Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands, 31635-31677 [2013-12154]
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Vol. 78
Friday,
No. 101
May 24, 2013
Part II
Department of the Interior
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Bureau of Land Management
43 CFR Part 3160
Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands; Proposed
Rule
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Federal Register / Vol. 78, No. 101 / Friday, May 24, 2013 / Proposed Rules
DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Part 3160
[WO–300–L13100000.FJ0000]
RIN 1004–AE26
Oil and Gas; Hydraulic Fracturing on
Federal and Indian Lands
Bureau of Land Management,
Interior.
ACTION: Supplemental notice of
proposed rulemaking and request for
comment.
AGENCY:
On May 11, 2012, the Bureau
of Land Management (BLM) published
in the Federal Register a proposed rule
entitled Oil and Gas; Well Stimulation,
Including Hydraulic Fracturing, on
Federal and Indian Lands. The BLM has
used the comments on that draft to
make improvements and is now seeking
additional comment on a revised
proposed rule. Key issues in this
updated draft include: the use of an
expanded set of cement evaluation tools
to help ensure that usable water zones
have been isolated and protected from
contamination; and more detailed
guidance on how trade secrets claims
will be handled, modeled on the
procedures promulgated by the State of
Colorado. The revised proposed rule
would also provide opportunities for the
BLM to coordinate standards and
processes with individual States and
tribes to reduce administrative costs and
to improve efficiency.
DATES: Send your comments on this
supplemental notice of proposed
rulemaking (SNPR) to the BLM on or
before June 24, 2013. The BLM need not
consider, or include in the
administrative record for the final rule,
comments that the BLM receives after
the close of the comment period or
comments delivered to an address other
than those listed below (see ADDRESSES).
If you wish to comment on the
information collection requirements in
this SNPR, please note that the Office of
Management and Budget (OMB) is
required to make a decision concerning
the collection of information contained
in this SNPR between 30 to 60 days after
publication of this document in the
Federal Register. Therefore, a comment
to OMB is best assured of being
considered if OMB receives it by June
24, 2013.
ADDRESSES: Mail: U.S. Department of
the Interior, Director (630), Bureau of
Land Management, Mail Stop 2134 LM,
1849 C St. NW., Washington, DC 20240,
Attention: 1004–AE26. Personal or
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SUMMARY:
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messenger delivery: Bureau of Land
Management, 20 M Street SE., Room
2134 LM, Attention: Regulatory Affairs,
Washington, DC 20003. Federal
eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions at this Web site.
Comments on the information
collection requirement: Fax: Office of
Management and Budget (OMB), Office
of Information and Regulatory Affairs,
Desk Officer for the Department of the
Interior, fax 202–395–5806. Electronic
mail: oira_submission@omb.eop.gov.
Please indicate ‘‘Attention: OMB
Control Number 1004–0203,’’ regardless
of the method used to submit comments
on the information collection burdens. If
you submit comments on the
information collection burdens, please
provide the BLM with a copy of your
comments, at one of the addresses
shown above.
FOR FURTHER INFORMATION CONTACT:
Steven Wells, Division Chief, Fluid
Minerals Division, 202–912–7143 for
information regarding the substance of
the rule or information about the BLM’s
Fluid Minerals Program. Persons who
use a telecommunications device for the
deaf (TDD) may call the Federal
Information Relay Service (FIRS) at 1–
800–877–8339 to contact the above
individual during normal business
hours. FIRS is available 24 hours a day,
7 days a week to leave a message or
question with the above individual. You
will receive a reply during normal
business hours.
SUPPLEMENTARY INFORMATION:
Executive Summary
‘‘Hydraulic fracturing,’’ a process
used to stimulate production from oil
and gas wells, has been a growing
practice in recent years. Public
awareness of hydraulic fracturing has
grown as new horizontal drilling
technology has allowed increased access
to shale oil and gas resources across the
country, sometimes in areas that have
not previously or recently experienced
significant oil and gas development. The
rapid expansion of this practice has
caused public concern about whether
fracturing can lead to or cause the
contamination of underground water
sources, whether the chemicals used in
fracturing should be disclosed to the
public, and whether there is adequate
management of well integrity and the
‘‘flowback’’ fluids that return to the
surface during and after fracturing
operations.
The Bureau of Land Management
(BLM) oversees approximately 700
million subsurface acres of Federal
mineral estate and 56 million subsurface
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acres of Indian mineral estate across the
United States. This revised proposed
rule and the initial proposed rule would
modernize BLM’s management of
hydraulic fracturing operations by
ensuring that hydraulic fracturing
operations conducted on the public
mineral estate (including split estate
where the Federal Government owns the
subsurface mineral estate) follow certain
best practices, including: (1) The public
disclosure of chemicals used in
hydraulic fracturing operations on
Federal and Indian lands; (2)
Confirmation that wells used in
fracturing operations meet appropriate
construction standards; and (3) A
requirement that operators put
appropriate plans in place for managing
flowback waters from fracturing
operations.
Like the initial proposed rule, this
revised proposed rule would apply to
Indian lands so that these lands and
communities receive the same level of
protection provided on public lands. In
most cases, the requirements in this rule
can be satisfied by submitting additional
information during the existing process
that the BLM currently applies to
operators when reviewing and
approving an operator’s Application for
Permit to Drill (APD) on public or
Indian lands. The rule would require
that disclosure of the chemicals used in
the fracturing process be provided to the
BLM after the fracturing operation is
completed. This information may be
submitted to the BLM through an
existing Web site known as
FracFocus.org, already used by some
states for reporting mandatory chemical
disclosure of hydraulic fracturing
chemicals. Submission of this
information through this Web site
allows an operator to provide the public
and many State and tribal regulators
with prompt access. This approach also
has the benefit of reducing reporting
burdens for oil and gas operators by
avoiding duplicative reporting
requirements and administrative duties
for the BLM in many instances.
The BLM developed this revised
proposed rule and the initial proposed
rule with the intention of improving
public awareness and strengthening
oversight of hydraulic fracturing
operations without introducing
unnecessary new procedures or delays
in the process of developing oil and gas
resources on public and Indian lands.
Some states, like Colorado, Wyoming,
Arkansas, and Texas, have issued their
own regulations addressing disclosures
and oversight for oil and gas drilling
operations. Operators with leases on
Federal lands must comply with both
BLM’s regulations and with State
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operating requirements, including State
permitting and notice requirements to
the extent they do not conflict with
BLM regulations. State regulations
pertaining to hydraulic fracturing
operations are not uniform. The States
that have regulated hydraulic fracturing
typically require some notification to a
state agency and some require reporting
on FracFocus. Other States have not
taken action in this area. This revised
proposed rule seeks to create a
consistent oversight and disclosure
model that will apply across all public
and Indian lands that are available for
oil and gas development, and aims to
streamline and minimize the efforts
required to comply with any new
requirements, while also protecting
Federal and tribal interests and
resources. Currently nearly 36 million
acres of Federal land are under lease for
potential oil and gas development.
These leases can be found on public
land and for public minerals in 24 states
The BLM has revised the proposed rule
to reduce some of the information
requirements to avoid duplication with
the requirements of States (on Federal
land) and tribes (on tribal land). The
BLM has considered various options to
encourage streamlining, flexibility, and
more efficient operation on both BLM
and tribal leases.
The BLM has for many years had a
number of agreements with certain
States and tribes concerning
implementation of the various
regulatory programs in logical and
effective ways. The BLM will work with
States and tribes to establish formal
agreements that will leverage the
strengths of partnerships, and reduce
duplication of efforts for agencies and
operators, particularly in implementing
the revised proposed rule as
consistently as possible with State or
tribal regulations.
Similarly, the BLM has been looking
to State regulations governing hydraulic
fracturing for elements that should be
incorporated into the revised proposed
rule. Examples include allowing
disclosure of chemical constituents of
fracturing fluids through FracFocus, as
required by several states, and adoption
of the Colorado system of having
operators submit an affidavit that
undisclosed information about
chemicals is entitled to protection as
trade secrets.
Regarding Indian lands, the BLM fully
embraces the statutes, Executive Orders,
and other statements of governmental or
departmental policy in favor of
promoting tribal self-determination and
control of resources. The Indian Mineral
Leasing Act (IMLA), however, subjects
all oil and gas operations on trust or
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restricted Indian lands to the Secretary’s
regulations and does not authorize the
Secretary to allow tribes to opt out of
these regulations. Nonetheless, the BLM
is actively addressing ways to use tribal
rules in the implementation of the
revised proposed rule. For example, the
proposed rule recognizes the authority
that may be delegated to the States and
the tribes to implement various
environmental programs under the Safe
Drinking Water Act to protect
underground sources of drinking water
and has been revised to defer to State
(on Federal land) or tribal (on tribal
land) designations of aquifers as either
requiring protection from oil and gas
operations, or as exempt from any
requirement to isolate water-bearing
zones in section 3162.3–3(b).
The revised proposed rule also adds
a provision allowing the BLM to
approve a variance that would apply to
all lands within the boundaries of a
State, a tribe, or described as field-wide
or basin-wide, that is commensurate
with the state or tribal regulatory
scheme. The BLM must determine that
the variance would meet or exceed the
effectiveness of the revised proposed
rule. State and tribes would be invited
to work with the BLM to craft variances
that would allow technologies,
processes or standards required or
allowed by the State or tribe to be
accepted as compliance with the rule.
Such variances would allow the BLM
and the States and tribes to improve
efficiency and reduce costs for operators
and for the agencies.
The proposed changes to existing
hydraulic fracturing oversight are partly
in response to recommendations put
forward by the Shale Gas Production
Subcommittee of the Secretary of
Energy’s Advisory Board in 2011. Also,
current BLM regulations governing
hydraulic fracturing operations on
public lands are more than 30 years old
and were not written to address modern
hydraulic fracturing technologies and
practices. In preparing this revised
proposed rule, the BLM received input
from members of the public and
stakeholders, and consulted with tribal
representatives.
The changes from the original
proposed well stimulation rule are
discussed in greater detail below, but
some of the notable changes include the
following. This revised proposed rule
would require use of cement evaluation
logs (CELs) in the place of the originally
proposed cement bond logs (CBL). The
use of the broader term of CEL is
intended to allow a variety of logging
methods to be used to show the
adequacy of cementing, including
technologies such as ultrasonic logs,
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variable density logs, microseismograms, standard CBLs, CBLs with
directional receiver array, ultrasonic
pulse echo technique, and isolation
scanners. CBLs would be accepted
because they are one of the technologies
included in CELs. However, if a State
(on Federal land) or tribe (on Indian
land) designates some other technology
to meet its requirements for hydraulic
fracturing wells that is at least as
effective in assuring adequate
cementing, the BLM may allow use of
that technology as a variance from the
CEL requirement.
The revised proposed rule would also
change the operation of the trade secrets
provision. The revised proposed rule
allows operators to submit to the BLM
an affidavit asserting exemption from
disclosure of certain information having
to do with the hydraulic fracturing
fluid. The rule also gives the BLM the
ability to demand the specific chemical
details of any materials being proposed
for trade secret exemption.
Further, although the BLM is not
proposing a material change in the
provision that allows hydraulic
fracturing flowback fluids to be stored
either in tanks or in lined pits, the BLM
seeks comments on the costs and
benefits of requiring flowback fluids to
be stored only in closed tanks. Other
provisions of the initial proposed rule
have been modified for clarity or in
response to comments. Accordingly, the
entire revised proposed rule is available
for public comment.
The BLM has analyzed the costs and
the benefits of this proposed action in
an accompanying Regulatory Impact
Analysis available in the rulemaking
docket. The estimated costs range from
$12 million to $20 million per year. The
range reflects uncertainty about the
generalization of costs across all
hydraulic fracturing operations. The
potential benefits of the rule are more
challenging to monetize than the costs,
but that does not mean that the rule is
without benefits. The rule creates a
consistent, predictable regulatory
framework, in accordance with the
BLM’s stewardship responsibilities
under the Federal Land Policy and
Management Act and other statutes, for
hydraulic fracturing involving BLMadministered lands. The rule is
designed to reduce the environmental
and health risk that can be posed by
hydraulic fracturing operations,
particularly in the way the rule
addresses flowback fluids, well
construction, and hydraulic fracture
design. The rule would ensure that
operators demonstrate wellbore integrity
with pressure tests on 100 percent of the
hydraulically fractured wells and with
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CELs on the casing strings that protect
usable water on each type well. A type
well is an oil and gas well that can be
used as a model for well completion in
a field where geologic characteristics are
substantially similar. The authorized
officer would evaluate whether
substantially similar geologic conditions
exist during review of the APD or
sundry notice requesting approval of a
group of wells for a field. CELs would
be required only of type wells,
‘‘wildcat’’ wells that are not approved as
part of a field development proposal,
and whenever there is evidence of a
problem with the cement job. The BLM
is asking for comments on the
effectiveness of this proposal.
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I. Public Comment Procedures
II. Background
III. Discussion of the Revised Proposed Rule
and Comments on the Proposed Rule
IV. Procedural Matters
I. Public Comment Procedures
If you wish to comment, you may
submit your comments by any one of
several methods: Mail: You may mail
comments to U.S. Department of the
Interior, Director (630), Bureau of Land
Management, Mail Stop 2134LM, 1849
C Street NW., Washington, DC 20240,
Attention: 1004–AE26. Personal or
messenger delivery: Bureau of Land
Management, 20 M Street SE., Room
2134LM, Attention: Regulatory Affairs,
Washington, DC 20003. Federal
eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions at this Web site.
You may submit comments on the
information collection burdens directly
to the Office of Management and
Budget, Office of Information and
Regulatory Affairs, Desk Officer for the
Department of the Interior, fax 202–395–
5806, or oira_submission@omb.eop.gov.
Please include ‘‘Attention: OMB Control
Number 1004–0203’’ in your comments.
If you submit comments on the
information collection burdens, please
provide the BLM with a copy of your
comments, at one of the addresses
shown above.
Please make your comments as
specific as possible by confining them to
issues directly related to the content of
this revised proposed rule, and explain
the basis for your comments. The
comments and recommendations that
will be most useful and likely to
influence agency decisions are:
1. Those supported by quantitative
information or studies; and
2. Those that include citations to, and
analyses of, the applicable laws and
regulations.
The BLM is not obligated to consider
or include the comments received after
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the close of the comment period (see
or comments delivered to an
address other than those listed above
(see ADDRESSES) in the Administrative
Record for the rule.
Comments, including names and
street addresses of respondents, will be
available for public review at the
address listed under ADDRESSES during
regular hours (7:45 a.m. to 4:15 p.m.),
Monday through Friday, except
holidays. Before including your address,
telephone number, email address, or
other personal identifying information
in your comment, be advised that your
entire comment—including your
personal identifying information—may
be made publicly available at any time.
While you can ask in your comment to
withhold from public review your
personal identifying information, we
cannot guarantee that we will be able to
do so.
DATES)
II. Background
Well stimulation techniques, such as
hydraulic fracturing, are commonly
used by oil and natural gas producers to
increase the volumes of oil and natural
gas that can be extracted from wells.
Hydraulic fracturing techniques are
particularly effective in enhancing oil
and gas production from shale gas or oil
formations. Until quite recently, shale
formations rarely produced oil or gas in
commercial quantities because shale
does not generally allow flow of
hydrocarbons to wellbores unless
mechanical changes to the properties of
the rock can be induced. The
development of horizontal drilling,
combined with hydraulic fracturing, has
made the production of oil and gas from
shale feasible. Hydraulic fracturing
involves the injection of fluid under
high pressure to create or enlarge
fractures in the reservoir rocks. The
fluid that is used in hydraulic fracturing
is usually accompanied by proppants,
such as particles of sand, which are
carried into the newly fractured rock
and help keep the fractures open once
the fracturing operation is completed.
The proppant-filled fractures become
conduits for fluid migration from the
reservoir rock to the wellbore and the
fluid is subsequently brought to the
surface. In addition to the water and
sand (which together typically make up
98 to 99 percent of the materials
pumped into a well during a fracturing
operation), chemical additives are also
frequently used. These chemicals can
serve many functions in hydraulic
fracturing, including limiting the growth
of bacteria and preventing corrosion of
the well casing. The exact formulation
of the chemicals used varies depending
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on the rock formations, the well, and the
requirements of the operator.
Hydraulic fracturing is a common and
accepted practice, and has been, in oil
and gas production for decades. The
BLM estimates that about 90 percent
(approximately 3,400 wells per year) of
wells drilled on Federal and Indian
lands are stimulated using hydraulic
fracturing techniques. Although many of
these are conventional wells, much of
the new activity occurs on wells
designed to produce shale oil and gas or
to employ horizontal drilling
techniques. Over the past 10 years, there
have been significant technological
advances in horizontal drilling, which is
frequently combined with hydraulic
fracturing. This combination, together
with the discovery that these techniques
can release significant quantities of oil
and gas from large shale deposits, has
led to production from geologic
formations in parts of the country that
previously did not produce significant
amounts of oil or gas. The resulting
expansion of oil and gas drilling into
new parts of the country because of the
availability of new horizontal drilling
technologies has significantly increased
public awareness of hydraulic fracturing
and the potential impacts that it may
have on water quality and water
consumption, unless adequately
regulated and safely implemented.
The BLM’s existing hydraulic
fracturing regulations are found at 43
CFR 3162.3–2. These regulations were
established in 1982 and last revised in
1988, long before the latest hydraulic
fracturing technologies became widely
used. In response to public interest in
hydraulic fracturing and in the BLM’s
regulation of hydraulic fracturing, in
particular, the Department of the
Interior (Department) held a forum on
hydraulic fracturing on November 30,
2010, in Washington, DC, attended by
the Secretary of the Interior and more
than 130 interested parties. The BLM
later hosted public forums (in Bismarck,
North Dakota on April 20, 2011; Little
Rock, Arkansas on April 22, 2011; and
Golden, Colorado on April 25, 2011) to
collect broad input on the issues
surrounding hydraulic fracturing. More
than 600 members of the public
attended the April 2011 forums. Some
of the comments frequently heard
during these forums included concerns
about water quality, water consumption,
and a desire for improved
environmental safeguards for surface
operations. Commenters also strongly
encouraged the agency to require public
disclosure of the chemicals used in
hydraulic fracturing operations on
Federal and Indian lands. Commenters
from the oil and gas industry suggested
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changes that would make the
implementation of the rule more
practicable, from their perspective, and
some opposed adoption of any such
rules affecting hydraulic fracturing on
the Federal mineral estate. Further, the
BLM distributed copies of the then-draft
rule to affected federally recognized
tribes in January 2012 and invited
comments from affected tribes.
Around the time of the BLM’s forums,
at the direction of President Barack
Obama, the Secretary of Energy
convened a Shale Gas Production
Subcommittee (Subcommittee) of the
Secretary of Energy Advisory Board to
evaluate hydraulic fracturing issues.
The Subcommittee met with industry,
service providers, state and Federal
regulators, academics, environmental
groups, and many other stakeholders.
On August 18, 2011, the Subcommittee
issued initial recommendations in its
‘‘90-day Interim Report.’’ The
Subcommittee issued its final report,
entitled ‘‘Shale Gas Production
Subcommittee Second Ninety Day
Report’’ on November 18, 2011. The
Subcommittee recommended, among
other things, that more information be
provided to the public about hydraulic
fracturing operations whether or not
they occur on the Federal mineral
estate, including disclosure of the
chemicals used in fracturing fluids. The
Subcommittee also recommended the
adoption of stricter standards for
wellbore construction and testing. The
final report also recommended that
operators engaging in hydraulic
fracturing undertake pressure testing to
ensure the integrity of all casings. These
reports are available to the public from
the Department of Energy’s Web site at
https://www.shalegas.energy.gov.
On May 11, 2012, the BLM published
in the Federal Register the initial
proposed rule entitled ‘‘Oil and Gas;
Well Stimulation, Including Hydraulic
Fracturing, on Federal and Indian
Lands’’ (77 FR 27691). The comment
period on the initial proposed rule
closed on July 10, 2012. At the request
of public commenters, on June 26, 2012,
the BLM published in the Federal
Register a notice extending the
comment period for 60 days (77 FR
38024). The extended comment period
closed on September 10, 2012. The BLM
received over 177,000 comments on the
initial proposed rule from individuals,
Federal and state governments and
agencies, interest groups, and industry
representatives. After reviewing the
comments on the proposed rule, the
BLM now proposes to revise the initial
proposed rule. As did the initial
proposed rule, this revised proposed
rule would apply to all wells
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administered by the BLM, including
those of Federal, tribal, and individual
Indian trust lands. Substantive
comments on the initial proposed rule
that informed the BLM’s decisions on
the revised proposed rule are discussed
in the section-by-section discussion of
this preamble. In the final rule, the BLM
will provide a complete discussion of
the comments submitted on the initial
proposed rule (although some are
discussed in this preamble) and those
received as a result of this revised
proposed rule.
