meters.
                                             However, MMS does agree
                                             that industry should
                                             establish best practices
                                             for reducing the amount of
                                             natural gas flared or
                                             vented and we will include
                                             this topic as part of the
                                             flaring and venting
                                             workshop we are planning.
(16) Multiple meters would be required on   The MMS anticipates 2 or 3
 most facilities.                            meters on most facilities
                                             where meters are required.
                                             That is, one for each
                                             pressure system (High
                                             Pressure (HP), Intermediate
                                             Pressure (IP), and Low
                                             Pressure (LP)) that exists
                                             on the facility. The meters
                                             would likely be located
                                             near the base of the flare
                                             boom just before the piping
                                             for that pressure system
                                             exits the facility.

[[Page 20275]]

 
(17) Wait for completion of API RP on       The MMS has sufficient
 measurement and allocation.                 information to finalize the
                                             rule. As API Recommended
                                             Practices (RP) are
                                             published, MMS will
                                             consider incorporating
                                             these into our regulations.
(18) Future workshop should be planned to   The MMS will hold a workshop
 discuss solutions and best practices.       after this final rule is
                                             issued. This will be
                                             included as a topic as part
                                             of our workshop on flaring
                                             and venting.
(19) Where did 2,000 bopd come from?        The MMS conducted a cost-
                                             benefit analysis looking at
                                             equipment costs, gas
                                             prices, and platform life
                                             to determine a minimum
                                             production rate that could
                                             support the installation of
                                             flare/vent meters. Also see
                                             Regulatory Flexibility Act
                                             discussion.
------------------------------------------------------------------------
                             Flaring/Venting
------------------------------------------------------------------------
(20) Converting to flare on existing        The MMS is still evaluating
 facilities may require redesign for         the flare versus vent issue
 safety.                                     and will hold an industry
                                             workshop to collect
                                             additional information.
(21) Limiting the flaring or venting of     We have always distinguished
 gas-well gas to 2 hours and allowing 48     between gas-well gas and
 continuous hours for oil-well gas when a    oil-well gas. The prior
 hydrate plug forms is not consistent with   regulation stated that
 prior guidance and actions. Previous MMS    ``lessees must not flare or
 guidance made no distinction between gas-   vent gas-well gas beyond
 well gas and oil-well gas if the plug       the time required to
 (hydrate) formed naturally.                 eliminate an emergency
                                             unless the Regional
                                             Supervisor approves.'' MMS
                                             policy has consistently
                                             been to allow 2 hours to
                                             eliminate the flare or vent
                                             under this rule. We added
                                             an exception for hydrate
                                             plugs under Sec.
                                             250.1160(a)(6).
(22) Short comment period for response did  The MMS included information
 not allow industry to develop detailed      in the preamble on the
 comments on flaring versus venting.         flaring versus venting
                                             issue because it was
                                             addressed in the GAO
                                             report, and we wanted
                                             operators to be aware that
                                             MMS is considering possible
                                             changes to the regulations
                                             to address this issue in
                                             the future. The MMS is
                                             still evaluating this issue
                                             and we may hold a workshop
                                             to collect additional
                                             information, before
                                             proposing new regulations
                                             on this issue.
(23) Retain records for 2 years instead of  There was no change proposed
 6 years.                                    here; this is merely a
                                             clarification that existing
                                             law (30 U.S.C. 1713,
                                             implemented at 30 CFR part
                                             212) applies to flare/vent
                                             records. Those records must
                                             be maintained for 6 years
                                             (in accordance with 30
                                             U.S.C. 1713 and 30 CFR part
                                             212), in addition to being
                                             maintained on the facility
                                             for 2 years and available
                                             for inspection by MMS
                                             personnel.
------------------------------------------------------------------------
                              Miscellaneous
------------------------------------------------------------------------
(24) How much of the MMS budget is being    The total discretionary
 supported by the cost recovery program at   budget for MMS in Fiscal
 this time; is an evaluation of the fee      Year 2007 was $288.2
 structure being carried out to adjust for   million. Total revenue
 actual agency needs?                        generated by cost recovery
                                             fees that year totaled
                                             $11.9 million or 4.1
                                             percent of the total MMS
                                             discretionary budget. The
                                             MMS recently adjusted these
                                             fees by the Implicit Price
                                             Deflator for the Gross
                                             Domestic Product, as
                                             provided by regulation. The
                                             MMS plans to review cost
                                             recovery fees in the coming
                                             year. Should this review
                                             result in a need to change
                                             the fees significantly,
                                             rulemaking will be required
                                             and a proposed rule will be
                                             published in the Federal
                                             Register for public review
                                             and comment.
                                            Fees are established in
                                             accordance with the
                                             Independent Offices
                                             Appropriation Act of 1952,
                                             31 U.S.C. 9701. It should
                                             be noted that MMS does not
                                             determine or adjust cost
                                             recovery fees to meet a pre-
                                             determined funding target,
                                             but rather to reflect the
                                             cost of actual services
                                             provided.
(25) The OOC, in conjunction with API,      The MMS has sufficient
 will commit to the development of a         information to finalize
 technical document or RP that would         this final rule. As API RPs
 address quantification, including volume,   are published, MMS will
 mass, and composition of flare and vent     consider incorporating
 quantities within the oil and gas           these into our regulations.
 production process. The OOC proposes to
 start working on this document now,
 concurrent with the subpart K final
 rulemaking; document and workshops to
 industry could occur within 18 months.
(26) For the protection of the State of     The MMS does not agree that
 Alaska's correlative rights, require        this final rule violates
 approval for operators to produce within    State correlative rights.
 500 ft of a lease or unit line even if      The MMS understands the
 adjacent acreage is unleased, allow State   State of Alaska's interest
 to comment.                                 in protecting its
                                             correlative rights in the
                                             event of development and
                                             production from an OCS
                                             lease adjacent to State
                                             unleased lands. Under the
                                             MMS regulatory process, the
                                             State of Alaska will
                                             receive and will have the
                                             opportunity to comment on
                                             each OCS Development and
                                             Production Plan (DPP) (30
                                             CFR part 250 subpart B). A
                                             DPP will include
                                             information on surface and
                                             bottom hole locations to
                                             enable the State of Alaska
                                             to determine if its
                                             correlative rights are at
                                             risk. The State of Alaska
                                             is entitled to copies of
                                             the Application(s) for
                                             Permit to Drill (APD) to
                                             monitor and assure that
                                             activities are conducted in
                                             accordance with an approved
                                             DPP.
------------------------------------------------------------------------


