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

Agencies

• DEPARTMENT OF THE INTERIOR
• Minerals Management Service

[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]


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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.

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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: https://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