The BLM’s revised proposed rule is
generally consistent with the American
Petroleum Institute’s (API) guidelines
for well construction and well integrity.
See API Guidance Document HF 1,
Hydraulic Fracturing Operations—Well
Construction and Integrity Guidelines,
First Edition, October 2009. HF1
discusses the importance of maintaining
wellbore integrity with casing and a
cementing program. It recommends
pressure tests after cementing casing
strings, and describes some
circumstances where CBLs are used to
verify adequate cementing. The API also
has published guidelines for water
management that support the use of
lined pits for water management. See
API Guidance Document HF 2—Water
Management Associated with Hydraulic
Fracturing, First Edition, 2010.
Based on the input provided from a
broad array of sources, including the
individuals who spoke at the BLM’s
public forums and the recommendations
of the Subcommittee, BLM proposed
critical improvements to its regulations
for hydraulic fracturing on May 11,
2012. Careful consideration of the
comments received on the proposed
rule, however, showed that further
improvements and clarifications were
appropriate. As did the initial proposed
rule, this revised proposed rule would
apply to all wells administered by the
BLM, including those on Federal, tribal,
and individual Indian trust lands.
Tribal consultation is a critical part of
this rulemaking effort, and the
Department is committed to making
sure tribal leaders play a significant role
as BLM and the tribes work together to
develop resources on public and Indian
lands in a safe and responsible way.
During the proposed rule stage, the BLM
initiated government-to-government
consultation with tribes on the proposed
rule and offered to hold follow-up
consultation meetings with any tribe
that desires to have an individual
meeting. In January 2012, the BLM held
four regional tribal consultation
meetings, to which over 175 tribal
entities were invited. To build upon
established local relationships, the
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individual follow-up consultation
meetings involved the local BLM
authorized officers and management,
including State Directors. After the
issuance of the proposed rule, tribal
governments, tribal members, and
individual Native Americans were also
invited to comment directly on the
proposed rule.
In June 2012, the BLM held additional
regional consultation meetings in Salt
Lake City, Utah; Farmington, New
Mexico; Tulsa, Oklahoma; and Billings,
Montana. Eighty-one tribal members
representing 27 tribes attended the
meetings. In these sessions, the BLM
and tribal representatives engaged in
substantive discussions of the proposed
hydraulic fracturing rule. A variety of
issues were discussed, including but not
limited to the applicability of tribal
laws, validating water sources,
inspection and enforcement, wellbore
integrity, and water management,
among others. Additional individual
consultations with tribal representatives
have taken place since that time. Also
consultation meetings were held at the
National Congress of American Indian
Conference in Lincoln, Nebraska, on
June 18, 2012, and at New Town, North
Dakota on July 13, 2012.
Responses from tribal representatives
informed the agency’s actions in
defining the scope of acceptable
hydraulic fracturing operations. One of
the outcomes of these meetings is the
requirement in this rule that operators
certify that operations on Indian lands
comply with tribal laws.
The revised proposed rule also seeks
to create less of an administrative
burden than the initial proposed rule
while providing the same benefits. This
change was made in response to both
tribal and industry comments.
The BLM has been and will continue
to be proactive about tribal consultation
under the Department’s newly
formalized Tribal Consultation Policy,
which emphasizes trust, respect and
shared responsibility in providing tribal
governments an expanded role in
informing Federal policy that impacts
Indian lands. Consultation will continue
during the comment period of this
revised proposed rule. Tribal
governments, tribal members, and
individual Native Americans were also
invited to comment directly on the
proposed rule, as they are invited to
comment on the revised proposed rule.
Several tribal representatives and
tribal organizations have commented
that the hydraulic fracturing rule should
not apply on Indian land, or that tribes
should be allowed to decide not to have
the rule apply on their land (that is,
‘‘opt out’’ of the rule). The BLM fully
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embraces the statutes, Executive Orders,
and other statements of governmental or
departmental policy in favor of
promoting tribal self-determination and
control of resources. In addition, the
Department remains bound by specific
statutes in which Congress has
delegated specific authority and duties
to the Department regarding the
management and regulation of
resources. The IMLA provides in
pertinent part as follows: ‘‘All
operations under any oil, gas, or other
mineral lease issued pursuant to the
terms … of this title or any other Act
affecting restricted Indian lands shall be
subject to the rules and regulations
promulgated by the Secretary of the
Interior.’’ 25 U.S.C. 396d. The
Department has consistently interpreted
this statutory directive as allowing
uniform regulations governing mineral
resource development on Indian and
Federal lands. Thus, an opt-out
provision would not be consistent with
the Department’s procedures under
IMLA, and the revised proposed rule
does not provide such an option.
There has also been a suggestion that
the Secretary should delegate her
regulatory authority to the tribes if the
tribe has regulations that meet or exceed
the standards in the BLM regulation.
The IMLA does not authorize the
Secretary to delegate her regulatory
responsibilities to the tribes, and
therefore the revised proposed rule does
not include a delegation provision.
Nonetheless, there are opportunities for
tribes to assert more control over oil and
gas operations on tribal land by entering
into Tribal Energy Resource Agreements
under the Indian Energy Development
and Self-Determination Act (part of the
Energy Policy Act of 2005), and to
pursue contracts under the Indian SelfDetermination and Education
Assistance Act of 1975.
Also, the proposed rule has been
revised to defer to State (on Federal
land) or tribal (on Indian land)
designations of aquifers as either
requiring protection from oil and gas
operations, or as exempt from the
requirement to isolate water-bearing
zones in section 3162.3–3(b). Revised
section 3162.3(k) provides that for lands
within the jurisdiction of a State or a
tribe that State or tribe could work with
the BLM to craft a variance that would
allow compliance with State or tribal
requirements to be accepted as
compliance with the rule, if the variance
meets or exceeds this rule’s standards.
The BLM is also seeking comments on
whether compliance with State or tribal
requirements to disclose chemical
constituents of hydraulic fracturing
fluids should be deemed as compliance
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with the proposed rule if the State or
tribal requirements meet or exceed the
standard in the rule at section 3162.3–
3(i).
As explained elsewhere in this
preamble, the BLM intends to reach out
to States and to tribes to review existing
agreements, to strengthen those that
could provide a greater role for States
and tribes, and to reach new agreements
where there have been none. The BLM
will seek new and improved agreements
to reduce regulatory burdens and to
increase efficiency, while fulfilling the
Secretary’s responsibilities mandated by
statutes as steward for the public lands
and trustee for Indian lands.
The BLM invites the public’s
comments on whether there are other
opportunities in the revised proposed
rule to incorporate or to defer to State
or tribal standards or requirements.
Although greater use of State or tribal
standards or procedures could reduce
compliance costs for operators and
increase consistency, enforcement
issues could arise. On Federal lands, the
BLM enforces the Federal regulations
and lease conditions, and the States
enforce their regulations. On Indian
lands, the BLM enforces the Federal
regulations and the terms of the leases,
and the tribes have the power to enforce
their own law. Comments are requested
on practical enforcement challenges that
might arise if the BLM incorporates or
defers to State or tribal laws or
procedures, and on any proposed
solutions.
Over the past few years, in response
to strong public interest, several
States—including Colorado, Wyoming,
Arkansas, and Texas—have
substantially revised their State
regulations related to hydraulic
fracturing. One of the BLM’s key goals
in updating its regulations on hydraulic
fracturing is to complement State efforts
by providing a consistent standard
across all public and Indian lands
nationwide. The BLM has revised the
initial proposed rule to make reported
information consistent and easily
accessible to the public. For instance,
the BLM is working closely with the
Groundwater Protection Council and the
Interstate Oil and Gas Compact
Commission so that operators may
report chemicals used in hydraulic
fracturing operations to BLM through
the existing FracFocus.org Web site,
which is already well established and
used by many States. This online
database includes information from oil
and gas wells in approximately 12
States and includes information from
over 500 companies. The BLM
understands that the database is in the
process of being improved and will in
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the near future have enhanced search
capabilities and allow for easier
reporting of information. If operators are
unable to use FracFocus or elect not to,
they may elect to report chemicals used
on Federal or Indian lands directly to
the BLM. The BLM intends to report
that information to the public through
FracFocus.
The BLM recognizes the efforts of
some States to regulate hydraulic
fracturing and seeks to avoid
duplicative regulatory requirements.
However, it is important to recognize
that a major impetus for a separate BLM
rule is that States are not legally
required to meet the stewardship
standards applying to public lands and
do not have trust responsibilities for
Indian lands under Federal laws. Thus,
the rule may expand on or set different
standards from those of States that
regulate hydraulic fracturing operations,
but do not need to adhere to the same
resource management and public
involvement standards appropriate on
Federal lands under Federal law. This
revised proposed rule encourages
efficiency in the collection of data and
the reporting of information by
proposing to allow operators in States
that require disclosure on FracFocus to
meet both the State and the BLM
requirements through a single
submission to FracFocus.
III. Discussion of the Revised Proposed
Rule and Comments on the Proposed
Rule
As was discussed in the proposed
rule, the BLM is revising its hydraulic
fracturing regulations, found at 43 CFR
3162.3–2, and adding a new section
3162.3–3. Existing section 3162.3–3
would be retained and renumbered.
The Federal Land Policy and
Management Act (FLPMA) directs the
BLM to manage the public lands so as
to prevent unnecessary or undue
degradation, and to manage those lands
using the principles of multiple use and
sustained yield. FLPMA defines
multiple use to mean, among other
things, a combination of balanced and
diverse resource uses that takes into
account long-term needs of future
generations for renewable and nonrenewable resources. FLPMA also
requires that the public lands be
managed in a manner that will protect
the quality of their resources, including
ecological, environmental, and water
resources. The Mineral Leasing Act and
the Mineral Leasing Act for Acquired
Lands authorize the Secretary to lease
Federal oil and gas resources, and to
regulate oil and gas operations on those
leases, including surface-disturbing
activities. The Act of March 3, 1909, the
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Indian Mineral Leasing Act and the
Indian Mineral Development Act assigns
regulatory authority to the Secretary
over Indian oil and gas leases on trust
lands (except those excluded by statute,
i.e., the Crow Reservation in Montana,
the ceded lands of the Shoshone
Reservation in Wyoming, the Osage
Reservation in Oklahoma, and the coal
and asphalt lands of the Choctaw and
Chickasaw Tribes in Oklahoma). As
stewards of the public lands and
minerals and as the Secretary’s regulator
for operations on oil and gas leases on
Indian lands, the BLM has evaluated the
increased use of hydraulic fracturing
practices over the last decade and
determined that the existing rules for
hydraulic fracturing require updating.
The Secretary delegated to the BLM his
authority to oversee operations on
Indian mineral leases through the
Departmental Manual (235 DM 1.K)
under the Indian Allotted Lands Leasing
Act and the Tribal Lands Leasing Act.
The Secretary also approved the
authorities section of the regulations
which give the BLM authority under
additional Indian related statutes.
As discussed in the background
section of this preamble, the increased
use of well stimulation activities over
the last decade has also generated
concerns among the public about
Initial proposed
regulation
Revised proposed pegulation
43 CFR 3160.0–5 Definitions ...........
43 CFR 3162.3–3(a) Subsequent
Well Operations; Well Stimulation.
(None) ..............................................
43 CFR 3162.3–3(c) What the Notice of Intent Sundry Must Include.
43 CFR 3162.3–3(c)(2) ....................
43 CFR 3162.3–3(c)(4) ....................
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hydraulic fracturing and about the
chemicals used in hydraulic fracturing.
The proposed rule and this revised
proposed rule are intended to increase
transparency for the public regarding
the fluids used in the hydraulic
fracturing process, in addition to
providing assurances that wellbore
integrity is maintained throughout the
fracturing process and that the fluids
that flow back to the surface from
hydraulic fracturing operations are
properly stored, disposed of, or treated.
The following chart explains the major
changes between the proposed
regulations and the regulations in this
revised proposed rule.
43 CFR 3160.0–5 Definitions ..........
43 CFR 3162.3–2(a) Subsequent
Well Operations.
43 CFR 3162.3–3(c)(3) ....................
43 CFR 3162.3–3(c)(5) ....................
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Substantive changes
This revised proposed rule would revise the proposed term ‘‘stimulation fluid’’ to ‘‘hydraulic fracturing fluid’’ to be consistent with
other changes to the rule. It also would delete the definition of
‘‘well stimulation’’ and add a definition of ‘‘hydraulic fracturing,’’
which excludes acidizing, enhanced secondary recovery and tertiary recovery. The terms used in other sections of this rule were
also revised to make those sections consistent with the changes
here. The rule would also include definitions of the terms ‘‘refracturing’’ and ‘‘type well.’’ ‘‘Refracturing’’ is defined as a hydraulic
fracturing operation subsequent to an initial completion of an oil
and gas well which used hydraulic fracturing previously. ‘‘Type
well’’ is defined in this section to mean an oil and gas well that
can be used as a model for other wells drilled by the same operator across the field. The revised proposed rule also clarifies the
definition of ‘‘usable water’’ by specifying types of geologic zones
that would be deemed to contain usable water, and other types
that would be deemed not to contain usable water.
43 CFR 3162.3–2(a) Subsequent The revised proposed rule would replace the term ‘‘commingling’’
Well Operations.
with the term ‘‘combining’’ to avoid confusion with the term
‘‘commingling’’ that is used in calculating royalties on production.
43 CFR 3162.3–3(a) Subsequent The revised proposed rule would change the scope of the regulaWell Operations; Hydraulic Fraction to apply only to hydraulic fracturing operations, and not to
turing.
other ‘‘well stimulation’’ activities. It would clarify that the regulation also applies to refracturing operations.
43 CFR 3162.3–3(b) Isolation of This new paragraph would require that all fracturing and refracUsable Water to Prevent Conturing operations meet the performance standard in section
tamination.
3162.5–2(d), which requires that operators must isolate all usable
water and other mineral-bearing formations and protect them
from contamination.
43 CFR 3162.3–3(d) What the No- The revised proposed rule would add a new provision that allows
tice of Intent Sundry Must Include.
the Notice of Intent (NOI) Sundry to be submitted for a single
well or a group of wells with the same geological characteristics.
If it is for a group of wells, the information should be for a ‘‘type
well.’’
43 CFR 3162.3–3(d)(2) ................... The revised proposed rule would delete the requirement to submit
a CBL for approval prior to commencing fracturing operations.
Section 3162.3–3(i)(8), would require that a CEL be submitted
after fracturing operations, unless there are problems with the cement job. The revised proposed rule would also add a requirement that the depths of usable water aquifers be based on a drill
log of the subject well or of another well in the field.
Deleted ............................................ The revised proposed rule would delete the requirement that the
operator submit a pre-hydraulic fracturing certification that it will
comply with all applicable permitting and notice requirements.
43 CFR 3162.3–3(d)(3) ................... The revised proposed rule would add to the list of the source and
location of water supply ‘‘reused or recycled water.’’
43 CFR 3162.3–3(d)(4) ................... The revised proposed rule would add to the requirements for a hydraulic fracturing design that the operator must include the estimated fracture direction and propagation plotted on the well
schematics and on a topographical map of the same scale as the
map used in the APD. It would also add a requirement to supply
the estimated vertical distance to the nearest usable water aquifer above the fracture zone.
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Revised proposed pegulation
Substantive changes
43 CFR 3162.3–3(c)(6) ....................
43 CFR 3162.3–3(d)(5) ...................
43 CFR 3162.3(d) Mechanical Integrity Testing Prior to Well Stimulation.
(None) ..............................................
43 CFR 3162.3–3(f) Mechanical Integrity Testing Prior to Hydraulic
Fracturing.
43 CFR 3162.3–3(e)(1) Monitoring
of Cementing Operations and Cement Evaluation Log Prior to Hydraulic Fracturing.
The revised proposed rule would remove ‘‘chemical composition’’
from the information that is required to be submitted regarding
the handling of recovered fluids.
The revised proposed rule would add clarification that a mechanical
integrity test (MIT) would be required for a re-fracturing operation.
43 CFR 3162.3–3(c)(2) ....................
43 CFR 3162.3–3(e)(2) ...................
(None) ..............................................
43 CFR 3162.3–3(e)(3) ...................
(None) ..............................................
43 CFR 3162.3–3(e)(4) ...................
(None) ..............................................
43 CFR 3162.3–3(e)(5) ...................
43 CFR 3162.3–3(e)(1) ....................
43 CFR 3162.3–3(g)(1) ...................
43 CFR 3162.3–3(e)(2) Monitoring
and Recording During Well Stimulation.
43 CFR 3162.3–3(g)(2) Monitoring
and Recording During Hydraulic
Fracturing.
43 CFR 3162.3–3(g) Information
that Must be Provided to the Authorized Officer After Completed
Operations.
43 CFR 3162.3–3(i) Information that
Must be Provided to the Authorized Officer After Completed Operations.
43 CFR 3162.3–3(g)(1) ....................
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regulation
43 CFR 3162.3–3(i)(2) ....................
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The revised proposed rule would add a new paragraph requiring
that during cementing operations the operator must monitor and
record the flow rate, density, and treating pressure, and then
submit the monitoring report to the BLM within 30 days of completion of the hydraulic fracturing.
The revised proposed rule would add a new paragraph stating a
general rule that an operator must run a CEL on each casing that
protects usable water. A CEL may be ultrasonic logs, variable
density logs, micro-seismograms, standard CBLs, CBLs with directional receiver array, ultrasonic pulse echo technique, an isolation scanner or other tool of equal effectiveness.
The revised proposed rule would add a new paragraph that provides an exception to the CEL requirement where an operator’s
‘‘type well’’ has been shown to have successful cement bonding
and subsequent wells have the same specifications and geologic
parameters as the ‘‘type well,’’ and the cementing operations
monitoring data parallels those of the type well.
The revised proposed rule would add a new paragraph that if there
is any indication of inadequate cementing, the operator must report it to the BLM within 24 hours, with written confirmation within
48 hours. The operator would be required to run a CEL showing
that it has corrected the cementing job, and that usable water
has been isolated to protect it from contamination. At least 72
hours prior to starting fracturing operations, the operator must
submit to the BLM a certification indicating that it corrected the
inadequate cement job and documentation showing that there is
adequate cement bonding.
The revised proposed rule would add a new provision stating that
the operator must submit the information required by (e)(1) and
(2) to the BLM in a Subsequent Report Sundry Notice.
This paragraph would be revised to apply to refracturing operations
as well as fracturing operations. It also would be revised to make
it clear that that the pressure in the annulus between any intermediate casings and the production casing must be continuously
monitored and recorded.
This paragraph would be revised to apply to refracturing operations
as well as fracturing operations. For any incident of the annulus
pressure increasing by more than 500 psi, the revised proposed
rule would change the due date for a Subsequent Report Sundry
Notice from 15 days after the occurrence to 30 days after completion of fracturing operations.
Changes to this section would add a clarification that the information is required for each well fractured or refractured, even if the
BLM approved a Notice of Intent Sundry for a group of wells. The
new provision would allow reporting of chemical information to
the BLM either directly or through FracFocus or other database
that the BLM specifies. The revised proposed rule would add a
new provision that the operator submitting chemical information
through FracFocus must specify that the information is for a Federal or Indian well, certify that the information is correct, and certify that the operator complied with applicable laws governing notice and permits. The revised proposed rule would also add a
new provision clarifying that the operator is responsible for information submitted by its hydraulic fracturing contractor.
This revised section would delete the requirement that the operator
report the actual access route and transportation method for all
water used in stimulating the well, since this information is provided before the operation is approved.
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Initial proposed
regulation
Revised proposed pegulation
Substantive changes
43 CFR 3162.3–3(g)(2), (4) and (5)
43 CFR 3162.3–3(i)(1) ....................
43 CFR 3162.3–3(g)(6) ....................
43 CFR 3162.3–3(i)(4) ....................
43 CFR 3162.3–3(g)(7) ....................
Deleted ............................................
43 CFR 3162.3–3(g)(8) and (9) .......
43 CFR 3162.3–3(i)(7) ....................
(None) ..............................................