[[Page 20276]]


       Table 2--MMS Response to Comments on Specific Requirements
------------------------------------------------------------------------
         Citation/comment                       MMS response
------------------------------------------------------------------------
Sec.   250.1153(b)(2)--Consider     The MMS is not implementing this
 completions with downhole gauges    suggestion in the final rule. This
 instead of requiring bottomhole     configuration results in a single
 pressure surveys.                   pressure measurement, which is not
                                     a survey. A survey is required in
                                     order to establish a pressure
                                     gradient, which is used to correct
                                     reservoir pressures to a common
                                     datum. As stated in Sec.
                                     250.1153(d), industry may continue
                                     to request departures from this
                                     requirement, if necessary.
Sec.   250.1160(a)--Add gas-well    Wording in the final rule will
 flash gas.                          change from oil-well gas or gas-
                                     well gas to natural gas. This
                                     wording covers the venting or
                                     flaring of all natural gas
                                     regardless of the well type.
Sec.   250.1160(a)(3)(i)--Neither   The commenter is correct, approval
 lease nor pipeline operator needs   under this subpart will not be
 MMS approval to blowdown            required for this situation since
 pipelines downstream of royalty     the activity is downstream of the
 meters.                             royalty meter; however, flaring or
                                     venting must be reported after the
                                     fact in accordance with this final
                                     rule. Approvals may be required
                                     under subparts H and J of this
                                     part.
Sec.   250.1160(a)(4)--Include      The MMS agrees. The wording was
 unloading or cleaning of a well     modified to be consistent with the
 in addition to testing under the    Condition column.
 Additional requirements column.
Sec.   250.1160(a)(5)--Define the   Since economic conditions vary with
 amount of routine flaring or        time, MMS cannot specify a fixed
 venting that is considered          volume higher than 50 MCF per day.
 uneconomic.                         The Additional requirements column
                                     clearly indicates that a monthly
                                     average volume equal to 50 MCF per
                                     day or less is assumed by MMS to be
                                     uneconomic. If your facility
                                     averages more than 50 MCF per day,
                                     you will be expected to capture the
                                     gas or demonstrate that the volume
                                     is uneconomic and continue to
                                     monitor the economic viability as
                                     costs and prices change.
Sec.   250.1160(a)(6)--The time     The initial cause of the problem
 necessary to unload a well after    will determine where the incident
 an upset is remedied should be      falls (either Sec.
 granted under Sec.                  250.1160(a)(2), (a)(4), (a)(6), or
 250.1160(a)(4) and should not be    (a)(7)). For example, an operator
 included in the 48 continuous       may flare oil-well gas without
 hours or 144 cumulative hours       prior approval for 48 continuous
 allowed under Sec.                  hours in order to remediate a
 260.1160(a)(6) (upset due to        hydrate plug. However, that
 hydrate plugs, etc.).               operator may not continue to flare
                                     without approval for an additional
                                     48 hours in order to unload the
                                     well after the hydrate plug is
                                     remediated. In this example, the
                                     initial cause of the problem was a
                                     hydrate plug; therefore, the
                                     operator will only be authorized to
                                     flare oil-well gas for up to 48
                                     continuous hours without approval
                                     (under Sec.   250.1160(a)(6)).
Sec.   250.1160(a)(7)--The          The initial cause of the problem
 cumulative time allowed in          will determine where the incident