43 CFR 3162.3–3(i)(8) ....................
(None) ..............................................
43 CFR 3162.3–3(i)(9) ....................
43 CFR 3162.3–3(h) and (i) .............
43 CFR 3162.3–3(j)(1) through (4)
(None) ..............................................
43 CFR 3162.3–3(j)(4) ....................
* * * .................................................
43 CFR 3162.3–3(k) ........................
The proposed regulation required two separate reports or tables
(one for all additives of the actual stimulation fluid by trade name
and purpose, and another for the complete chemical makeup (including the Chemical Abstracts Service Registry Number [CAS
number]) of all materials used in the actual stimulation fluid). The
revised proposed rule would require the information required in
the FracFocus form: True vertical depth of the well, total water
volume used, and for each chemical used (including the base
fluid) the trade name, supplier, purpose, ingredients, CAS number, maximum ingredient concentration in the additive, and maximum ingredient concentration in the fracturing fluid.
A new requirement would be added by this rule to report the actual,
estimated, or calculated direction of the fractures.
This revised proposed rule would delete the provision that would
have expressly allowed the Subsequent Report Sundry Notice to
be completed in part by attaching the hydraulic fracturing contractor’s job log so long as the required information was included
and readily apparent.
The revised proposed rule would revise the requirement for certification of wellbore integrity to include the monitoring of cementing
operations and the CEL. It would also clarify that the certification
of compliance with applicable law is different for Indian lands
than for Federal lands.
This rule would add a new paragraph requiring operators to submit
the actual cement operations monitoring report, any CEL, and
the MIT results.
This rule would add a new paragraph allowing the BLM to require
the operator to provide further information about any representation submitted under paragraph (i).
In this revised proposed rule these sections have been significantly
revised. The regulations would no longer require operators to
submit all information about chemicals to the BLM, to segregate
trade secrets, and to justify the assertion of trade secret protection. Instead, the regulations would instruct operators not to disclose trade secret information to the BLM or on FracFocus. Operators would submit an affidavit stating that the withheld information is entitled to withholding from the public under Federal statute or regulation. The BLM would retain authority to require operators to submit the claimed trade secret information.
This rule would add a new paragraph requiring operators to keep
the information claimed to be trade secrets for 6 years, by reference to existing 43 CFR 3162.4–1, which applies to all lease
operations.
This rule would add a new provision allowing States and tribes to
work with the BLM to create variances applicable to all lands
within a field, a basin, a State, or Indian lands. Such a variance
would have to meet or exceed the effectiveness of the rule provision it replaces.
Section-by-Section Discussion of the
Revised Proposed Rule and Discussion
of Comments
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Comments Addressed in This Revised
Proposed Rule
In this revised proposed rule, the
BLM discusses many of the comments
received on the proposed rule. The BLM
will fully discuss comments on the
initial proposed and revised proposed
rules in the eventual announcement of
the final rule. Commenters provided
detailed and helpful information. The
BLM desires to demonstrate how public
comment assisted in framing the issues
and to ultimately produce this revised
proposed rule. The Department does not
address every comment in this revised
rule, because the changes in this revised
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proposed rule have mooted some
comments on the initial proposed rule.
Other comments were not central to the
re-evaluation the BLM has undertaken,
and thus discussion of those few
comments would not contribute to the
public’s understanding of the reasons
the BLM is publishing the revised
proposed rule.
Additionally, not every change in the
revised proposed rule responds to a
specific comment. Some revisions
clarify the proposed rule, and still other
revisions allow this revised rule to be
more effective with reduced costs and
delays to operators and to the BLM.
This revised proposed rule identifies
some issues on which the BLM
specifically seeks comments. The
public, however, may submit comments
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on any provision of the revised
proposed rule. All comments received
in response to the initial proposed rule
will be in the record of any final rule;
accordingly, the public does not need to
resubmit comments to the initial
proposed rule in response to this
revised proposed rule.
General Comments on the Initial
Proposed Rule
The BLM received comments both
supporting and questioning the need for
a rule regulating hydraulic fracturing.
Supporters stated, among other things,
that the rule protects groundwater and
ensures that operators properly handle
flowback water. In general, the
opposition stated that BLM regulation of
hydraulic fracturing is unnecessary and
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argued that no scientific basis exists that
hydraulic fracturing causes groundwater
contamination and that it is a low-risk
operation. The opposition further
argued that States should regulate
hydraulic fracturing and that many
States already have current rules. The
BLM acknowledges that many States do
have regulations in place; however, not
all of the States that contain Federal
lands under the BLM’s jurisdiction have
hydraulic fracturing regulations.
Further, FLPMA and other Federal law
provide for public involvement that is
not always required in State law. In
addition, the BLM has responsibilities
for Indian resources and State
regulations do not apply to Indian
lands. Furthermore, States do not
uniformly require measures that would
uphold the BLM’s responsibilities for
federally managed public resources, to
protect the environment and human
health and safety on Federal and Indian
lands, and to prevent unnecessary or
undue degradation of the public lands.
By taking additional steps to ensure
wellbore integrity and to control the
handling of flowback water, potential
impacts of hydraulic fracturing can be
mitigated.
Some commenters questioned
whether the BLM’s proposed regulations
are premature, because the
Environmental Protection Agency (EPA)
is currently conducting a multi-year
study on the potential impact of
hydraulic fracturing on drinking water
resources, with a final report due in
2014. The BLM is aware of the ongoing
EPA study relating to the impacts of
hydraulic fracturing. While the EPA
study may offer additional information
regarding the potential impacts of
hydraulic fracturing, nothing in the
revised proposed regulations would
contradict or conflict with the EPA
study, which does not focus on the
management of public lands and
resources subject to Federal public
lands law. Notwithstanding the findings
that will be included in the EPA’s
anticipated study, this revised
regulation prevents undue or
unnecessary degradation of public lands
and furthers the Secretary’s trust
responsibilities on Indian lands.
Some commenters disputed the
authority of the BLM to regulate well
construction and regulate water
supplies used for, or potentially
impacted by, hydraulic fracturing. Other
commenters asserted that the proposed
rule infringes upon State and tribal
water rights authority. FLPMA directs
the BLM to manage the public lands so
as to prevent unnecessary or undue
degradation. FLPMA also requires that
the public lands be managed in a
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manner that will protect the quality of
resources, i.e. ecological,
environmental, and water resources.
Regulating wellbore construction meets
these mandates. The Indian lands
leasing statutes direct the Secretary to
regulate oil and gas operations on
Indian lands. The Secretary has
delegated his authority for regulating
downhole activities on Indian mineral
leases to the BLM. The BLM has
historically regulated the construction
of wellbores through approvals of APDs
(applying the Onshore Oil and Gas
Order Numbers 1 and 2). This rule
would supplement existing regulations
regarding wellbore construction
(Onshore Oil and Gas Order Number 2,
Drilling (53 FR 46790)).
The revised proposed regulations at
sections 3162.3–3(d)(3) and 3162.3–
3(i)(2) would require submission of
information on water sources to assist
the BLM in assessing the environmental
effects of individual drilling operations.
The National Environmental Policy Act
and the implementing regulations by the
Council on Environmental Quality
require that Federal agencies assess the
environmental impacts of their
proposed actions and inform their
decision-making. The information on
water sources will be part of an
environmental assessment regarding
how water is being supplied for the
hydraulic fracturing operation. The
BLM does not intend to regulate water
use, but instead to acquire information
on the water used incidental to oil and
gas operations on Federal and Indian
lands. Acquisition of this information is
similar to requirements in Onshore Oil
and Gas Order No. 1, Approval of
Operations (72 FR 10308) for drilling a
well. Onshore Order No. 1 requires the
operator to identify the source, access
route, and transportation method for all
water anticipated for use in drilling the
proposed well. Based on information
received at this time, the requirement in
Onshore Order No. 1 has not caused
conflicts with State or tribal water rights
authorities. Likewise, based on BLM’s
previous experience with the
information requirements of its existing
onshore orders, BLM does not anticipate
that the requirements proposed here
will cause any conflicts. The revised
proposed regulation does not regulate
Indian, State, and private water rights.
Accordingly, the Department made no
revisions to the initial proposed rule as
a result of these comments.
The BLM received some comments
stating that the rule should clarify the
jurisdiction or scope of this rule. The
revised proposed rule falls under 43
CFR part 3160. The jurisdiction (scope)
of all sections under part 3160, which
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would include this revised proposed
rule, is defined in existing regulations at
43 CFR 3161(a), which states: ‘‘[a]ll
operations conducted on a Federal or
Indian oil and gas lease by the operator
are subject to the regulations in this
part.’’ Therefore, this revised proposed
rule would not apply to hydraulic
fracturing operations on private or State
leases, even leases included in a Federal
or Indian agreement. The BLM’s only
jurisdiction on private and State leases
is for site security, measurement, and
reporting of production when the
private or State lease is committed to a
Federal or Indian agreement. Existing
regulations already define the
jurisdiction or scope of the revised
proposed rule, so the Department made
no revisions to the initial proposed rule
as a result of these comments.
Some commenters requested that the
BLM coordinate permitting and
reporting with States to avoid
duplication. Some commenters faulted
the BLM for undermining the efforts of
State oil and gas commissions to
regulate hydraulic fracturing. The BLM
has revised the initial proposed rule to
avoid duplication with State
requirements. Nonetheless, the BLM
needs to have accurate information
about the construction and completion
of oil and gas wells on Federal and
Indian land. The BLM acknowledges the
efforts necessary to comply with State or
tribal and BLM regulations, but modern
information technology significantly
reduces the time and expense of
reporting the same information to both
a State or tribal agency and to the BLM.
Federal law is clear that the Federal
Government has extensive authority
over Federal lands and Indian lands,
and that State governments may
exercise certain powers on non-Indian
lands, except in instances where Federal
law preempts State law. The notice,
approval, testing, operational, and
reporting requirements of the revised
proposed regulation would in no way
undermine the efforts of State agencies
to regulate hydraulic fracturing. The
BLM recognizes the advantages to
building upon existing relationships
established with the different States and
tribes as a prudent approach to
maintaining efficiency and flexibility
while reducing duplication. It makes
sense for both the BLM and the States
or tribes with oil and gas activity to
explore ways to coordinate
implementation of this revised proposed
rule. For States or tribes that maintain
hydraulic fracturing rules that meet or
exceed the standards that would be
imposed by this revised proposed rule,
the BLM will pursue amending or
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updating the existing agreement with
each State or tribe to reflect the
expectation and responsibilities for each
agency. An example of an existing
agreement is the State of Colorado
which has a Memorandum of
Agreement with the BLM (and the
United States Forest Service) for
Permitting and Oil and Gas Operations
on BLM and National Forest Service
Lands in Colorado.
The BLM is committed to working
with tribes to coordinate
implementation of this revised proposed
rule with the tribes’ laws, rules, and
permitting and inspection programs.
The contents of such agreements or
understandings might be different for
each tribe, but such agreements actively
seeking opportunities to share
standards, information, and processes
should yield more consistency for
operators and better efficiency for the
BLM and tribal agencies.
Some commenters said that the
proposed rule is inconsistent with
existing laws or regulations such as the
Energy Policy Act of 2005 and EPA’s
New Source Performance Standards. For
instance, some commenters believed
that the proposed permitting
requirements would cause delays in
permitting that would violate the
timeframes mandated by the Energy
Policy Act. The BLM disagrees with
these comments. Changes from the
initial proposal in this revised proposed
rule would reduce possible permitting
delays and BLM projected workload.
The BLM would meet the requirements
of the Energy Policy Act by informing
the operator what steps remain to be
completed and the schedule for
completion of these requirements for
processing of their drilling permits.
Often delays occur from submittal of
incomplete information or surveys as
part of the drilling permit proposal, or
due to turnover in industry permitting
specialists. The BLM has increased the
number of drilling permits approved
over the past 3 years, and does not
believe such productivity gains will be
negatively impacted by this revised
proposed rule. The BLM received some
comments that certain definitions and
requirements in the proposed rule were
vague. The commenters stated that
without clarification, this purported
vagueness could lead to
misinterpretation by operators and
inconsistent application by BLM
engineers and inspectors. Because the
revised proposed rule uses different
approaches to regulation than the initial
proposed rule, some definitions have
been revised. The BLM worked to
ensure the revisions also increased
clarity. The BLM believes that the
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definitions are sufficiently clear to the
industry, the BLM, and the public. To
the extent that some definitions might
be construed as open-ended, it is
because the rule must allow for some
degree of flexibility to accommodate the
wide range of geologic and
environmental conditions encountered
on Federal and Indian leases.
Some commenters stated that the
BLM does not have the staffing, budget,
or the number of experts needed to
implement the rule, which will cause
delays in approvals. The BLM does not
agree with the assertion regarding the
lack of BLM staff expertise. Also the
revisions proposed in this revised
proposed rule would reduce the amount
of staff time required to implement the
rule and limit any permitting delays.
The changes include the option of
including multiple wells with
substantially similar geology in the
permit application (type wells),
narrowing the scope of the rule to
include only hydraulic fracturing, and
the elimination of the proposed
requirement for the BLM to review and
approve CBLs prior to hydraulic
fracturing. These changes are discussed
further in other sections of this rule.
Some BLM offices, especially those
that process a large volume of drilling
applications, may experience delays in
implementing the revised proposed
rule. The BLM is mindful of this issue
and already provides remote assistance
from other offices. As with the
implementation of any new rule, some
delays may be inevitable. This rule,
however, will help prevent unnecessary
or undue degradation of public lands
and to provide protection to Indian trust
resources.
Some commenters recommended that
the BLM, State, or tribes should inspect
all hydraulic fracturing operations on
Federal and Indian land. The BLM did
not revise the rule as a result of these
comments. As part of the BLM’s annual
inspection strategy, the BLM inspects all
workover operations, including
hydraulic fracturing, on Federal and
Indian lands that are rated as a high
priority. This rating depends on
measuring many factors, including the
type of operation, the location, and the
potential impacts of the operation.
The BLM received some comments
objecting to the application of the rule
to ‘‘well stimulation’’ operations which,
as defined in the May 2012, proposed
rule, includes any operation designed to
increase the permeability of the
reservoir rock. The definition
specifically included acidization, but
could also be interpreted to mean other
operations such as thermal stimulation
and maintenance fracturing, designed to
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open up fractures near the wellbore.
Some of the commenters stated that the
requirements in the proposed rule were
too onerous for what they considered to
be routine maintenance operations. The
commenters requested that the rule
apply only to hydraulic fracturing
operations.
The BLM agrees with these comments
and made several revisions to the
revised proposed rule as a result.
Section 3162.3–3(a) has been revised to
apply only to hydraulic fracturing and
refracturing, rather than to well
stimulation as stated in the proposed
rule.
In addition, definitions of ‘‘hydraulic
fracturing’’ and ‘‘refracturing’’ have
been added to the revised proposed rule
(section 3160.0–5) instead of the
previous definition of well stimulation.
In this revised proposed rule, the term
‘‘hydraulic fracturing’’ specifically
excludes enhanced secondary recovery,
such as water flooding, tertiary
recovery, recovery through steam
injection, and other types of well
stimulation such as acidizing.
Some commenters requested
clarification of the requirements for
operators who conduct hydraulic
fracturing operations on or near land
managed by other Federal agencies such
as the National Park Service (NPS) and
the United States Forest Service (USFS).
One commenter wanted to ensure that a
comprehensive NEPA document was
prepared and that the BLM include the
NPS as a cooperating agency when
hydraulic fracturing operations are near
National Parks. Another commenter
wanted the rule to specify that it
applied to USFS managed land. When
warranted, the BLM invites other
agencies, including the USFS and the
NPS, to participate in the preparation of
the NEPA analysis.
The involvement of other agencies
reflects the site-specific issues and
potential impacts to resources. On USFS
lands, the USFS typically has the lead
responsibility for compliance with
NEPA as part of its review of the surface
use plan of operation, and the BLM
serves as a cooperating or joint lead
agency. The revised proposed rule, as
with all of the other regulations in 43
CFR part 3160 (see 43 CFR 3161.1—
Jurisdiction), would apply to USFS
lands. No revisions were made to the
rule as a result of these comments.
The BLM received some comments
requesting that the rule include a ban on
the use of diesel fuel in hydraulic
fracturing operations. Jurisdiction over
the use of diesel fuel in hydraulic
fracturing operations lies with the EPA
through its administration of the
Underground Injection Control (UIC)
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program. (SDWA, Section 1421(d)(1)(B),
42 U.S.C. 300h(d)(1)(B)(ii,40 CFR
144.11). Owners or operators who inject
diesel fuels during hydraulic fracturing
related to oil and gas operations must
obtain a UIC permit before injection
begins. The EPA published draft
permitting guidance for oil and gas
hydraulic fracturing operations using
diesel fuels in May 2012. Thus the BLM
did not revise the rule as a result of
these comments.
The BLM received some comments
that certain provisions of the proposed
rule were open ended, which would
give BLM too much discretion and
would result in uncertainty, delays, and
increased costs for operators. For
example, some comments suggested that
the ability of the BLM to request
additional information in the Sundry
Notice requesting approval for hydraulic
fracturing (section 3162.3–3(d)(7)) was
open ended. The BLM believes that the
provisions in the revised proposed rule
are necessary to provide the flexibility
essential to regulating operations over a
broad range of geologic and
environmental conditions. Requests for
information from the Authorized Officer
are administratively appealable if an
operator believes the directive lacks a
proper basis. The BLM did not revise
the rule as a result of these comments.
The BLM received some comments
suggesting that all wells permitted prior
to the effective date of the rule should
be exempt from the provisions of the
rule, that the rule be phased in over a
period of 180 days, and that older wells
should be reviewed for information
only. The BLM understands the
commenters’ concerns. Nonetheless, the
primary goal of this rule is to ensure
that hydraulic fracturing does not cause
negative impacts to Federal or Indian
resources, including groundwater and
surface water. This is achieved by
ensuring wellbore integrity is
maintained throughout the hydraulic
fracturing process and placing
restrictions on the handling of flowback
water. Achieving these goals is critical
regardless of when the BLM approved
the APD or if the proposed operation
will take place immediately after the
effective date of the rule or 180 days
after the effective date of this rule. The
BLM did not revise the rule as a result
of these comments.
Section Discussion
As an administrative matter, this rule
would amend the authorities section for
the BLM’s oil and gas operations
regulations at 43 CFR 3160.0–3 to
include FLPMA. Section 310 of FLPMA
authorizes the Secretary of the Interior
to promulgate regulations to carry out
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the purposes of FLPMA and other laws
applicable to the public lands. See 43
U.S.C. 1740. This amendment would
not be a major change and would have
no effect on lessees, operators, or the
public.
This rule would remove the terms
‘‘nonroutine fracturing jobs,’’ and
‘‘routine fracturing jobs,’’ from 43 CFR
3162.3–2(a) and 43 CFR 3162.3–2(b). It
would add a new section, 43 CFR
3162.3–3, for hydraulic fracturing
operations. In this rule, there would be
no distinction drawn between
‘‘nonroutine’’ or ‘‘routine’’ hydraulic
fracturing operations. Prior approval
would be required for hydraulic
fracturing operations, but would be
available concurrently with the prior
approval process that is already in place
for general well drilling activities
through the APD process. The running
of CELs on surface or intermediate
casing strings, which is currently an
optional practice, would be required for
new wells where the casing protects
usable water, except for wells
substantially similar to an operator’s
‘‘type well’’ for which the operator has
demonstrated the efficacy of the cement
bonding of casing under similar
geological conditions within the same
field. All wells would require
mechanical integrity testing prior to
hydraulic fracturing.
The revised proposed rule includes
eight new definitions for technical terms
used in the rule. These definitions will
improve readability and clarity of the
regulations.
Published in this rule are the
following definitions:
• Annulus means the space around a
pipe in a wellbore, the outer wall of
which may be the wall of either the
borehole or the casing; sometimes also
called the annular space.
• Bradenhead means a heavy, flanged
steel fitting connected to the first string
of casing that allows suspension of
intermediate and production strings of
casing, and supplies the means for the
annulus to be sealed off.
• Hydraulic fracturing means those
operations conducted in an individual
wellbore designed to increase the flow
of hydrocarbons from the rock formation
to the wellbore through modifying the
permeability of reservoir rock by
breaking it. Hydraulic fracturing does
not include enhanced secondary
recovery such as water flooding, tertiary
recovery, recovery through steam
injection, or other types of well
stimulation operations such as
acidizing. The BLM changed the
proposed rule’s term ‘‘stimulation fluid’’
to ‘‘hydraulic fracturing fluid’’
throughout these regulations.
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• Hydraulic fracturing fluid means
the liquid or gas, and any associated
solids used in hydraulic fracturing,
including constituents such as water,
chemicals, and proppants.
• Proppant means a granular
substance (most commonly sand,
sintered bauxite, or ceramic) that is
carried in suspension by the fracturing
fluid and that serves to keep the cracks
open when fracturing fluid is
withdrawn after a hydraulic fracture
treatment.
• Refracturing means a hydraulic
fracturing operation subsequent to the
completion of a prior hydraulic
fracturing operation in the same well.
For purposes of this definition, a
hydraulic fracturing operation is
completed when a well begins
producing oil or gas, or when
equipment necessary to inject the
hydraulic fracturing fluid at sufficient
pressure to fracture the stratum is
removed from the well pad, whichever
occurs earlier.
• Type well means an oil and gas well
that can be used as a model for well
completion in a field where geologic
characteristics are substantially similar
within the same field, and where
operations such as drilling, cementing,
and completions using hydraulic
fracturing are likely to be successfully
replicated using the same design.
Usable water means generally those
waters containing up to 10,000 ppm of
total dissolved solids.
The proposed rule used the term
‘‘well stimulation’’ to describe the
activities being regulated by this rule. In
this revised proposed rule, that term is
replaced with the term ‘‘hydraulic
fracturing.’’ The reason for the change is
because, after reviewing all of the
comments and considering the available
information, the BLM has determined
that only hydraulic fracturing
operations require the additional
measures in this rulemaking. This
definition also has language that
explains the types of secondary recovery
activities to which this rule does not
apply.
This rule also includes the following
three terms that were not in the
proposal: Hydraulic fracturing fluid;
refracturing; and type well. These terms
are defined so that there is a common
understanding of the regulatory
provisions that follow.
This rule would delete the definition
of ‘‘fresh water,’’ and is consistent with
how the BLM has been protecting all
usable waters in its onshore orders.
Usable water includes fresh water (often
defined as water containing less than
5,000 parts per million (ppm) of total
dissolved solids (TDS)) and water that is
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of lower quality than fresh water. The
BLM has been more protective when it
seeks to protect all usable water during
drilling operations, not just fresh water.
This policy was established upon the
effective date of Onshore Order No. 2,
December 19, 1988. Water with up to
10,000 ppm TDS may be used for some
agricultural or industrial purposes, often
with some treatment, and thus would
continue to be protected under this
revised proposed rule. Not all waters of
up to 10,000 ppm TDS need to be
isolated or protected from hydraulic
fracturing operations; clarifying edits
have been added to help the public
understand how the rule will affect
operations.
The rule would revise section 3162.3–
2(a) by removing the phrase ‘‘perform
nonroutine fracturing jobs’’ from the
current 43 CFR 3162.3–2(a). The phrase
‘‘routine fracturing jobs, or’’ would also
be removed from existing section
3162.3–2(b). This rule does not affect
requirements for acidizing jobs, and this
rule would not remove the reference to
acidizing jobs from section 3162.3–2(b).
Hydraulic fracturing operations are
addressed under section 3162.3–3.
In paragraph (a) of this section, the
term ‘‘commingling’’ in the initial
proposed rule would be replaced with
the term ‘‘combining’’ to clarify the
intent of this requirement and to avoid
confusion with the meaning of
‘‘commingling’’ as that term is used in
a production accounting context and in
sections 3162.7–2 and 3162.7–3 of this
title. The term ‘‘commingling’’ in a
production accounting context refers
only to the combining of production
from different leases, communitized
areas (CA), participating areas (PA), or
State or private mineral estates prior to
royalty measurement. Commingling,
whether it is downhole commingling or
surface commingling, requires BLM
approval to ensure that the allocation
method is consistent with Onshore Oil
and Gas Order Number 3, Site Security
(54 FR 8056), Onshore Oil and Gas
Order Number 4, Measurement of Oil
(54 FR 8086), and Onshore Oil and Gas
Order Number 5, Measurement of Gas
(54 FR 8100), for royalty measurement
purposes. The combining of production
from different intervals or zones within
a wellbore also requires BLM approval
to ensure that the zones proposed for
combining are compatible from a
reservoir standpoint, regardless of the
royalty implications. The intent of the
requirement in this section would be to
address reservoir concerns from
combining zones or intervals; therefore,
the word ‘‘commingling’’ was changed
to ‘‘combining.’’ The royalty
implications of commingling production
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from different leases, CAs, PAs, or State
and private properties are handled
under a separate approval process in 43
CFR 3162.7–2 and 3162.7–3.
Refracturing operations within 5 years
from the approval of a Notice of Intent
Sundry would be considered a
‘‘recompletion’’ under section 3162.3–
2(b). The subsequent report on those
operations would require the
information and certifications
prescribed in section 3162.3–3(i) of this
rule. Under section 3162.3–3(c)(3)(i), a
refracturing operation more than 5 years
after the approval of the Notice of Intent
Sundry would require BLM’s approval
of a new Notice of Intent Sundry.
The revised proposed rule would
change the scope of the regulation to
apply only to hydraulic fracturing
operations and not to other well
stimulation activities. Section 3162.3–
3(a) would make it clear that this
section applies only to hydraulic
fracturing operations and that all other
injection activities must comply with
section 3162.3–2. This language is
necessary to make the distinction
between hydraulic fracturing and other
well injection activities, such as
secondary and tertiary recovery
operations. Secondary and tertiary
recovery operations do not involve the
injection of chemicals at pressures high
enough to fracture strata, and thus do
not raise the same concerns of breaching
the well bore and migrating into usable
water.
New paragraph 3162.3–3(b) would
require that all fracturing and
refracturing operations meet the
performance standard in section
3162.5–2(d) of this title. Among other
things, that section requires operators to
isolate all usable water and other
mineral-bearing formations and protect
them from contamination.
Some commenters requested more
clarity on how the definition of usable
water would apply to the requirement to
isolate and protect usable water from
contamination from hydraulic fracturing
operations. The BLM has revised the
definition of usable water to specify
that, for purposes of the hydraulic
fracturing regulations, usable water
includes underground sources of
drinking water, zones actually used for
water supply for industrial or
agricultural purposes (unless the
operator shows that the industrial or
agricultural user would not be harmed
by failure to protect or isolate), and
zones designated by the State or the
tribe as requiring isolation or protection
from oil and gas operations. The BLM
has also revised the section to specify
that, for the purposes of the hydraulic
fracturing regulations, usable water does
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not include the zone authorized for
hydraulic fracturing, zones designated
as ‘‘exempted aquifers’’ under the Safe
Drinking Water Act (SDWA), and zones
that the State or tribe have explicitly
designated as exempt from any
requirement for oil and gas operators to
isolate or protect. Any other zones
containing water that does not exceed
10,000 ppm TDS would be considered
usable water. The BLM recognizes that
including aquifers not otherwise
exempted would be consistent with its
Oil and Gas Onshore Orders, but may
make the rule more stringent than other
Federal, State, and tribal laws. The BLM
invites comments specifically on the
incremental costs associated with
protecting zones that contain up to
10,000 ppm of total dissolved solids,
that are not already protected under
SDWA or equivalent State or tribal law,
and not excluded in the proposed
definition (i.e., those aquifers protected
by part (4) in the proposed definition of
usable water). BLM may consider
excluding such zones in the final rule.
The BLM believes that the revised
language makes explicit the appropriate
deference to the expertise and
professional judgment of the State or
tribal agencies entrusted to manage the
groundwater resources under their
respective jurisdictions.
Section 3162.3–3(c) would require the
BLM’s approval of all proposals for
hydraulic fracturing or refracturing
activity. The operator has the option of
applying for the BLM’s approval in its
APD, including the information
required by paragraph (d) of this
section.
The operator may submit a Sundry
Notice and Report on Wells (Form
3160–5) as a Notice of Intent Sundry for
the hydraulic fracturing proposal for the
BLM’s approval before the operator
begins the fracturing activity. This
section would supersede and replace
existing section 3162.3–2(b) that states
that no prior approval is required for
routine fracturing. That reference in the
existing section would be deleted. Also,
an operator must submit a new Sundry
Notice prior to hydraulic fracturing
activity:
• If the BLM’s previous approval for
hydraulic fracturing is more than 5
years old,
• If the operator becomes aware of
significant new information about the
relevant geology, the fracturing
operation or technology, or the
anticipated impacts to any resource, or
• If the operator proposes refracturing
of the well.
The 5-year period is consistent with
practices in some States, including
Montana, Wyoming, and Colorado,
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which require that operators reconfirm
well integrity for fracturing operations
through a pressure test every 5 years.
The requirement to submit a new NOI
for refracturing is new to this revised
proposed rule and is added to clarify
that approval of a single hydraulic
fracturing operation in a well does not
allow for multiple refracturing
procedures without compliance with
the notice, monitoring, and reporting
requirements.
The BLM understands the timesensitive nature of oil and gas drilling
and well completion activities and does
not anticipate that the submittal of
additional hydraulic fracturing-related
information with APD applications will
significantly impact the timing of the
approval of drilling permits. The BLM
believes that the additional information
that would be required by this rule
would be reviewed in conjunction with
the APD and within the normal APD
processing time frame. Also, the BLM
anticipates that requests to conduct
hydraulic fracturing operations on
existing wells that have been in service
more than 5 years will be reviewed
promptly. The BLM understands that
delays in approvals of operations can be
costly to operators and the BLM intends
to avoid delays whenever possible.
Furthermore, if an operator believes that
approval of hydraulic fracturing would
be swifter if it is not part of the APD,
the operator has the option of
submitting the Notice of Intent Sundry
at a later date. However, the operator
does not obtain an exemption from any
requirement of this regulation by
submitting a Notice of Intent Sundry
after drilling and cementing operations
have commenced.
Section 3162.3–3(d) has been revised
from what was originally proposed to
allow the Sundry Notice required by
this section to be submitted for a single
well or a group of wells. If the
submission is for a group of wells that
share substantially similar geological
characteristics, the information should
describe the ‘‘type well.’’ ‘‘Type well’’ is
a term commonly used in the oil and gas
industry and the BLM added it as a new
definition in section 3160.0–5 of this
rule. By constructing and monitoring a
type well, including running a CEL on
casing that encounters usable water, the
operator demonstrates that its
engineering design and execution
effectively isolate aquifers with usable
water in the field. The same operator
may then replicate the type well for
each of the wells in the approved group
for the same field. The operator would
not need to run a CEL on those wells
unless the monitoring data indicated a
problem with the cementing.
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Section 3162.3–3(d)(1) would require
a report that includes the geological
names, a geological description, and the
proposed measured depth of the top and
the bottom of the formation into which
hydraulic fracturing fluids would be
injected. The report is needed so that
the BLM may determine the properties
of the rock layers and the thickness of
the producing formation and identify
the confining rocks above and below the
zone that would be stimulated.
Under this revised proposed rule,
section 3162.3–3(d)(2) would be revised
by removing the reference to the CBL,
because under this rule prior approval
of a CBL or other CEL would no longer
be routinely required. The change in
this section is as a result of changes to
paragraph (e) and is necessary to make
this section consistent with those
changes. Section 3162.3–3(d)(2) would
be revised to require the operator to
submit the measured or estimated
depths of all occurrences of usable
water using a drill log from the subject
well or any other well sharing the same
geological characteristics within the
same geologic formation, which will
help the BLM in its efforts to make sure
that water resources are protected. As it
pertains to the depths of all occurrences
of usable water, the word ‘‘estimated’’
has been added because at the planning
stages of the operation, the actual
measured depths would not generally be
available.
Although prior approval of a CEL
would no longer be routinely required,
operators would be required to submit
to the BLM the results of a CEL with the
post-completion sundry notice. The
BLM will be reviewing the well drilling
and completion records and logs
including the CEL, to help verify that
operators have complied with their duty
to assure that the casings are properly
cemented.
Section 3162.3–3(d)(3) would require
reporting of the measured depth to the
perforations in the casing and uncased
hole intervals (open hole). This section
would also require the operator to
disclose specific information about the
water source to be used in the fracturing
operation, including the location of the
water that would be used as the base
fluid. The BLM needs this information
to determine the impacts associated
with operations. This rule would add
‘‘reused or recycled water’’ to the
example list of sources and location of
the water supply to be used for
fracturing operations. The rule makes it
clear that reused or recycled water is a
recognized source of water supply for
these types of operations. The
information required by this paragraph
does not interfere with State or tribal
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regulation of water allocation. The
operators would need to comply with
all State or tribal water laws, but need
not disclose to the BLM the documents
evidencing their rights to use the water.
This regulation would in no way
discourage operators from reusing or
recycling water for new hydraulic
fracturing operations.
Initial proposed section 3162.3–
3(c)(4) would have required operators to
certify in writing that they have
complied with all applicable Federal,
tribal, State, and local laws, rules, and
regulations pertaining to fracturing
fluids before a fracture is attempted.
This section has been deleted from the
revised proposed rule because the BLM
believes that requiring this certification
after the operator has completed
hydraulic fracturing operations (see
section 3162.3–3 (i)(7)) adequately
protects Federal and Indian lands and
resources and, therefore, the burden on
industry of providing and on the BLM
of reviewing that information ahead of
operations is not justified.
Section 3162.3–3(c)(5) has been
renumbered in this revised proposed
rule as section 3162.3(d)(4) and has
been revised. Section 3162.3–3(d)(4)
would require the operator to submit a
plan for the hydraulic fracturing design.
This information is needed in order for
the BLM to be able to verify that the
proposed hydraulic fracturing design is
adequate for safely conducting the
proposed well stimulation.
Section 3162.3–3(d)(4)(i) would
require the operator to submit the
estimated total volume of fluids that
will be used in the hydraulic fracturing
operations.
Section 3162.3–3(d)(4)(ii) would
require submission of the anticipated
surface treating pressure range. This
information is needed by the BLM to
verify that the maximum wellbore
design burst pressure will not be
exceeded at any stage of the hydraulic
fracturing operation.
Section 3162.3–3(d)(4)(iii) would
require the maximum injection treating
pressure information to be submitted.
This information is needed by the BLM
to verify that the maximum allowable
injection pressure will not be exceeded
at any stage of the hydraulic fracturing
operation.
Section 3162.3–3(d)(4)(iv) would
require the operator to submit the
estimated fracture direction, length, and
height, including the fracture
propagation plotted on a map so that the
BLM can ensure that the fracturing
operations do not threaten aquifers,
other resources, or other operations. The
rule would also require that the
information include the estimated
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fracture propagation plotted on the well
schematics and on a map. The rule
would require that the map must be of
a scale no smaller than 1:24,000, which
is the scale required for the map
included in an APD.
The rule also would add a new
paragraph 3162.3–3(d)(4)(v) that
requires submission of the estimated
vertical distance to the base of the
nearest usable water aquifer above the
fracture zone. The rule would require
this information to assure that usable
water is isolated from propagated
fissures. Fracturing operations that are
expected to propagate fissures vertically
to depths near those of usable water
may require closer scrutiny by the BLM
than those with thousands of feet
between the fissures and aquifers.
Section 3162.3–3(d)(5) would require
the operator to provide for BLM’s
approval information about the
handling of recovered fluids. This
information is being requested so that
the BLM has all necessary information
regarding chemicals being used in the
event that the information is needed to
help protect health and safety or to
prevent unnecessary or undue
degradation of the public lands. The
BLM has deleted the requirement for
operators to provide the estimated
chemical composition of flowback
fluids because it would in effect require
operators to reveal the total chemical
constituents of their hydraulic
fracturing fluids prior to operations. It
would also require speculation as to the
chemistry of fluids in the target zone,
and their reactions, if any, with the
hydraulic fracturing fluids. The BLM
has determined that operators may
justifiably change the chemical
composition of hydraulic fracturing
fluids after approval of fracturing
operations, and even during those
operations in response to such factors as
availability of chemicals and
unexpected geologic conditions. Thus,
the reliability of the pre-operational
estimated composition of flowback
fluids could be imperfect. The
composition of actual flowback fluids
could be appropriately determined from
the post-operational disclosure of the
chemicals used in the fracturing
operations. It is most important at the
approval stage, however, for the
operator to show that it has an adequate
plan to manage and contain the
recovered fluids that would prevent
them from contaminating surface water
or groundwater without regard to their
specific chemical composition.
Section 3162.3–3(d)(5)(i) would
require the operator to submit to the
BLM an estimate of the volume of fluid
to be recovered during flowback,
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swabbing, and recovery from production
facility vessels. This information is
required to ensure that the facilities
needed to process or contain the
estimated volume of fluid will be
available on location.
Section 3162.3–3(d)(5)(ii) would
require the operator to submit to the
BLM the proposed methods of managing
the recovered fluids. This information is
needed to ensure that the handling
methods will adequately protect public
health and safety.
Section 3162.3–3(d)(5)(iii) would
require the operator to submit to the
BLM a description of the proposed
disposal method of the recovered fluids.
This is consistent with existing BLM
regulations for produced waters (i.e.,
Onshore Oil and Gas Order Number 7,
Disposal of Produced Water, (58 FR
47354)). This information is requested
so that the BLM has all necessary
information regarding disposal of
chemicals used in the event it is needed
to protect the environment and human
health and safety on Federal and Indian
lands and to prevent unnecessary or
undue degradation of the public lands.
Section 3162.3–3(d)(6) would require
the operator to provide, at the request of
the BLM, additional information
pertaining to any facet of the hydraulic
fracturing proposal. For example, the
BLM may require new or different tests
or logs in cases where the original
information submitted was inadequate,
out of date, or incomplete. Any new
information that the BLM may request
will be limited to information necessary
for the BLM to ensure that operations
are consistent with applicable laws and
regulation, or that the operator is taking
into account site-specific circumstances.
Such information may include, but is
not limited to, tabular or graphical
results of an MIT, the results of logs run,
the results of tests showing the total
dissolved solids in water proposed to be
used as the base fluid, and the name of
the contractor performing the hydraulic
fracturing operation.
Comments on What the Notice of Intent
Sundry Must Include
Some commenters requested baseline
water testing prior to hydraulic
fracturing operations; however, the BLM
cannot authorize operators to enter nonFederal land to conduct baseline water
testing, so the BLM did not change the
revised proposed rule as a result.
Whether to require baseline water
testing on Federal land will be
addressed, as is the current practice, as
part of the analysis under the National
Environmental Policy Act (NEPA)
review, and the ‘‘downhole review’’ by
the BLM authorized officer pursuant to
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Onshore Oil and Gas Orders Nos. 1 and
2. For example, if local drilling or
geologic conditions, such as downhole
stratigraphy involving faults, fissures,
natural fractures, karst/limestone or
other similar conditions require extra
vigilance for any leaks of wellbore fluids
to the usable water, then additional
testing for baseline water could be
required by the BLM as a condition of
approval (COA) of a drilling permit.
Similarly, the site-specific NEPA
analysis of a drilling permit might
reveal local environmental conditions
that indicate a need to require baseline
testing as a COA.
The BLM received some comments
requesting that the BLM require up-front
disclosure of the chemicals proposed for
use in the hydraulic fracturing fluid.
Commenters indicated that only through
full up-front disclosure could the BLM
and the public assess impacts to water,
land, air quality, and human health and
safety. The proposed rule was not
revised based on these comments.
Analysis of the impacts from hydraulic
fracturing is done as part of the NEPA
analysis conducted prior to the issuance
of permits. For the purposes of NEPA
compliance, the exact composition of
the fluid proposed for use is not
required because chemicals used in the
hydraulic fracturing process are
generally considered potentially
hazardous for the purpose of impact
analysis and mitigation. Operators will
be aware that the rule requires
disclosure of hydraulic fracturing
chemicals after operations are complete
and operators will also be required to
certify that the hydraulic fracturing
fluid used complied with all applicable
permitting and notice requirements and
all applicable Federal, State, and local
laws, rules, and regulations (a separate
but similar certification is required for
Indian lands). The operator would also
be required to certify that wellbore
integrity was maintained prior to and
throughout hydraulic fracturing
operations. The BLM believes that the
post-fracturing disclosures and
certifications would provide adequate
assurances that the hydraulic fracturing
operations protect public health and
safety and protect Federal and Indian
resources.