 paragraph (a)(4) should also be     falls (either Sec.
 included in (a)(7)(iv). The hours   250.1160(a)(2), (a)(4), (a)(6), or
 accumulated to restore/optimize     (a)(7)) and therefore the time
 production should not impact the    allotted to perform the work
 hours accrued due to equipment      related to the incident. If an
 failures.                           equipment failure results in a need
                                     to flare or vent under Sec.
                                     250.1160(a)(7), any additional
                                     procedures needed to restore
                                     production (e.g., well blow down),
                                     must be performed within the time
                                     allotted under Sec.
                                     250.1160(a)(7). The operator would
                                     need to request approval from the
                                     Regional Supervisor if additional
                                     time is needed.
Sec.   250.1160(b)--Subpart C is    The MMS agrees that it is not
 sufficient to regulate pollution    necessary to mention subpart C in
 issues, mentioning Subpart C in     subpart K. The MMS also agrees that
 Subpart K is redundant and          production upsets may not lend
 confusing. Production upsets are    themselves to prior approval.
 not anticipated and therefore       Paragraph (a) details the periods
 would not lend themselves to        allowable during production upsets
 prior approval.                     before MMS approval is required.
                                     Regardless of whether or not
                                     operators need and receive prior
                                     approval under (a), however, they
                                     are still obligated to follow their
                                     approved Development Operations
                                     Coordination Document (DOCD) or DPP
                                     under subpart B. We reworded Sec.
                                     250.1160(b) to clarify that MMS
                                     flare or vent approvals granted
                                     under subpart K do not exempt
                                     operators from the requirement to
                                     follow their DOCD or DPP. Before
                                     flaring and/or venting an amount
                                     that exceeds the limits specified
                                     in their DOCD or DPP, operators
                                     must submit and receive approval of
                                     a revised DOCD or DPP.
Sec.   250.1160(e)--If MMS          The subject paragraph was eliminated
 approves flaring or venting, the    since negligence related to flaring
 volume should not be considered     and venting is adequately covered
 avoidably lost unless information   in the subsequent paragraph.
 provided was incorrect. Revise
 wording to state RS will evaluate
 flaring and venting requests to
 determine if situation exceeds
 those in Sec.   250.1160(a).
Sec.   250.1160(f)--If MMS          Additional wording referencing Sec.
 approves flaring or venting, the     250.1160(a) is not necessary.
 volume should not be considered     Although MMS does not intend to
 avoidably lost unless information   commonly determine gas to be
 provided was incorrect. Revise      avoidably lost after we have
 wording to state flaring or         approved the flaring or venting,
 venting in excess of situations     the Regional Supervisor must retain
 in Sec.   250.1160(a) without       full authority to make that
 approval, or if approval was        determination.
 obtained with misleading
 information, will be considered
 avoidably lost.
Sec.   250.1161(c)--Industry        The MMS agrees. Small leaks from
 supports addressing small leaks     valves, fittings, flanges, pressure
 from valves, etc., if all safety    relief valves or similar components
 concerns are addressed.             are considered fugitive emissions
                                     and are more appropriately
                                     addressed under 30 CFR 250.107
                                     (``What must I do to protect
                                     health, safety, property, and the
                                     environment?''). Note that this
                                     paragraph was reworded and
                                     renumbered as 30 CFR 250.1160(f).
Sec.   250.1162(a)--Include all     The MMS agrees. The word condensate
 liquid hydrocarbons, not just       will be replaced with liquid
 condensate.                         hydrocarbons.