The BLM also received comments in
opposition to pre-disclosure of chemical
constituents because of trade secret
concerns and positing that the actual
chemicals used will change from the
pre-drilling stage based on the results
encountered during drilling. While the
BLM agrees with these comments, no
revisions to the revised proposed rule
were made because neither the initial
proposed rule nor the revised proposed
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rule would require pre-disclosure of
chemicals.
The BLM received some comments
expressing concern about additional
delays that would be caused by the
permitting process in the proposed rule.
According to the comments,
unnecessary delays would be caused by
having to submit voluminous amounts
of information for each well proposed
for hydraulic fracturing or acidization,
the review and approval of CBLs prior
to hydraulic fracturing, and the lack of
BLM staff to perform these additional
reviews. Based on consideration of these
comments, the initial proposed rule has
been revised. The changes include the
option of including multiple wells with
similar geology in the permit
application (‘‘type wells’’), narrowing
the scope of the rule to include only
hydraulic fracturing, and the
elimination of the requirement for the
BLM to review and approve CBLs prior
to hydraulic fracturing. These changes
are discussed further in other sections of
this preamble.
The BLM received some comments
regarding the amount of information
required in section 3162.3–3(c) of the
proposed rule in order for the BLM to
grant approval of hydraulic fracturing
operations. The commenters stated that
much of this information, such as
flowback time and flowback volume, is
speculative. Commenters indicated that
data such as treatment volumes,
chemical composition, and other
specific design parameters can only be
determined after the well has been
drilled. Commenters also suggested that
instead of providing site-specific design
details which could change, the BLM
should allow operators to submit a
generic master design plan or type well
proposal.
The BLM agrees with these
comments. The revised proposed rule
(section 3162.3–3(d)) would provide for
a more streamlined permitting process
by allowing a Notice of Intent Sundry
Notice to cover a group of wells with
similar geologic characteristics, rather
than just a single well. If the Sundry
Notice is for a group of wells, the
information required in section 3162.3–
3(d) would be submitted for a type well
that represents a typical completion and
hydraulic fracturing procedure for the
group of wells included in the Sundry
Notice. The requirement to submit a
CBL prior to the BLM granting approval
for hydraulic fracturing is also being
removed in the revised proposed rule.
The BLM received some comments
that suggested that more information
should be required prior to approving a
plan or application for a permit to
hydraulically fracture a well. Some of
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the additional information suggested to
be obtained included the total amounts
of waste, recycling methods, produced
fluid disposal plans, fluid transportation
plans, on-site storage and chemical
composition of flowback water, more
geologic data, an emergency spill
response plan, and information about
confining zones. All of the suggestions
are already parts of required APD
components and other BLM regulations
including Onshore Orders Nos. 1, 2, and
7. The BLM did not revise the rule as
a result of these comments.
Some comments suggested that the
BLM require more information both preand post-hydraulic fracturing, including
common chemical names, composition
of recovered fluids, sources of water
used and storage/containment methods.
Existing regulations require advance
approval of plans for handling waste
and hazardous materials and sources of
water used in drilling and completing
wells on Federal and Indian lands. The
BLM did not revise the rule as a result
of these comments.
The BLM received some comments
stating that the proposed rule should
provide for ‘‘estimates’’ rather than
actual information in the permit
application. The reason given for
providing estimates is that the hydraulic
fracturing plan could change from the
time it is approved based on conditions
encountered during drilling and for
other reasons. The BLM partially agrees
with this comment and has revised the
rule so that it would allow the operator
to submit information for a type well
drilled in an area of similar geology in
lieu of submitting information specific
to every well proposed for hydraulic
fracturing. The BLM understands that
some of the information such as
formation depths, will be estimations of
various parameters; for example, wellspecific geological strata, formation
depth/zone of perforation and fracture,
expected amount of fracturing fluid
injection volumes and flowback from
the wellbore, expected pressure and
temperature during drilling and
completions, etc. However, the BLM
also requires that the operator submit a
Sundry Notice if major changes from the
approved permit are requested.
The BLM received some comments
that the proposed rule requires
documentation that is duplicative of
other regulatory requirements and
documents already submitted to the
BLM, particularly the APD and Well
Completion reports. The BLM agrees
that some of the data that would be
required in this rule is similar to that
found or contained in other reports,
forms and approved plans. However, the
BLM believes that the requested
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information is unique to the hydraulic
fracturing operation and is necessary for
the BLM to ensure that operations are
conducted in a manner that will protect
groundwater, surface water, and other
resources. The BLM did not revise the
rule as a result of this comment. The
BLM received some comments regarding
the timeframes for hydraulic fracturing
permit approvals. The commenters
suggested that the rule should specify a
set amount of time in which the BLM
must complete its review of hydraulic
fracturing proposals, and if that time
was exceeded, the proposal would be
automatically approved. The BLM did
not revise the rule as a result of these
comments because the imposition of a
timeframe or ‘‘automatic’’ approvals
could limit the BLM’s ability to ensure
protection of usable water and other
resources. The BLM cannot abdicate its
statutorily mandated responsibilities to
prevent unnecessary or undue
degradation of public lands and to
protect Federal and Indian resources by
establishing an artificial deadline. As
discussed in other sections, however,
the revised proposed rule would make
several changes to the permitting
process that would reduce the
possibility of unreasonable delays.
The BLM received some comments
questioning the rationale or need for the
information requested in both the
permit and the subsequent report. The
BLM has determined that the requested
information is important to assess the
environmental impacts of the proposed
operation as well as to ensure that
hydraulic fracturing operations will be
conducted in a manner that prevents
waste of valuable minerals, protects
other resources, and ensures public
health and safety. No revisions to the
rule were made as a result of this
comment.
The BLM received some comments
objecting to the requirement to estimate
or calculate fracture lengths both in the
application for hydraulic fracturing
(section 3162.3–3(d)) and in the
subsequent report (section 3162.3–3(i)).
The primary objection expressed by the
commenters is the difficulty, expense,
and high degree of uncertainty in
estimating, calculating, or measuring
fracture lengths. According to the
commenters, calculating fracture lengths
requires elaborate computer models,
which are often proprietary, and
measuring fracture lengths requires
seismic monitoring which adds time
and expense. Some commenters
questioned the need for this
information, especially given that the
target zone is usually thousands of feet
below any known usable water zones.
Other commenters stated that there is a
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significant economic incentive to
contain fractures to the target zone in
order to minimize the volume of fluid
required in the fracturing process.
In order to evaluate the potential
impacts of the proposed hydraulic
fracturing application, the BLM must
have information showing the estimated
fracture lengths. This information is
used to help ensure that fractures will
not intersect known fault zones,
communicate with older unplugged
wells with questionable wellbore
integrity, or communicate with usable
water zones. The BLM is aware that the
fracture lengths provided in the
application and subsequent report are
estimates. For the subsequent report, the
reporting of actual fracture lengths can
be used to identify potential problems.
The BLM did revise section 3162.3–3(i)
as a result of these comments; moreover,
section 3162.3–3(d) was revised to
clarify how the estimated fracture
lengths are to be provided to the BLM
in the application.
Section Discussion
Section 3162.3–3(e) is new to the rule.
This section would require monitoring
of cementing operations and would
require a CEL prior to hydraulic
fracturing operations for each casing
that protects usable water. The
requirements are necessary to ensure
that the usable water aquifers
intersected during well drilling have
been isolated to protect them from
contamination. Because aquifers are
permeable, operators routinely isolate
them from hydraulic fracturing
operations by lining the wellbore with
a tubular casing (typically metal casing).
‘‘Surface casings’’ are typically run for
the top 1,000 to 1,500 feet of a well.
‘‘Intermediate casings’’ are used where
necessary at greater depths. Operators
pump cement to the outside of the
casing to assure that the casing will
transmit the pressures of hydraulic
fracturing to the surrounding rock
without failure, and to assure that
neither fracturing fluids nor produced
oil and gas leak through or around the
casing and are lost. Cementing
operations, however, do not always
yield a perfect result. There may be
gaps, voids, or channels between a
casing and the rock wall of the wellbore
that lack adequate cement, and thus
may be vulnerable to failure or leaks. A
CEL is a class of tools that can be run
down a casing to assess whether there
are any significant gaps or voids in the
cement behind a casing. Operators
typically run a CEL on intermediate
casings, but not on surface casings when
the cement flows back to the surface.
For surface casing an operator generally
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observes the cement in the annulus, and
uses additional cement as needed. The
initial proposed regulations at section
3162.3–3(c)(2) would have required a
CBL prior to all hydraulic fracturing
operations. However, a CBL is only one
of a suite of technologies that are
described as CELs. Under this revised
proposed rule, other cement evaluation
technologies, either existing or
developed in the future, that are equally
effective may be used. An ‘‘equally
effective’’ technology in this context
would be any methodology or tool that
is at least as reliable as a CBL in
detecting gaps or voids in the cement
behind a casing and meets the
performance objective of validating the
wellbore integrity and isolating zones of
usable water.
Operators may choose from several
well logging techniques to evaluate the
quality of the cement behind casing.
Various types of logs provide different
types of information. For example, a
CBL presents the reflected amplitude of
an acoustic signal transmitted by a
logging tool inside the casing. Another
acoustic log presents the waveforms of
the reflected signals detected by the
logging tool receiver and provides
qualitative insights concerning the
casing, the cement sheath and the
formation. Ultrasonic logging tools
measure the resonant echoes.
Under this rule, operators would have
the flexibility of using suitable logs to
confirm a good cement bond behind the
casing to protect and isolate usable
water. The BLM will review those logs
after post-completion submission by the
operator.
New section 3162.3–3(e)(1) would
require the operator to monitor and
record the flowrate, density, and
treating pressure, and to submit a
cement operation monitoring report to
the BLM within 30 days after
completion of hydraulic fracturing
operations. The required monitoring
data would provide important
indications of problems with the
cementing of casings. That monitoring
data would help to verify the results of
a CEL and for wells where no CEL is
required will provide the primary
assurance that cementing operations
conformed to those of a proven type
well.
New section 3162.3–3(e)(2) would
require the operator to run a CEL for
each casing that protects usable water,
unless it is exempt from doing so under
(e)(3) of this section, and to submit these
logs to the BLM within 30 days after
completion of the hydraulic fracturing
operations. A CEL includes, but is not
limited to, a CBL, ultrasonic imager,
variable density logs, micro-
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seismograms, CBLs with directional
receiver array, ultrasonic pulse echo
technique, or isolation scanner.
Comments on Cement Bond Logs
The BLM received some comments in
response to proposed sections 3162.3–
3(b)(i), 3162.3–3(b)(ii), 3162.3–3(c)(2),
that would have required operators to
run CBLs and obtain approval from the
BLM prior to commencing hydraulic
fracturing operations. The commenters
focused on seven main issues: (1)
Allowing the use of other technology
besides CBLs; (2) The use of other
metrics to demonstrate zonal isolation;
(3) Delays and costs associated with
running and obtaining approval of CBLs
prior to commencing hydraulic
fracturing operations; (4) Reliability and
interpretation of CBLs; (5) The
incorporation of API Standard 65–2; (6)
The ability for operators to challenge or
appeal findings from the BLM regarding
CBL results; and (7) The possibility of
requiring CBLs on all casing strings, not
just the surface casing. These comments
are discussed in further detail below.
Some commenters suggested that the
BLM should allow the use of other
technologies in lieu of a CBL. The other
technologies that were suggested
include ultrasonic logs, variable density
logs, micro-seismograms, standard
CBLs, CBLs with directional receiver
array, ultrasonic pulse echo technique,
and isolation scanners. The BLM agrees
with this comment and believes that
these technologies could be effective at
demonstrating zonal isolation.
Therefore, section 3162.3–3(e)(2) would
replace the term CBL with a more
generic term, ‘‘cement evaluation log,’’
(CEL) which would include the
technologies suggested by the
commenters. It would also permit
operators to use logging tools which are
the most appropriate in any given
situation.
Some commenters stated that a CBL
provides only one indication of the
quality of a cement job. The comments
said that there are other, perhaps more
reliable, methods of determining the
quality of the cement job such as:
• Monitoring cement returns to the
surface during the cement job. If good
cement returns are achieved, it is a
positive indication that there were no
unexpected or untreated voids or
fractures in the wellbore, which helps
ensure that cement was properly placed
between the wellbore and the casing;
• Placing centralizers on the lower
joints of casing to ensure the casing is
concentric to the wellbore, allowing a
uniform cement sheath to form between
the casing and the wellbore;
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• Witnessing the amount of ‘‘fall
back’’ of cement in the annulus; while
it is normal for the top of the cement to
retreat down the annulus as the cement
sets, excessive fall-back can indicate
that problems were encountered during
the cement job;
• Monitoring the pressures, flow
rates, volumes, and densities of cement
during the cement job. If these
parameters are consistent with the
values anticipated during the design of
the cement job, it is a good indication
that no unexpected conditions were
encountered during the cementing and
that a cement seal has been established;
• Ensuring that there were no
equipment failures during the cement
job, such as line breaks or pump
failures; and
• Applying other analytic techniques
such as temperature logs and formation
integrity tests.
Some commenters stated that the
BLM should require the operator to run
a CBL only if one or more of these
methods indicated a problem with the
cement job. The BLM agrees with these
comments and proposes several
revisions in the revised proposed rule as
a result. The revised proposed rule
includes a new section 3162.3–3(e)(1)
that would establish requirements for
monitoring cementing operations,
including the need to monitor and
record flow rate, density, and pumping
pressure of the cement. In addition,
section 3162.3–3(e)(4) would require the
operator to run a CEL if there are
indications of an inadequate cement job
such as lost returns, cement channeling,
gas cut mud, or equipment failure. If the
monitoring information provides
indications of an inadequate cement job,
the operator would also be required to
notify the BLM within 24 hours, submit
a written report within 48 hours, and to
certify that the inadequate cement job
had been corrected and document that
zonal isolation had been achieved prior
to starting hydraulic fracturing
operations. The BLM also agrees with
the importance of centralizers in
obtaining zonal isolation; however,
because Onshore Order No. 2 (Section
III.B.1.f) already requires centralizers on
the bottom 3 joints of surface casing, an
additional requirement to run
centralizers is not needed in this rule.
Some commenters objected to the cost
of running a CBL on every well and,
perhaps more importantly, the delay
associated with the BLM review of CBLs
prior to allowing operators to start
hydraulic fracturing operations. Some
comments referenced the current delays
in permitting due to lack of staff and
stated that this additional approval step
would only serve to exacerbate these
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delays. Several revisions are included in
the revised proposed rule as a result of
these comments. For wells where there
are no indications of an inadequate
cement job, section 3162.3–3(e)(3)
would provide an option to run a CEL
only on a type well that is
representative of local geology and
typical drilling and completion
techniques. If the CEL run on the type
well demonstrated zonal isolation, CELs
would not be required on subsequent
wells where there were no indications
of an inadequate cement job. However,
Section 3162.3–3(e)(4) would require an
operator to run a CEL on all wells where
there are indications of an inadequate
cement job, such as, but not limited to,
lost returns, cement channeling, gas cut
mud, or failure of equipment, that show
that remedial action and evaluation are
necessary. In addition, the revised
proposed rule would eliminate the need
for the BLM to review and approve the
CEL prior to commencing hydraulic
fracturing operations. Instead, operators
would submit CELs run under section
3162.3–3(e)(2) within 30 days of
completing hydraulic fracturing
operations. CELs for type wells would
have to be submitted prior to exempting
subsequent wells under 3162.3–3(e)(3)
from the requirement to run a CEL.
Operators would submit CELs run under
3162.3–3(e)(4) at least 72 hours prior to
commencing hydraulic fracturing
operations; however no approval from
the BLM would be necessary. The BLM
considered a requirement for operators
to receive BLM approval prior to
commencing hydraulic fracturing
operations in these cases. The BLM
believes that the combination of the
proposed notice and certification
requirements would provide adequate
assurance of wellbore integrity prior to
hydraulic fracturing without incurring
additional delay or workload. The
proposed 24-hour notice would also
allow the BLM time to prioritize
inspections of the hydraulic fracturing
operation to verify compliance with
these proposed regulations, Onshore
Order Number 2, and the approved
APD.
The BLM received some comments
expressing concern about the reliability
of CBLs and the difficulties of
interpreting CBLs. Some commenters
stated that CBLs are not effective until
the cement has reached a certain
compressive strength because CBLs
work on the principal of acoustic
attenuation. At low compressive
strengths, commenters stated that the
acoustic properties of cement and water
are very similar and it is difficult to
delineate between the two when
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interpreting logs. The commenters went
on to state that the problem is more
pronounced in surface casing because
the lower formation temperature near
the surface prolongs the setting process,
requiring more time to achieve levels of
compressive strength that are required
for reliable log interpretation.
Comments about the additional waiting
times varied. One commenter suggested
that a CBL on the surface casing and
intermediate casing would delay
drilling operations 24 hours for each
test. Other commenters suggested that
the CBL requirement would delay
drilling operations by up to 72 hours for
the surface casing alone. The
commenters suggested that during this
time, operators would be required to
maintain idle drilling equipment on
site, at a significant cost to the
operators.
After researching these concerns, the
BLM acknowledges the potential
difficulties of running and interpreting
CBLs. As a result, the BLM has
determined that requiring CBLs on
every well may be unnecessarily
expensive, may induce unnecessary
delay, and will not provide increased
protection beyond what will be
available by requiring a CEL on type
wells. Therefore, the revised proposed
rule would give operators the option of
running a CEL on a type well as
discussed previously. A CEL would still
be required on all wells where there are
indications that there is an inadequate
cement job. The BLM also believes that
allowing the use of other technology
such as ultrasonic logs could make the
log interpretation less subjective.
The BLM also received some
comments expressing concerns about
the ability of BLM staff to properly
interpret CBLs. According to the
commenters, without adequate training
and experience, the BLM could
misinterpret a CBL run in a wellbore
with an adequate cement job and
conclude that there was an inadequate
cement job. This misinterpretation
would result in additional time and
expense for the operator to either
challenge the BLM’s finding or to
conduct expensive and unnecessary
remedial work. The BLM does not agree
with the assertion regarding the lack of
staff training and experience. However,
the BLM believes that the previously
discussed changes, including providing
a type well option, and eliminating the
need for a requirement to obtain BLM
approval of CELs prior to starting
hydraulic fracturing operations, address
the commenters’ concerns.
The BLM received some comments
which requested that the rule include an
appeal process for operators if the BLM
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were to deny hydraulic fracturing on a
well because the CBL could not
demonstrate zonal isolation. The BLM
did not revise this rule as a result of this
comment because a BLM decision to
deny authorization to hydraulically
fracture a well would be subject to the
administrative reviews already
established in 43 CFR 3165.3 and
3165.4. In addition, as discussed earlier,
the revised proposed rule would
eliminate the requirement for operators
to obtain BLM approval of CELs prior to
starting hydraulic fracturing operations.
Some commenters recommended that
the BLM require operators to run CELs
on all casing strings, not just the surface
casing because the isolation of usable
water, as required in Onshore Order No.
2, may be accomplished by other casing
strings. The proposed rule published in
May 2012 required CBLs on all casing
strings protecting usable water. The
BLM clarified this requirement in
3162.3–3(e)(2), with exceptions for type
wells, in this revised proposed rule.
Section Discussion
New section 3162.3–3(e)(3) would
explain that an operator is not required
to run a cement evaluation log on the
casings if the operator:
(1) Had submitted a CEL for a type
well that showed successful cement
bonding to protect against downhole
fluid cross-migration; and
(2) Completes a subsequent well or
wells with the same specifications and
geologic characteristics as the type well,
and approved in the same group sundry
notice for a single field, and the
cementing operations monitoring data
parallels those of the type well.
The BLM believes that where an
operator has designed a type well to be
replicated across a field (and often from
the same well pad), and the cement
monitoring data for each well and the
CEL for the type well show no
indications of cement problems, the
operator should be allowed to construct
the other wells in an approved group
within the same field without the
expense and potential delays of running
a CEL for each well. The same well
design and construction repeated within
the same field with the same monitoring
data should yield the same result:
adequate cementing. After considering
the comments, the BLM believes that
requiring each well to have a CEL for
the surface casing as originally proposed
would impose costs and possibly delays
on operators without providing
significant additional assurance of
adequate cementing to protect usable
water aquifers. In view of the comments
that insist that a CBL on surface casing
is unnecessary when the cement returns
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to the surface, the BLM is also seeking
comments on whether the requirements
to run a CEL on wells where there is no
indication of an inadequate cement job,
as proposed in paragraphs 3162.3–
3(e)(2) and (e)(3), is appropriate,
including specific information about the
costs and benefits of requiring CELs in
such cases. Under new section 3162.3–
3(e)(4), for any well, if there is any
indication of an inadequate cement
sheathing behind the casing such as, but
not limited to, lost returns, cement
channeling, gas cut mud, or failure of
equipment, the operator would be
required to notify the BLM within 24
hours of the occurrence, followed by a
written report within 48 hours.
Furthermore, the operator would be
required to remedy the situation first
following the standard industry
practice. When logging operations
indicate that the cement job is defective,
either in the form of poor cement
bonding or communication between
zones, a remedial cementing technique
known as squeeze cementing may be
performed to establish zonal isolation.
The commonly used steps to remedy
such problems include perforating the
casing at the defective interval and
forcing, or ‘‘squeezing,’’ cement slurry
through the perforations and into the
annulus to fill the voids. In addition,
squeeze cementing may be an effective
technique for repairing casing leaks
caused by a corroded or split casing.
The objective is to restore the barrier
integrity of the formations that were
disrupted by drilling. To confirm a good
cement sheathing behind the casing, the
operator must run a CEL showing that
usable water has been isolated to protect
it from contamination. If deemed
necessary, the BLM could require the
operator to submit the CEL for BLM
approval prior to continued operations.
At least 72 hours prior to commencing
hydraulic fracturing operations, the
operator would be required to submit to
the BLM a signed certification
indicating that the operator corrected
the inadequate cement job and
documentation showing that there is
adequate cement bonding. These
requirements were added because the
revised proposed rule has eliminated
the requirement to submit a CBL for
each well for approval by the BLM prior
to continuing operations. Accordingly,
where there are indications of a problem
with cementing, the BLM needs to have
timely and complete information
showing correction of the problem. If an
operator failed to report a cementing
problem, the BLM would utilize one or
more of its existing enforcement
options. This could include: shutting
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31653
down operations on the well until the
operator takes the appropriate corrective
actions; issuing an order of the
authorized officer requiring remedial
action; or monetary assessments for
failure to comply. The BLM would
enforce the appropriate action
regardless of whether the original
requirements for the well included the
running of a CEL. Also, the BLM would
put a high priority on witnessing that
operator’s operations on this and future
wells to ensure compliance with these
proposed regulations, Onshore Order
Number 2, and the approved APD.
New section 3162.3–3(e)(5) would
require operators to include in the
Subsequent Report Sundry Notice under
section 3162.3–3(i) the records and logs
produced under sections 3162.3–3(e)(1)
and (e)(2).
Section 3162.3–3(f) would require the
operator to perform a successful MIT
before beginning hydraulic fracturing or
refracturing operations. This
requirement is necessary to help ensure
the integrity of the wellbore under
anticipated maximum pressures during
hydraulic fracturing operations.
Wellbore integrity may be degraded over
time, and thus it is necessary to perform
a MIT prior to each refracturing
operation.
Section 3162.3–3(f)(1) would require
the MIT to emulate the pressure
conditions that would be seen in the
proposed hydraulic fracturing. This test
would show that the casing is strong
enough to protect usable water and
other subsurface resources during
hydraulic fracturing operations.
Section 3162.3–3(f)(2) would establish
the minimum engineering criteria for
using a fracturing string as a technique
during hydraulic fracturing. The
requirement to be 100 feet below the
cement top would be imposed to ensure
that the production or intermediate
casing is surrounded by a competent
cement sheath as required by Onshore
Order No. 2. The 100 foot requirement
is required by some State statutes (e.g.,
Montana Board of Oil and Gas
Conservation, section 36.22.1106,
Hydraulic Fracturing) and is a generally
accepted standard in the industry.
Testing would emulate the pressure
conditions that would be seen in the
proposed hydraulic fracturing in order
to ensure that the casing used in the
well would be robust enough to handle
the pressures.
Section 3162.3–3(f)(3) would require
the well to hold the pressure for 30
minutes with no more than 10 percent
pressure loss. This requirement is the
same standard applied in Onshore
Order No. 2, Section III.B.h., to confirm
the mechanical integrity of the casing.
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This language does not set a new
standard in the BLM’s regulations. This
test, together with the other
requirements, would demonstrate if the
casing is strong enough to protect water
and other subsurface resources during
hydraulic fracturing operations. The
BLM believes that all of these tests are
important to show that reasonable
precautions have been taken to ensure
the protection of other resources during
hydraulic fracturing operations.
Comments on Mechanical Integrity
Testing
Some commenters objected to the cost
of the requirement for an MIT prior to
hydraulic fracturing due primarily to
the delay and the cost of rig time. The
BLM disagrees with this comment. A
casing pressure test is already required
by Onshore Order No. 2. Section
III.B.1.h. of Onshore Order No. 2
requires that operators test all casing
strings below the conductor to 0.22 psi
per foot of casing string length or 1,500
psi, whichever is greater, but not to
exceed 70 percent of the minimum
internal yield. While the test pressure
for the MIT may differ from what is
required by Onshore Order No. 2, there
is no significant increase in rig time
required to run the MIT as proposed.
Mechanical integrity testing is a
common hydraulic testing method;
operators typically conduct such tests
after every surface- or intermediatecasing cement job. Operators first
perform a casing pressure test to verify
the mechanical integrity of the tubular
string and then drill out the casing shoe.
Next, they perform a pressure integrity
test by increasing the internal casing
pressure until it exceeds the pressure
that will be applied during the next
drilling phase. If no leakage is detected,
the cement seal is deemed successful.
The BLM believes that performing a
successful MIT prior to starting
hydraulic fracturing is essential to
ensuring the casing and fracture string
(if used) are capable of withstanding the
pressure used and serves as an early
indicator whether the applied pressures
can be successfully supported. No
revisions to the initial proposed rule
were made as a result of this comment.
The BLM received some comments
stating that an MIT is not needed on
every well and should only be required
on wells that are more than 5 years old
or if pressure exceeds 80% of casing
yield. The BLM believes that the
requirements in section 3162.3–3(f)(1) of
the revised proposed rule are standard
industry practice and are required to
ensure the casing is capable of
withstanding the pressures applied
during hydraulic fracturing operations.
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No revisions to the revised proposed
rule were made as a result of this
comment.
Some comments suggested that the
BLM require the operator to perform an
MIT before and after hydraulic
fracturing to ensure that there were no
casing failures during the hydraulic
fracturing process. No revisions to the
revised proposed rule were made as a
result of this comment. Sections 3162.3–
3(f)(1) and (f)(2) of this rule would
require the operator to test the casing
and fracture string (if used) to the
maximum anticipated treating pressure.
If the MIT is successful prior to
hydraulic fracturing and the treatment
pressure does not exceed the MIT test
pressure, there is no reason to run
another MIT after treatment. The BLM
believes that the tests required under
this rule are sufficient to show that the
casing is strong enough to protect water
and other subsurface resources during
hydraulic fracturing operations.
Some comments suggested changing
the term ‘‘MIT’’ to ‘‘pressure testing.’’
No revisions to the initial proposed rule
were made as a result of this comment.
The BLM believes that the term
‘‘Mechanical Integrity Test’’ is widely
understood by industry, is used by
many State regulatory agencies, and
accurately describes the intent of the
test. Nonetheless, we invite comments
as to whether there are other tests that
would be equally effective as an MIT for
confirming that well casings will
withstand the pressures of hydraulic
fracturing operations.
One comment recommended that the
BLM should require reporting the
results of the MIT with the subsequent
report rather than prior to hydraulic
fracturing. The BLM did not revise the
rule as a result of this comment because
there is no specific provision in the
revised proposed rule that would
require the operator to submit the MIT
results to the BLM prior to fracturing. A
related comment suggested that the
BLM should be notified of any failures
or anomalies in the MIT prior to
hydraulic fracturing. The BLM does not
believe that a requirement to notify the
BLM of a failed MIT is necessary to
ensure wellbore integrity prior to
fracturing. The revised proposed rule
(section 3162.3–3(f)) would require a
successful MIT prior to hydraulic
fracturing; therefore, if the MIT failed
and the operator proceeded with
hydraulic fracturing operations, the
operator would be in violation of the
rule and would be subject to
enforcement actions. No revisions to the
initial proposed rule were made as a
result of this comment.
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The BLM received some comments
suggesting that the proposed 10 percent
allowable loss in pressure during the
MIT is excessive. No revisions to the
revised proposed rule were made as a
result of this comment. The proposed 10
percent allowable pressure drop for the
MIT is the same as the allowable
pressure drop during the testing of
casing and blowout prevention
equipment in Onshore Order No. 2. The
allowable pressure drop is included to
set objective and enforceable standards
of what the BLM considers to be a
successful test.
Section Discussion
Section 3162.3–3(g)(1) would require
the operator to continuously monitor
and record the annulus pressure at the
bradenhead and has been revised to
apply to refracturing as well as
fracturing operations. The pressure in
the annulus between any intermediate
casing and the production casing must
also be continuously monitored and
recorded. The pressure during the
fracturing should be contained in the
string through which the fracturing fluid
is being pumped. Unexpected changes
in the monitored and recorded
pressure(s) provide an early indication
of the possibility that well integrity has
been compromised and that immediate
action should be taken to prevent well
failure. This information is needed by
the BLM to ensure that hydraulic
fracturing operations are conducted as
designed. This information also shows
that fracturing fluids are going to the
intended formation and not into other
geologic horizons such as aquifers. This
section is different from the proposal in
that it would require monitoring and
recording of pressure between the
annulus and any intermediate casing.
This revised proposed rule makes this
distinction because monitoring and
recording of pressure in the annuli
between all intermediate casings and
the production casing more accurately
shows downhole conditions, whereas
the initial proposed rule required only
monitoring and recording pressure in
the annulus between the production
casing and the intermediate string
adjacent to the production string.
Failure in other casing strings would not
have been identified. The revision is
proposed in order to detect potential
failures of any casing string that may
contribute to cross zonal flow.
Section 3162.3–3(g)(2) has been
revised to apply to fracturing and
refracturing operations and would
require the operator to orally notify the
BLM as soon as possible, but no later
than 24 hours following the incident, if
during the fracturing operation the
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annulus pressure increases by more
than 500 pounds per square inch over
the annulus pressure immediately
preceding the fracturing. Within 30 days
after the occurrence, the operator must
submit a Subsequent Report Sundry
Notice (Form 3160–5, Sundry Notices
and Report on Wells) to the BLM
containing all details pertaining to the
incident, including corrective actions
taken. This information is needed by the
BLM to ensure that fracturing fluids are
going into the formation for which they
were designed. The BLM also needs to
obtain reasonable assurance that other
resources are adequately protected. An
increase of pressure in the annulus of
this amount could indicate that the
casing had been breached during
hydraulic fracturing. Consistent with
the BLM’s Onshore Order No. 2, the
operator must repair the casing should
a breach occur. This section is different
from the initial proposed rule. The
initial proposed rule required the
submission of the Subsequent Report
Sundry Notice within 15 days after the
occurrence. The revised proposed rule
would require submission within 30
days after the occurrence. This revision
was made to this rule to reduce the
number of reports required from
operators. The report can be part of the
same Subsequent Report Sundry Notice
required in revised proposed section
3162.3–3(i).
Section 3162.3–3(h) would require the
operator to store recovered fluids in
tanks or lined pits. This provision grants
flexibility for the operator to choose
using either a lined pit or a storage tank.
This provision is necessary because
flowback fluids could contain
hydrocarbons from the formation and
could also contain additives and other
components that might degrade surface
and groundwater if they were to be
released without treatment. This section
is consistent with existing industry
practice and American Petroleum
Institute (API) recommendations for
handling completion fluids, including
hydraulic fracturing fluids (see Section
6.1.6 of API Recommended Practice
51R, Environmental Protection for
Onshore Oil and Gas Production
Operations and Leases, First Edition,
July 2009). Because the use of lined pits
or tanks for the storage of recovered
fluids reasonably protects land and
water from spills or leaks of recovered
fluids, the BLM believes that this
provision is consistent with FLPMA’s
mandate to prevent unnecessary or
undue degradation of the public lands
and the BLM’s obligations to protect
environmental quality and Indian trust
resources.
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Typically, most of the hydraulic
fracturing fluid that will be recovered
from a well is recovered before the well
begins producing significant quantities
of oil or gas. Traces of the fracturing
fluids, however, may be produced for
long periods of time thereafter, usually
with water from the formation. It is not
the BLM’s intent for the proposed rule
to displace Onshore Order No. 7 for
disposal of produced water. The BLM
invites comments on the potential
benefits of distinguishing flowback fluid
from produced water and suggested
ways to distinguish the two.
Commenters should consider that
Onshore Order No. 7 allows for
temporary storage in reserve pits for up
to 90 days, with the possibility of an
extension. Onshore Order No. 1 requires
all pits to be reclaimed within six
months of well completion or well
plugging, with the possibility of a
variance.
Additional conditions of approval for
the handling of flowback water may be
placed on the operation by the BLM if
needed to ensure protection of the
environment and other resources. The
BLM recognizes the ongoing efforts of
States to regulate hydraulic fracturing
operations. This regulation would not
preempt any State or tribal law that
might require use of such technologies
as double-lined pits or tanks as part of
a reuse or recycling requirement.
Comments on the Handling of
Recovered Fluids
Commenters expressed a variety of
views on proposed section 3162.3–3(f).
That section would require storage of
flowback fluids in lined pits or tanks.
Some commenters were critical of
allowing storage of flowback fluids in
lined pits, stating that pits increase the
likelihood of accidental discharges, that
pit liners may react with flowback fluids
and cause failures and seepage, that pits
must be fenced to exclude wildlife, and
that the fluids stored in pits would
cause air pollution. Those commenters
recommended that pits be double-lined,
that they be equipped with leak
detection systems, or that storage in pits
be prohibited and that the rule should
require flowback fluid to be stored in
tanks, or in a closed-loop containment
and reuse system. Some commenters
were in favor of BLM’s proposal to
require a plan for handling flowback
fluids, as in proposed section 3162.3–
3(c)(6), but sought additional
encouragement in the rule for injection
and recycling of those fluids.
Other commenters believed that
requiring lined pits or tanks for
flowback fluids was appropriate. Some,
though, argued that those requirements
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were duplicative of the requirements of
some State regulations. Some
commenters recommended that the rule
simply adopt the requirements of
Onshore Order No. 7 for flowback pits.
The BLM shares commenters’
concerns about contributions of pits to
air quality problems, and the possibility
of failures, leaks, and overflow events.
The BLM is also concerned about
excluding wildlife, including migratory
birds, from pits on well sites, but a
separate Instruction Memorandum has
been issued and describes appropriate
fencing, netting, and other actions to
help prevent wildlife and livestock
injury or mortality from various aspects
of oil and gas operations, including
open pits. See the BLM’s Instruction
Memorandum WO–IM–2013–033 of
December 13, 2012. The BLM is also
interested in evaluating the costs of
requiring flowback fluids to be stored in
closed tanks.
In a sampling of State regulations, it
was found that most States require
flowback fluids to be stored in lined pits
or tanks. One State, California, requires
storage in tanks, and another, New
Mexico, allows lined pits to be
approved as a variance from requiring
storage in tanks. It also appears that
some States, such as Texas and
Oklahoma, are encouraging the use of
mobile recycling systems.
Onshore Order No. 7 allows disposal
of produced water in unlined pits in
certain circumstances. The BLM does
not believe that storage of hydraulic
fracturing flowback fluids in unlined
pits is appropriate because of the far
greater volume of flowback fluids
compared with typical volumes of
produced water, and because of the
chemical constituents of flowback fluids
may pose different or increased risks if
they come into contact with surface
water or groundwater.
The revised proposed rule at 3162.3–
3(h) has not been materially changed in
response to the comments on the
proposed rule. The revised proposed
rule would not preempt State laws that
require the use of tanks, or efforts to
expand use of mobile recycling systems.
Some comments were also received
requesting that the final rule state that
all flowback water be captured in tanks
and removed from the site without the
use of pits. This would require that the
BLM distinguish flowback water from
produced water and also require
additional tankage since flowback water
is generally returned to the surface
mixed with water produced from the
formation. The BLM seeks comments on
whether the following is an appropriate
distinction: fluids recovered from a
hydraulically fractured well before it
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begins production of oil or gas will be
considered flowback and subject to
revised proposed rule section 3162.3–
3(h); fluids recovered from a
hydraulically fractured well after it
begins production of oil or gas will be
considered produced water and subject
to Onshore Order No. 7. The BLM is
also interested in the public’s views on
whether such a distinction should be in
the regulation, or be issued as nonbinding guidance.
In view of comments raising concerns
that flowback fluids present hazards to
the environment beyond those that can
be controlled in lined pits, the BLM is
specifically requesting comments on
whether the rule should require
flowback fluids to be stored only in
closed tanks, and not allow them to be
stored in lined pits. Is the exclusive use
of tanks preferable for the handling of
flow-flowback water from either an
environmental or economic perspective?
Are there additional environmental or
economic concerns that should be
considered as the BLM considers a
requirement for the use of tanks for the
disposal of flow-flowback waters?
Another alternative would be for the
rule to specify that a lined pit must be
equipped with a leak detection system,
as is required for lined pits for produced
water under Onshore Order No. 7. Some
commenters advocated for requiring
double-lined pits. The BLM asks for
comments on the costs and benefits of
the foregoing alternatives for storage of
flowback fluids. Specific information
about the environmental and economic
costs and benefits of those alternatives
would be most useful. Information on
the prevalence of tank use versus lined
pits would also be helpful.
A number of comments were received
on the proposed rule that raised issues
that are already addressed in other
places in the BLM’s Oil and Gas
operations regulations and the Onshore
Orders. The Onshore Orders may be
viewed at: https://www.blm.gov/mt/st/
en/prog/energy/oil_and_gas/operations/
orders.print.html.
Section Discussion
Section 3162.3–3(i) has been
reorganized from what was in the
proposed rule and would require the
operator to submit to the BLM certain
information within 30 days after
fracturing or refracturing operations are
complete. The information required by
paragraph (i)(1) of this section on the
depth of the well, water volume used,
and information about the chemicals
used in the fracturing fluid may be
submitted through FracFocus or another
BLM-designated database, or in the
Subsequent Report Sundry Notice. If the
information is submitted through
FracFocus, or another BLM-designated
database, the operator must specify
whether the information is for a Federal
or Indian well, certify that the
information is correct, and certify
compliance with applicable law. All
other information required under
paragraph (i) would be submitted in the
Subsequent Report Sundry Notice. If, for
some reason, the operator is unable to
submit the information about the
chemicals through FracFocus or another
BLM-designated database, the operator
must timely submit the required
information directly to the BLM. The
BLM would determine if the hydraulic
fracturing operation was conducted as
approved and would retain this
information as part of the individual
well record and it would be available for
use when the well has been depleted
and the plugging of the well is being
designed. This section would also make
it clear that any information submitted
by a contractor or agent of the operator
is considered to have been submitted
directly from the operator to the BLM.
In other words, the operator is
responsible for information submitted
by contractors or agents. This section
also would require the operator to
submit information to the BLM within
30 days after the hydraulic fracturing
operations are completed for each well,
even if the BLM approved hydraulic
fracturing of a group of wells (see
section 3162.3–3(c)).
Section 3162.3–3(i)(1) is new to the
rule and would require that the operator
submit to the BLM the true vertical
depth of the well, total water volume
used, and for each chemical used
(including base fluid) the trade name,
supplier, purpose, ingredients,
Chemical Abstract Service Number
(CAS #), maximum ingredient
concentration in additive (% by mass),
and maximum ingredient concentration
in hydraulic fracturing fluid (% by
mass). Total water volume includes
‘‘new’’ water and any produced water or
water reused or recycled from prior
hydraulic fracturing operations. The
percent mass value is the mass value for
each component (Mc) divided by the
value of the entire fluid mass (Mt) times
100. (Mc/Mt)*100 = percent value. The
information should be based on the
maximum potential for concentration,
and thus the total may exceed 100
percent by a reasonable, but minimal,
amount. The percent mass values
should be for the entire stimulation
operation, not for the individual stages.
Table 1 presents an example of the kind
of information that may be submitted.
TABLE 1—SAMPLE HYDRAULIC FRACTURING FLUID PRODUCT COMPONENT INFORMATION DISCLOSURE
Well Identification/Location and Other Fracturing Information
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Value
Fracture Date ........................................................................