[[Page 20277]]

 
Sec.   250.1163(a)--Metering--      The MMS has sufficient information
 defer this part until a workshop    to finalize this rule. Additional
 can be held with industry; work     input from industry groups is not
 in conjunction with API to          necessary and would delay
 develop a Technical Bulletin; not   implementation of GAO
 enough time to retrofit existing    recommendations. The meter accuracy
 facilities; high degree of          requirement has been changed from 2
 measurement accuracy is             percent to 5 percent. We changed
 unrealistic; if not deferred,       the time to install the meters on
 limit to new facilities; and        existing facilities from 120 days
 pulling a portion of the metering   to 180 days based on an industry
 requirement may conflict with the   comment. Thus rulemaking is
 Administration and Procedures Act.  consistent with the Administrative
                                     Procedure Act (5 U.S.C. Sec.   553,
                                     Rulemaking).
Sec.   250.1163(a)(3)--OGOR-B       Note--The proposed rule did not have
 submitted to MRM will not           a Sec.   250.1163(a)(3), this
 accommodate multiple facility       comment presumably refers to Sec.
 submissions. Flared or vented gas   250.1163(b)(3). The MMS agrees that
 at a host facility would have to    modified reporting on Form MMS-4054
 be allocated back to the lease.     Part B (OGOR-B) is required in
                                     order to implement this GAO
                                     recommendation. In order to
                                     implement this, Sec.
                                     250.1163(a)(1) of the final rule
                                     will require operators to notify
                                     MMS of all facilities that process
                                     more than 2,000 bopd and therefore
                                     require meters. The Regional
                                     Supervisor will then establish
                                     Facility Measurement Point (FMP)
                                     numbers for those metering
                                     locations. These FMP numbers will
                                     be used on the OGOR-B forms to
                                     identify the facilities where
                                     flaring and venting occurs.
                                     Further, in order to ease the
                                     reporting burden, the language will
                                     be modified from that in the
                                     proposed rule. Instead of requiring
                                     operators to associate all flared
                                     and vented volumes with the
                                     facilities where the flaring and
                                     venting occurred, such reporting
                                     (on OGOR-B forms) is only required
                                     for those facilities which are
                                     required to install flare/vent
                                     meters (Sec.   250.1160(b)(3)). For
                                     other facilities, operators must
                                     continue to report flared and
                                     vented volumes by lease or unit
                                     (Sec.   250.1163(b)(4)) (note that
                                     flared and vented volumes must be
                                     separated regardless of whether
                                     reporting is by facility, lease, or
                                     unit). Additionally, MRM will send
                                     guidance to operators on all other
                                     reporting requirements necessitated
                                     by this regulatory change.
Sec.   250.1163(b)(1)--Reporting    See response Sec.   250.1163(a)(3).
 separate flaring or venting on
 OGOR B will require modification
 to current reporting requirements.
Sec.   250.1163(b)(2)--Lease use    The MMS agrees. Section
 already reported on OGOR B.         250.1163(b)(2) requires reporting
                                     lease use gas on Form MMS-4054,
                                     which is the OGOR. This rule does
                                     not impose additional lease use
                                     reporting requirements. The wording
                                     was modified slightly to clarify
                                     this issue.
Sec.   250.1163(b)(3)--Reporting    See response Sec.   250.1163(a)(3).
 flaring or venting from multiple
 facilities separately on a single
 lease is redundant and requires
 changes from industry and MRM.
 These records are kept at each
 facility and could be requested
 from the operator as needed to
 eliminate this burdensome
 requirement.
Sec.   250.1163(c)--Industry sends  The MMS disagrees. Summary
 a letter summarizing pertinent      information submitted in a letter
 flaring or venting information      following an oral approval is only
 after receiving oral approval to    a portion of the required records
 flare or vent; requiring actual     to be saved on location. A complete
 flaring or venting records be       record must be maintained on each
 kept on location is redundant.      facility for routine inspections by
                                     MMS personnel.
Sec.   250.1164(b)(1)--Subpart C    The MMS agrees. This paragraph was
 is sufficient to regulate           deleted.
 pollution issues.
Sec.   250.1167-General--Requiring  Data submitted for an early
 the following additional            application would often be obsolete
 information is burdensome and       interpretations and result in
 redundant to data previously        inaccurate conclusions.
 submitted in other documents        Furthermore, receiving the data in
 (e.g. CIDs).                        separate submittals will expedite
                                     MMS review of industry
                                     applications.
Sec.   250.1167(a)(3)--net sand
 isopach.
Sec.   250.1167(a)(4)--net
 hydrocarbon isopach.
Sec.   250.1167(b)(2)--amplitude
 maps.
Sec.   250.1167(d)(1)--estimated
 recoverable reserves for each
 completion in a reservoir.
Sec.   250.1167(e)(2)--reservoir
 name and whether it is
 competitive.
------------------------------------------------------------------------

    After reviewing and responding to the comments, MMS changed the 
appropriate rule language as specified in the MMS comment response. 
Table 3 compares the changes from the NPR to this final rule.