State ......................................................................................
County ...................................................................................
API Number ..........................................................................
Operator Name: ....................................................................
Well Name and Number .......................................................
Longitude ..............................................................................
Latitude .................................................................................
Production Type ....................................................................
True Vertical Depth (TVD) in feet .........................................
Total Fluid Volume Injected (gal) ..................................
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Remarks
Start mm/dd/yyyy .................................................................
Wyoming.
Sublette.
XX–XXX–XXXX.
XYZ COMPANY.
Name and Number.
¥109.123456.
42.54321.
Gas, wet gas, oil.
14,193.
X,XXX,XXX.
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Federal Register / Vol. 78, No. 101 / Friday, May 24, 2013 / Proposed Rules
31657
HYDRAULIC FRACTURING FLUID COMPOSITION
Trade name
Supplier
Purpose
Ingredients
SAND ..........
XYZ Corp. ...
Proppant ...........
LGC–39 UC
XYZ Corp. ...
Liquid Gel Concentrate.
Crystalline silica,
quartz.
Polysaccharide
Chemical abstract service
number
(CAS #)
Max. ingredient
concentration in
additive
(% by mass)
14808–60–7 .....
Confidential
Business Information.
Max. ingredient
concentration in
HF Fluid
(% by mass)**
100.00
7.48357
60.00
Comments
0.16265
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** A long list of other materials may follow
The information required in
paragraph 3162.3–3(i)(1) may be
submitted directly to the BLM or
through FracFocus or another BLMdesignated database service.
Substantially similar information
required to be submitted by this section
was proposed in sections 3162.3–3(g)(4)
and (g)(5). The required information has
been restated to conform to the fields for
disclosure provided by FracFocus.
Disclosure through FracFocus, though
voluntary, would save operators from
submitting data both to FracFocus and
to the BLM in the States that require
posting to FracFocus. It would also
provide to the public timely information
from a single Web site on fracturing
operations on Federal, Indian (under
these regulations), and non-Federal/
non-Indian wells (through State law or
voluntary submission). If the operator
experiences any problem with
submitting required information
through FracFocus, it should notify the
BLM promptly. The operator would be
required to submit the information to
the BLM within 30 days after
completing the hydraulic fracturing
operation, whether or not it is able to
submit it through FracFocus.
Some commenters on the proposed
rule were critical of FracFocus because
of limitations in its ability to search and
aggregate data across individual wells.
The BLM has been in discussions with
persons responsible for FracFocus and
expects that recent and foreseeable
improvements to the system will
address many of these concerns.
Section 3162.3–3(i)(2) would require
the operator to submit information on
the actual measured depth of
perforations or the open-hole interval
(i.e., non-cased wellbore), the source
and location(s) of the water used in the
hydraulic fracturing fluid, and actual
pump pressures. This information
identifies the producing interval of the
well and would be available for use
when the well has been depleted and
plugging of the well is being designed.
The level of detail of the required
information about the sources of the
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water used has been reduced from that
in initial proposed section 3162.3–
3(g)(1), because the deleted information
(access route and transportation
method) would not be useful to the BLM
after the conclusion of operations.
Requiring a subsequent report on the
actual sources of water used, however,
would allow the BLM to check the
accuracy of the pre-fracturing notice and
to remain informed of important trends
in sourcing of water for hydraulic
fracturing operations.
Section 3162.3–3(i)(3) would require
submission of information on the actual
surface pressure and rate at the end of
each fluid stage, and the actual flush
volume, rate, and final pump pressure.
This information is needed by the BLM
for it to ensure that the maximum
allowable pressure was not exceeded at
any stage of the hydraulic fracturing
operation.
Section 3162.3–3(i)(4) would require
submission of information pertaining to
the actual, estimated, or calculated
fracture length, height, and direction.
This information is required so that the
BLM can verify that the intended effects
of the hydraulic fracturing operations
remain confined to the petroleumbearing rock layers and will not have
unintended consequences on other rock
layers or aquifers. The revised rule
requires an operator to indicate the
direction of hydraulic fracture. This was
not in the initial proposed rule, and is
necessary for the BLM to have accurate
information pertaining to the extent and
direction of the fracturing operations.
Section 3162.3–3(i)(5) would require
submission of the following information
concerning the handling of recovered
fluids:
(1) The volume of fluid recovered
during flowback, swabbing, or recovery
from production facility vessels;
(2) The methods of handling the
recovered fluids, including, but not
limited to, transfer pipes and tankers,
holding pond use, re-use for other
stimulation activities, or injection; and
(3) The disposal method of the
recovered fluids, including, but not
limited to, injection, hauling by truck,
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or transporting by pipeline. The
disposal of fluids produced during the
flowback from the hydraulic fracturing
process must follow the requirements
set out in Onshore Order No. 7, Disposal
of Produced Water, Section III. B.
The information is necessary to assure
that the lands and waters have not been
contaminated by flowback fluids. The
proposed regulation at 3162.3–3(g)(10)
included a requirement for information
on pipeline requirements. Pipeline
systems are not ordinarily used for
transfer of flowback fluids. This revised
proposed rule at section 3162.3–
3(h)(5)(ii), instead would require
information on transfer pipes and
tankers.
Section 3162.3–3(i)(6) would state
that if the actual operations deviate from
the approved plan, the deviation(s) must
be documented and explained.
Understanding the complexities of
hydraulic fracturing, the BLM expects
there often to be slight differences
between the proposed plan and the
actual operation. The explanation
would provide the BLM with a better
understanding not only of the particular
well, but also of the technologies used
in various geologic areas.
Section 3162.3–3(i)(7) is a
renumbered section that would require
the operator to submit to the BLM a
certification signed by the operator that:
(1) Wellbore integrity was maintained
prior to and throughout the hydraulic
fracturing operation, as required by
paragraph (b) of this section. This
requirement was originally proposed in
section 3162.3–3(h)(9). It would also
require the operator to certify that it
complied with the requirements of
paragraphs (e), (f), (g) and (h) of this
section; and
(2) For Federal lands, the hydraulic
fracturing fluid used complied with all
applicable permitting and notice
requirements as well as all applicable
Federal, State, and local laws, rules, and
regulations; or
(3) For Indian lands, the hydraulic
fracturing fluid used complied with all
applicable permitting and notice
requirements as well as all applicable
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Federal and tribal laws, rules, and
regulations.
Operators must certify that they have
complied with the requirements for
monitoring cementing operations,
mechanical integrity testing, and
monitoring during fracturing operations;
the accuracy of these certifications will
be checked through the submission of
the monitoring and testing data as
required in section 3162.3–3(i)(8).
Assurances of wellbore integrity are
critical for knowing whether further
inquiries are needed to assess any
environmental contamination. The
certification of compliance with
applicable permitting and notice
requirements was in the proposed
regulation both for the notice of intent
and for the subsequent operations. This
rule would require only that the
certification be included with the
Subsequent Operations Sundry Notice.
In response to comments provided in
meetings with tribal representatives, in
this revised proposed rule, the
certification required for Indian lands is
detailed separately from the certification
required for Federal lands. Consistent
with the overall approach of this rule,
the revision is to clarify that this part
does not apply State or local law to
Indian lands. This section does not
specify which laws apply on Indian or
on Federal lands, but only the necessary
certification.
Section 3162.3–3(i)(8) is also new to
the revised proposed rule and it would
require the operator to submit evidence
supporting the information required in
paragraphs (e)(1), (e)(2), and (f) of this
section, including the cement
operations monitoring report, any CEL,
and the result of any MIT. The initial
proposed rule would have required
submission to the BLM of cement bond
logs prior to completing operations, but
that requirement has been revised in
response to comments that the costs of
delays for CBLs would be excessive. As
mentioned above, requiring the
monitoring and testing data, including
any CELs after operations, will be
sufficient to check the accuracy of
operators’ certification that the
operations were in compliance with the
rule.
New section 3162.3–3(i)(9) would
provide that the BLM may require
submission of data substantiating the
information required in paragraph (i) of
this section. The required information
would provide a more complete record
of the well. If there is an indication that
a closer examination is necessary, the
operator would provide the authorized
officer with the data relevant to the
information reported with the
Subsequent Operations Sundry Notice.
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Comments on Information That Must Be
Provided to the BLM After Completed
Operations
The BLM received some comments
regarding the disclosure through the
FracFocus Web site of chemical
constituents used by operators during
hydraulic fracturing operations. This
online database includes information
from oil and gas wells in roughly 12
States and includes information from
over 500 companies. The commenters
were divided between those supporting
disclosure using FracFocus and those
opposed to its use. Supporters of
FracFocus indicated it was a common
database which many State agencies
already use, that the BLM does not have
the necessary manpower to process and
post information on their own, and that
FracFocus allows for transparency of
data to the public.
The BLM agrees with these comments
and has proposed revisions to the
proposed rule at section 3162.3–3(i) that
would recognize FracFocus as an
approved method of disclosing
chemicals. However, the BLM would
also accept other methods of disclosure,
including the submittal of a Sundry
Notice, or the posting of the information
in another BLM-designated database.
The revised proposed rule makes it clear
that an operator should not disclose any
information on the Subsequent Report
Sundry Notice or on FracFocus that it
believes to be exempt from disclosure
under the Trade Secrets Act or other
Federal law. However, under the revised
proposed rule, the BLM would have the
authority to require the submittal Trade
Secret information on a case-by-case
basis. A more detailed discussion of the
Trade Secrets Act is provided under that
section of the preamble.
Commenters objecting to the use of
FracFocus were concerned that the
database lacks search capability or
filtering and sorting of information,
provides incomplete disclosure, and
that copyright protection prohibits data
from being copied. Commenters also
expressed concerns that FracFocus is
not updated in a timely manner, needs
a dedicated funding source independent
from the oil and gas industry, and that
FracFocus is not a government run Web
site and not subject to Federal laws or
oversight. Some comments proposed
that the BLM develop an independent
government-run database for chemical
disclosure.
While the BLM did not revise this
rule in response to these comments, it
understands that FracFocus is in the
process of improving the database with
enhanced search capabilities to allow
for easier reporting of information. In
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addition, information submitted to the
BLM through FracFocus will still be
required to comply with this rule. The
BLM believes that working with the
Groundwater Protection Council and the
Interstate Oil and Gas Compact
Commission to improve FracFocus will
be more cost-effective and beneficial
than creating a separate database for
Federal and Indian wells.
The BLM received some comments
that suggested that the rule should
require the reporting of the maximum
concentration of each constituent in the
hydraulic fracturing fluid instead of the
actual concentration, as was stated in
the proposed rule. Commenters also
suggested that the concentration in
percent of total fluids should be
reported. The BLM agrees with these
suggestions because by using maximum
concentration, the information is
consistent with the data fields in
FracFocus and the requirements of this
rule. Most hydraulic fracturing
operations are conducted on one section
or segment at a time along the length of
the horizontal well bore within the
target zone. Operators may adjust or
vary the actual concentrations of
chemicals in later fracturing segments
based on results in the earlier segments.
In such a situation, there may be no one
concentration of certain chemicals, but
the maximum concentration could be
readily reported. In addition, the
maximum concentration expressed in
percent of total fluid would be helpful
in determining the toxicity of the fluid
in case of accidental spill or exposure.
For these reasons, the revised proposed
rule (section 3162.3–3(i)(1)) would
require the maximum concentration of
each chemical used in both the additive
and in the hydraulic fracturing fluid.
The BLM received some comments
objecting to the amount of information
required in the subsequent report
required in section 3162.3–3(g). Some
commenters suggested that the reporting
of chemical constituents should include
only those constituents that were added
and not chemicals that could be native
to the target zone. One comment
objected to the requirement that the
subsequent report must be submitted to
the BLM and suggested that the operator
maintain the information and submit it
only upon request. Some comments
stated that not all chemicals have a
Chemical Abstracts Service Registry
Number (CAS#) assigned to them and,
therefore, should not be required. The
BLM did not change the revised
proposed rule as a result of these
comments because the information
required is important to its overall goal
of ensuring public safety and
environmental protection.
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The BLM received some comments
that more information should be
required in the subsequent report,
including the volume of the base fluid
and each chemical used and proppants.
The BLM did not revise the revised
proposed rule as a result of these
comments because the information
already required is sufficient to ensure
public safety and environmental
protection.
The BLM also requests comments on
whether, if the State (for Federal lands)
or the tribe (for Indian lands) requires
submission of the same or more
information about the chemical
constituents of hydraulic fracturing
fluids, and provides that the
information would be publicly available
(except for trade secrets protected under
State or tribal law), the BLM should
deem compliance with those disclosure
requirements within 30 days from
completion of hydraulic fracturing
operations to be compliance with
proposed section 3162.3–3(i)(1). Such
an amendment would reduce the
compliance burden on operators in
some areas, compared with the revised
proposed section 3162.3–3(i)(1).
However, if the State or the tribe does
not require posting of the data on
FracFocus, it could be less convenient
for the public or the BLM to obtain the
data, or to compare data across
jurisdictions.
The BLM received some comments
that stated an operator cannot certify
actions of a third party or a contractor.
The BLM disagrees with this comment.
Existing regulations (43 CFR 3162.3(b))
specify that an operator is responsible
for the conduct of every contract service
provider on the operator’s well site and
lease, including the on-site activities
and regulatory compliance of any
hydraulic fracturing contractor. This
requirement in the revised proposed
rule is consistent with existing Federal
regulations; therefore the BLM did not
revise this rule as a result of this
comment.
Some comments stated that the rule
needs clarification on how to certify that
wellbore integrity has been maintained
throughout the hydraulic fracturing
process. Certification of wellbore
integrity would include certification of
the monitoring requirements proposed
in section 3162.3–3(f)(2). No revisions to
the initial proposed rule were made as
a result of this comment.
The BLM received some comments
that said the rule should require
operators to certify that they have
complied with all Federal, State, and
local laws. The BLM did not revise the
rule as a result of these comments. The
BLM believes, since all lease
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exploration, development, construction,
production, operations, and reclamation
activity is required to be conducted in
a manner which conforms to all
applicable Federal, State, and local laws
and regulations, that requiring
additional certifications, as suggested,
would be redundant and cause
unnecessary delays in approval and
processing of APDs and sundry notices.
All lease operations are already subject
to the terms of the lease and its
stipulations, the regulations of 43 CFR
part 3100, Onshore Oil and Gas Orders,
NTLs, the approved APD, and any
written instructions or orders of the
BLM authorized officer. In addition, the
initial proposed rule and the revised
proposed rule at section 3162.3–3(i)(7)
would require the operator to certify
that the hydraulic fracturing fluid used
complied with all applicable permitting
and notice requirements as well as all
applicable tribal or Federal, State, and
local laws, rules, and regulations. The
BLM did not revise the rule as a result
of this comment. However, we note that
BLM would not normally take
enforcement action based on an
operator’s innocent use of chemicals
inadvertently mis-labeled by the
manufacturer. BLM does not want to
create an incentive in the rule that
would make mis-labeled chemicals
more valuable than properly labeled
chemicals.
Section 3162.3–3(j) is substantially
different from the proposed rule. This
section would notify the operator of
procedures it needs to follow to identify
information otherwise required to be
submitted under this section that the
operator believes to be exempt, by law,
from public disclosure. The operator
should not disclose any particular
information on the Subsequent Report
Sundry Notice or through FracFocus
that it believes to be exempted from
public disclosure by the Trade Secrets
Act or other Federal law. Instead, the
operator should identify that particular
information as a trade secret. For any
information submitted under section
3162.3–3(j)(1), the operator would be
deemed to have waived any right to
protect that information from public
disclosure. For the claimed exemption
of any information required under
paragraph (i)(1) of this section, the
operator would be required to submit to
the BLM an affidavit that:
(1) Identifies the Federal statute or
regulation that prohibits the public
disclosure;
(2) Affirms that the information is not
publicly available;
(3) Affirms that the information is not
required to be publicly available under
any applicable law;
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31659
(4) Affirms that the release of the
information would likely harm the
operator’s competitive position; and
(5) Affirms that the information is not
readily apparent through reverse
engineering.
For information which the operator
does not believe to be exempt from
public disclosure, this regulation is
similar to the proposed regulations.
Under section 3162.3–3(j)(2), any
information provided in a Subsequent
Report Sundry Notice or through
FracFocus or other designated database
would not be protected by the Trade
Secrets Act or other Federal law.
For information claimed to be exempt
from public disclosure, this rule is
different from the proposed rule’s
exemption requirements. The proposed
regulation would have required
operators to submit the identities of all
the chemicals used in the fracturing
operations, to segregate the information
the operator considered to be exempt
from disclosure, and to justify the
exemption. This rule does not require
submission to the BLM information
exempt by law from public disclosure.
Instead, under section 3162.3–3(j)(1),
the operator would submit an affidavit
similar to the one required by
regulations in the State of Colorado. If
the affidavit is complete, it is possible
that the operator may not be asked to
submit any additional information
regarding the claimed trade secrets. The
BLM would have the discretion to
require the operator to submit the
undisclosed information for the BLM’s
review. Also, the BLM retains the
discretion to adjudicate whether the
undisclosed chemicals are exempt from
public disclosure. If the BLM requested
the information and determined that the
information is exempt from disclosure,
it would be kept confidential to the
extent allowed by law.
Comments On Information Claimed To
Be Exempt From Public Disclosure
Some commenters addressed the
BLM’s management of information
about chemicals used in hydraulic
fracturing operations. The proposed
regulation would have required
operators to provide information
identifying all of the chemicals used in
hydraulic fracturing fluids. For
information that operators believed to
be exempt from public disclosure under
Federal law (referred to here as ‘‘trade
secrets’’), the proposed regulation
would have required operators to
submit that information to the BLM,
mark that information as a trade secret
and provide a justification for not
releasing that information to the public.
A commenter noted that not all States
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with oil and gas operations require
public disclosure of the chemicals used
in hydraulic fracturing fluids and that
those that do require public disclosure
are not uniform in their requirements.
Some commenters wanted the BLM to
provide for disclosure of trade secrets to
the public, either upon demand of
health officials or first responders or at
the request of any member of the public.
Other commenters wanted additional
assurances that trade secrets would be
kept confidential, or objected to
providing trade secret information to the
BLM, and some stated that uncertainty
in protection of trade secrets could stifle
innovation.
The Federal Trade Secrets Act makes
it a crime for any Federal employee to
make an unauthorized disclosure of a
trade secret. See 18 U.S.C. 1905. The
BLM lacks statutory authority to
exclude hydraulic fracturing chemicals
by regulation from the scope of the
Trade Secrets Act. A commenter argued
that the general rulemaking authority of
the Secretary found in FLPMA, the
Mineral Leasing Act, and the Indian
mineral leasing statutes is sufficient for
the BLM to require public disclosure of
all chemicals without regard to the
Federal Trade Secrets Act. The judicial
opinions cited by that commenter,
though, are distinguishable because the
statutes at issue in those cases clearly
contemplated public disclosure, and
thus provided the necessary legal
authorization for disclosure. The
commenter’s assertion that more
information provided to the public
would assist the BLM in its statutory
duties does not render disclosure of
operators’ trade secrets ‘‘authorized by
law.’’
Some States that require submission
of trade secret information about
hydraulic fracturing chemicals have
laws which allow disclosure under
certain circumstances to medical
providers, public health officials, land
owners, or first responders. The Federal
Trade Secrets Act, however, does not
provide for such exceptions.
The BLM believes that the initial
proposed rule requiring operators to
disclose trade secret information with
justification for protecting each piece of
information and requiring the BLM to
maintain the confidentiality of all trade
secret chemicals would not be the best
solution. It would increase paperwork
burdens on operators, and custodial
requirements for the BLM. Because the
BLM could not reveal trade secret
information, the benefits of requiring
operators to submit all such information
would be limited. Revised section
3162.3–3(j) would instead instruct
operators not to submit trade secret
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information with their disclosure of
non-trade secret chemical information.
Rather, operators claiming that some
chemical information is a trade secret
would withhold the information and
submit an affidavit, modeled on the one
used by the State of Colorado, to affirm
that the undisclosed information is
entitled to protection from public
disclosure. The original affidavit may be
submitted to the BLM with the
subsequent report sundry notice within
30 days of completion of hydraulic
fracturing operations, or an electronic
version acceptable to the BLM field
office may be submitted within that
time. The electronic version would have
the same legal effect as an original
affidavit.