       Table 3--Changes From the Proposed Rule to This Final Rule
------------------------------------------------------------------------
  Citation--description, or       Proposed rule
    reason for the change           language         Final rule language
------------------------------------------------------------------------
Sec.   250.105--Removed the   Flaring means the     Flaring means the
 phrase ``in the field''       burning of gas in     burning of natural
 from the definition of        the field as it is    gas as it is
 Flaring. This phrase is not   released into the     released into the
 necessary, since all          atmosphere.           atmosphere.
 activities under this
 regulation take place in
 the field. Also, changed
 ``gas'' to ``natural gas''
 for clarity.

[[Page 20278]]

 
Sec.   250.105--Revised the   Sensitive reservoir   Sensitive reservoir
 definition of Sensitive       means a reservoir     means a reservoir
 reservoir to state that it    in which high         in which the
 is a reservoir in which the   reservoir             production rate
 production rate will affect   production rates      will affect
 ultimate recovery. This is    will decrease         ultimate recovery.
 a more accurate and           ultimate recovery.
 inclusive definition.
Sec.   250.1150--Revised      You must produce      You must produce
 wording back to the text in   wells and             wells and
 the existing rule, changed    reservoirs at rates   reservoirs at rates
 ``without harming ultimate    that provide for      that provide for
 recovery'' to ``while         economic              economic
 maximizing ultimate           development without   development while
 recovery''. This wording is   harming ultimate      maximizing ultimate
 more consistent with our      recovery and          recovery and
 mission and with the          without adversely     without adversely
 requirements of the final     affecting             affecting
 rule.                         correlative rights.   correlative rights.
Sec.   250.1151(c)--Revised   You must submit an    You must submit to
 language to clarify           original and one      the Regional
 submittal requirement for     copy of the form      Supervisor an
 the required form (either     required by           original and two
 form MMS-126 or MMS-128).     paragraph (a) of      copies of the
 Three copies of the form      this section, as      appropriate form
 must be submitted, one of     listed in the table   required by
 those copies is a public      in Sec.   250.1167.   paragraph (a) of
 information copy. A public    You must include      this section; one
 information copy of the       one public            of the copies of
 supporting documents is not   information copy      the form must be a
 required, therefore only      with each submittal   public information
 two copies of the             in accordance with    copy in accordance
 supporting information must   Sec.  Sec.            with Sec.  Sec.
 be submitted.                 250.190 and           250.186 and
                               250.196, and mark     250.197, and marked
                               that copy ``Public    ``Public
                               Information''.        Information.'' You
                                                     must submit two
                                                     copies of the
                                                     supporting
                                                     information as
                                                     listed in the table
                                                     in Sec.   250.1167
                                                     with form MMS-126.
Sec.   250.1153(d)--          The Regional          The Regional
 Clarified language on         Supervisor may        Supervisor may
 requesting a departure from   grant a departure     grant a departure
 conducting a static           from the              from the
 bottomhole pressure survey    requirement to run    requirement to run
 to specify what information   a static bottomhole   a static bottomhole
 must be included with the     pressure survey.      pressure survey. To
 request.                      You must request a    request a
                               departure by          departure, you must
                               letter, along with    submit a
                               Form MMS-140,         justification,
                               Bottomhole Pressure   along with Form MMS-
                               Survey Report. You    140, Bottomhole
                               must include          Pressure Survey
                               sufficient            Report, showing a
                               justification to      calculated
                               support the           bottomhole pressure
                               departure request.    or any measured
                                                     data.
Sec.   250.1154(a)(3)--       The reservoir is      The reservoir is
 Simplified wording--changed   undergoing            undergoing enhanced
 ``secondary or tertiary''     secondary or          recovery.
 to ``enhanced''. The term     tertiary recovery.
 enhanced includes secondary
 and tertiary recovery
 techniques.
Sec.   250.1154(b)--          For the purposes of   For the purposes of
 Restructured the paragraph,   this subpart, near-   this subpart, near-
 adding two subparagraphs.     critical fluids are   critical fluids
                               those fluids that     are: (1) Those
                               occur in high         fluids that occ