The operators would keep the
undisclosed information for 6 years,
under existing 43 CFR 3162.4–1(d). The
BLM would have the discretion to
require any operator to provide the
withheld information. The BLM might
demand withheld chemical information
for reasons that could include the need
to assist in tracing the origin of
chemicals in a possible contamination
event or to assure that operators are not
claiming trade secret protection without
justification.
Some commenters asserted that
various engineering and construction
features of oil and gas wells may be
deserving of trade secret protection. For
information, other than that required in
revised proposed section 3162.3–3(i)(1),
believed to be protected from public
disclosure, the submitter must comply
with the existing regulations at 43 CFR
3100.4. The procedure in revised
proposed section 3162.3–3(j) applies
only to the information required in
revised proposed section 3162.3–3(i)(1).
Some commenters directed the BLM’s
attention to statutes such as the
Occupational Safety and Health Act and
the Emergency Response and
Community Right to Know Act, and to
regulations promulgated by other
Federal agencies under the authority of
such Acts. Those statutes, though, do
not authorize the BLM to regulate the
information required under those
programs or to authorize disclosure of
trade secrets. The revised proposed rule,
however, would not interfere with other
Federal agencies administering their
programs, and would not preempt
applicable State, local, or tribal laws
that might require operators or other
agencies to make chemical information
available.
Other commenters asserted that
operators should not be responsible for
asserting and justifying trade secret
protection for chemicals selected by
service contractors. On the contrary,
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operators are responsible for all
operations on their well sites and for
compliance with all of the BLM’s
operating and reporting regulations.
Some commenters believed that 10 days
notice of a decision by the BLM before
information would be released to the
public was not sufficient to obtain
temporary relief from a court. However,
ten days is the notice for such decisions
under the Department’s FOIA
regulations at 43 CFR 4.23(g). Some
commenters suggested that trade secret
issues should be centrally coordinated
within the agency rather than be subject
to field office case-by-case
determinations. Trade secret issues are
inherently specific to technologies, well
locations, fracture zones, and times. The
BLM will address trade secret issues at
the most appropriate level of its
organization, but that does not need to
be specified in regulation.
Section Discussion
Under new section 3162.3–3(j)(4),
information that the operator claimed to
be exempt from disclosure would be
required to be maintained in the
operator’s records for 6 years after the
completion of the hydraulic fracturing
operations, by referring to existing
regulations at 43 CFR 3162.4–1(d). That
time period will assure that records are
available, but should not be unduly
burdensome for operators. Section
3162.3–3(j)(4) has been added because
the revised proposed rule has
eliminated the requirement that
operators routinely report information
on trade secret chemicals to the BLM. In
order for the BLM to have access to the
withheld information, the rule needs a
mandatory retention requirement.
Existing section 3162.4–1(a) requires
retention of ‘‘accurate and complete
records with respect to all lease
operations,’’ and subsection (d) of that
section requires those records be
retained for 6 years from the date they
were generated. The reference to section
3162.4–1(d) is to provide consistency
for operators. The BLM, however, is
interested in comments with
environmental and economic
information that would show that
another time period would be more
appropriate.
Section 3162.3–3(k) would provide
the operator with a process for
requesting a variance from the
minimum standards of this regulation.
Variances apply only to operational
activities, including monitoring and
testing technologies, and do not apply to
the actual approval process. The revised
proposed rule adds a provision allowing
the BLM to designate a variance
applicable to all wells in a field, a basin,
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a State, or within Indian lands. Such a
variance would be based on the BLM’s
determination that the variance will
meet or exceed the effectiveness of the
regulation and would allow the BLM to
adapt the regulatory requirements to the
unique geology of an area. It would also
be another way that the BLM could
defer to a standard, technology, or
process required or allowed by State or
tribal law that meets or exceeds the
effectiveness of the revised proposed
rule. Under section 3162.3–3(k)(1) a
request for a variance would be required
to specifically identify the regulatory
provision of this section for which the
variance is being requested, explain the
reason the variance is needed, and
demonstrate how the operator will
satisfy the objectives of the regulation
for which the variance is being
requested.
Section 3162.3–3(k)(2) states that the
BLM must make a determination that
the variance request meets or exceeds
the objectives of the regulation. For
example, an operator could request a
variance from the requirement to
monitor pressure in the annulus
between any intermediate casing string
and the production string because the
last intermediate string was run as a
liner and did not extend to the surface.
The BLM could grant a variance in this
situation because monitoring the
annulus between the production casing
and an intermediate string that did
extend to the surface meets the objective
of ensuring mechanical integrity is
maintained during the hydraulic
fracturing operation. This variance
provision is consistent with existing
BLM regulations such as Onshore Order
Number 1 (see Section X. of Onshore
Order No. 1).
Section 3162.3–3(k)(3) would state
that a variance under this section does
not constitute a variance to provisions
of other regulations, laws, or orders.
Section 3162.3–3(k)(4) makes clear
that the BLM has the right to rescind a
variance or modify any condition of
approval due to changes in Federal law,
technology, regulation, field operations,
noncompliance, or other reasons. The
BLM would intend for an operator to
rely on a variance, and thus would not
expect to rescind it. When BLM finds
that rescinding a variance is necessary,
ordinarily, the BLM’s rescission of a
variance would be effective only
prospectively. Conceivably, an operator
might obtain a variance through such
misrepresentations that it must not
continue to benefit from the variance, or
a variance is issued in violation of a
statute or causes such significant harm
that it must be rescinded retroactively,
but such situations should rarely occur.
Section 3162.5–2(d) would remove
the references to fresh water and
removes the phrase ‘‘containing 5,000
ppm or less of dissolved solids.’’ This
rule would require the operator to
isolate all usable water and other
mineral bearing formations and protect
them from contamination. This language
does not set a new standard in the
BLM’s regulations and does not create
new compliance requirements for those
operating on public and Indian lands.
Since 1988, Onshore Order No. 2,
Section II.Y., has defined usable water
and at Section III.B. has required the
operator to ‘‘protect and/or isolate all
usable water zones.’’ Revised proposed
section 3162.5–2(d) brings these
regulations into conformity with
Onshore Order No. 2, and provides the
appropriate standard for control of
31661
wells, including hydraulic fracturing
operations. Properly constructed and
cemented production casing, and where
appropriate, intermediate casing, will in
most cases provide effective isolation of
usable water and other mineral-bearing
formations below the surface casing.
IV. Procedural Matters
Federal and Indian Oil and Gas Leasing
Activity
To understand the context of the costs
and benefits of this rule, BLM includes
background information concerning the
BLM’s leasing of Federal oil and gas,
and management of Federal and Indian
leases. This analysis explains the basis
for the conclusions related to the
procedural matters sections that follow.
The BLM Oil and Gas Management
program is one of the largest mineral
leasing programs in the Federal
Government. At the end of fiscal year
(FY) 2012, there were 48,699 Federal oil
and gas leases covering 37,792,212
acres. For FY 2012, there were 92,583
producible and service drill holes and
99,015 producible and service
completions on Federal leases. In FY
2012, onshore Federal oil and gas leases
produced about 118 million barrels
(Bbl) of oil, 2.81 billion Mcf (thousand
cubic feet) of natural gas, and 2.84
billion gallons (Gal) of natural gas
liquids, with a production value of
almost $23 billion and generating
royalties of almost $2.6 billion. Oil and
gas production from Indian leases was
almost 29 million barrels of oil, 256
million Mcf of natural gas, and 155
million gallons of natural gas liquids,
with a production value of $3.4 billion
and generating royalties of $561 million.
TABLE 2—FEDERAL AND INDIAN OIL AND GAS PRODUCTION AND ROYALTIES, FISCAL YEAR 2012
Sales volume
Sales value
($ million)
Royalty
($ million)
118,142,826
2,806,572,692
2,839,924,280
$10,442
9,258
2,947
$1,275
976
298
Subtotal .......................................................................................................
..............................
22,648
2,550
Indian Leases:
Oil (Bbl) ...............................................................................................................
Gas (Mcf) ............................................................................................................
NGL (Gal) ...........................................................................................................
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Federal Leases:
Oil (Bbl) ...............................................................................................................
Gas (Mcf) ............................................................................................................
NGL (Gal) ...........................................................................................................
28,989,309
256,176,345
155,313,421
2,441
762
183
424
116
21
Subtotal .......................................................................................................
..............................
3,386
561
Source: Office of Natural Resource Revenue, Federal Onshore Reported Royalty Revenue, Fiscal Year 2012 and American Indian Reported
Royalty Revenue, Fiscal Year 2012.
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Estimating Benefits and Costs
This analysis estimates the potential
costs and benefits that would occur as
a result of the rule. Therefore, this
analysis measures the impacts in
relation to the current operating
environment (or the baseline).
In analyzing the costs and benefits of
the rule, it is important to differentiate
between the activities that operators
currently conduct and those additional
activities that the rule would compel.
This change in behavior provides the
basis of the cost and benefit estimates.
OMB Circular A–4 recognizes that not
all benefits and costs can be described
in monetary or even in quantitative
terms. In such cases, the circular directs
agencies to present any relevant
quantitative information along with a
description of the unquantifiable effects.
Measuring the Incremental Change
Many of the provisions in the rule are
conducted voluntarily by operators as a
matter of company practice or standard
industry practice. Operators have a
vested interest in ensuring that wells are
constructed properly to avoid problems
that might jeopardize their investment.
As a matter of industry practice,
operators typically perform the
following tasks:
• Develop a plan for the hydraulic
fracturing operation;
• Monitor the cementing processes;
• Cement the casing to protect water
zones;
• Conduct pressure tests on casing
strings during the drilling process or
before hydraulic fracturing operations;
• Maintain drill logs identifying
usable water zones;
• Run CBLs and/or other evaluation
logs on the production casing and
sometimes on the intermediate casing, if
formations of interest that are above the
producing zone or to maintain
compliance with State regulations, State
permit requirements, or Federal permit
requirements;
• Monitor annulus pressures during
the hydraulic fracturing operation; and
• Manage the flowback of fluids.
Some practices required in the rule
are already conducted by operators in
order to comply with existing applicable
State regulations or requirements. Such
State regulations often dictate how an
operator cements a well, what tests or
logs it conducts, how it handles
flowback, or whether it must disclose
the chemical contents of the hydraulic
fracturing fluid. In addition to
regulations, states may place
requirements in the drilling permits as
conditions of approval.
Some of the provisions in the rule
repeat existing Federal requirements.
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Operators on Federal and Indian lands
are already in compliance with those
provisions, and therefore the rule does
not pose an additional burden. For
example, the BLM has casing and
cementing requirements to protect and/
or isolate usable water zones, found in
Onshore Order No. 2, that are consistent
with the final rule. Operators on Federal
and Indian leases who are drilling in
compliance with Onshore Order No. 2
would also be in compliance with this
rule; accordingly the rule poses no
additional burden for drilling and
cementing operations, but does require
testing and reporting to assure that
usable water zones are isolated. Like
State regulatory authorities, the BLM or
a tribe may also place requirements on
operators as a condition of approval for
the drilling permit. Where appropriate
and possible, the analysis does not
consider impacts in areas where
operators already adhere to the rule’s
provisions as a matter of voluntary
practice or regulatory compliance with
existing Federal, tribal or State
regulations or requirements in
conditions of approval.
Costs Framework
To examine the costs of the rule, the
analysis considers the number of
hydraulic fracturing operations that
would be subject to the various
requirements and the costs of the
various requirements. While the rule
would apply to all hydraulic fracturing
operations on Federal and Indian lands,
specific provisions in the rule may
apply only to a subset of those
operations. For example, the rule
requires Subsequent Report (SR) Sundry
submissions for all hydraulic fracturing
operations. However, the number of
required NOI Sundry requests and the
CELs conducted would be fewer.
The three key components to the cost
formulation are the estimated number of
hydraulic fracturing operations, the
applicability of provisions to those
operations, and the compliance costs to
satisfy the provisions. Lower estimates
in either of these areas would lead to
lower estimates of the total costs of the
rule. Likewise, higher estimates would
lead to higher estimated total costs.
Protecting usable water: The BLM
already requires casing and cementing
to protect usable water zones that are
consistent with the final rule. Therefore,
the rule does not pose an additional
burden to operators.
Pressure Testing Requirement: The
pressure testing requirement is
consistent with standard industry
practice, State regulations, and BLM
regulations. The requirement does not
pose an additional burden to operators.
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Pit liner or storage tank requirement:
The requirement to manage flowback in
lined pits or storage tanks is consistent
with almost all existing State
regulations in States where new oil and
gas activity is occurring on BLMmanaged lands. The requirement would
pose an additional burden to operators
only on Federal and Indian leaseholds
in States or on Indian lands without
existing requirements and for those
operators that do not voluntarily
comply.
Disposal of flowback: The revised
proposed rule would require that
operators comply with applicable laws
and is consistent with Onshore Order
No. 7 disposal requirements for
produced water. We do not expect that
these provisions will pose additional
burdens to operators.
Cement evaluation logs on casing
strings that protect usable water: The
rule has a provision to conduct CELs on
the casing strings that protect usable
water. The applicable casing strings
include the surface casing and
sometimes the intermediate casing.
Operators do not typically run CELs to
evaluate the cement behind the surface
casing, so the rule would require an
additional step and cost in the drilling
process. Not all wells require
intermediate casing, and wells that
require intermediate casing may do so
for reasons other than to protect usable
water. In addition to requiring a CEL on
the surface casing of type wells and
wells not associated with a type-well
development proposal, the rule would
compel CELs on intermediate casing
that protects usable water, and further,
is deemed to compel CELs only on those
intermediate casings where the operator
would not otherwise conduct a CEL in
compliance with State regulations or
conditions of approval or do so
voluntarily.
Subsequent wells under a type well
approval: Under the revised proposed
rule, not all wells would be subject to
the CEL requirement. The subject
activity should reflect the number of
CELs on single wells and on type wells,
but not for the subsequently drilled
wells under a type well approval.
Requiring a CEL when there is an
indication of inadequate cementing:
Under the rule, operators on all wells
(single wells, type wells, and
subsequent wells to a type well) are
required to run a CEL when there is an
indication of inadequate cementing of a
casing string that protects usable water.
The BLM and many State regulations
and requirements have established
protocols for remedial actions in the
event of inadequate cementing. Those
protocols require operators to remediate
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to the authorized officer’s satisfaction
and where the regulatory authority may
request results from a CEL. For example,
Onshore Order 2 requires that operators
perform remedial cementing if cement is
not circulated back to the surface for the
surface casing (Section III.B.1.c).
Onshore Order 2 also requires an
additional pressure test or remedial
action as specified by the authorized
officer if a pressure test indicates that
casing strings do not meet minimum
standards (Section III.B.1.h). Onshore
Order 2 lists other minimum standards
and corrective actions, including some
that require logging or testing, remedial
cementing, and actions specified by the
authorized officer.
Measuring the costs of a CEL: The rule
introduces a new step (or steps) to the
drilling process, depending on the well.
This new step potentially poses an
additional cost burden to operators for
the costs of the CEL and the costs to
maintain idle drilling equipment if the
drilling process is delayed.
After cementing the casing, operators
must wait for a period of time for the
cement to harden before conducting any
well tests and drilling the plug. The
BLM requires operators to wait until the
cement at the casing shoe reaches a
compressive strength of 500 psi. States
generally have compressive strength
standards similar to the BLM’s. For
example, the State of Montana requires
operators to wait 8 hours and New
Mexico requires operators to wait
anywhere from 8 to 18 hours.
While waiting for the cement behind
the surface casing to set, operators will
install other required equipment on the
well, including blowout preventers.
After the cement has hardened
sufficiently and the operator has
satisfied Federal or State requirements,
operators would normally conduct a
pressure test on the surface casing, drill
through the plug, drill for an additional
interval into the formation, and then test
the shoe. After a successful shoe test,
operators then drill the intermediate
hole. The process is generally the same
for the intermediate casing; however,
operators may also run a log on the
intermediate casing depending on the
circumstances described before.
We received some comments on the
proposed rule suggesting that, by
requiring CBLs, the rule would force all
operators to maintain idle drilling
equipment while the cement reached
additional compressive strength
sufficient for a CBL to show meaningful
results. At issue is the idea that an
operator would need to wait an
additional amount of time before
pressure testing the casing or drilling
through the plug.
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An operator does not have to stand
idle at this point in time. For example,
an operator may pressure test the
surface casing, drill out the plug, test
the shoe, and then drill the intermediate
hole. An operator may then perform a
CEL at any point in time before setting
the intermediate casing, i.e., while
replacing a drill bit. In any of these
scenarios, however, ancillary delays
associated with the availability of the
logging company and the time required
to run the log could still result.
Operators drilling multiple wells on a
pad should also be able to run a CEL
and avoid potential drilling delays.
When drilling multiple wells on a pad,
an operator may use a smaller drilling
rig (known throughout the industry as a
‘‘double’’ rig) to sequentially drill a
casing hole, set casing, and cement
casing of each well, one by one. After
the surface holes have all been
sequentially drilled, cased, and
cemented, the operator will remove the
small drilling rig from the pad, and
bring in a large drilling rig to drill the
subsequent sections of each well. If an
operator is drilling multiple wells in
this fashion, then it may continue the
drilling process while the cement sets
on the first well, and log that well at the
operator’s convenience. In these
situations, the operator would incur no
additional costs associated with
maintaining idle drilling equipment.
Benefits Framework
While the potential benefits of the
rule are more challenging to monetize
than the costs, they are significant. The
rule is designed to reduce the
environmental and health risk posed by
hydraulic fracturing operations,
particularly in its treatment of flowback
fluids, well construction, and hydraulic
fracture design. Stronger field
operations with sound resource
protections provide improved efficiency
for the BLM to administer the program
management for oil and gas with fewer
protests, fewer compliance problems,
fewer FOIAs, and other activities that
divert limited available staff.
The primary challenge in monetizing
benefits lies in the quantification of a
risk that is largely unknown. Risk is the
product of the likelihood of an incident
occurring and the impact that would
result. In this context, risk is the
probability of an incident occurring
from hydraulic fracturing times the cost
of the damage. The monetized benefit of
this rule would be the reduction in risk
attributed to the rule, which also
represents the avoided costs of
remediating damage.
Though operators are required to
remediate damage when it occurs, there
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may be uncertainty about the true cost
or extent of the damage or limitations in
connecting an incident with an
operation. Even if the damage is
internalized, the overall benefit to
society would be less than if the
incident was avoided (if the compliance
costs are less than the damage costs),
since resources would have been
unnecessarily dedicated to the
remediation.
Operators are required to notify the
BLM when undesirable events occur.
Undesirable events may include
accidents, or accidental spills or
releases of hydrocarbon fluids,
produced water, hydraulic fracturing
flowback fluids, or other substances.
These events have the potential to
adversely affect public lands and other
important resources; reduce the value of
the minerals and lands; plus add
expensive costs to the BLM inspection
and enforcement by diverting limited
staff.
There are limitations in using the
BLM data on undesirable events for this
analysis. First, the data do not specify
whether the undesirable events
occurred as a result of any of the drilling
or completion activities associated with
the hydraulic fracturing operations. In
addition, the available data cannot be
readily matched with particular
provisions in the rule. The data
provides figures for the incidence of
spills, accidents, injuries, and other
impacts on a well, but the pit liner
information is generally not specified in
the incident reports for spills or leaks.
As such, there is difficulty in
quantifying the level of risk reduction
that would be attributed to the
regulations, even though the regulations
would most certainly reduce risk.
Damage, in general, is unknown,
particularly when attempting to
generalize damage costs which may vary
by expected magnitude and reversibility
of effects. Also, the valuation of the
damage may also take many and highly
variable forms. For example, an
undesirable incident occurring during
hydraulic fracturing might require the
remediation of surface or subsurface
areas. The incident might also require
that the operator shut-in temporarily or
plug the well before it may produce all
of the mineral resources. In this case,
the operator would lose revenue and
society would not benefit from the
produced resources. Such would be the
same for spills.
Discounted Present Value
There is a time dimension to
estimates of potential costs and benefits.
The potential events described, if they
occur at all, may be in the distant future.
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The further in the future the benefits
and costs are expected to occur, the
smaller the present value associated
with the stream of costs and benefits. As
such, future costs and benefits must be
discounted.1 The discount factor is then
used to convert the stream of costs and
benefits into ‘‘present discounted
values.’’ When the estimated benefits
and costs have been discounted, they
can be added to determine the overall
value of net benefits.
The OMB’s basic guidance on the
appropriate discount rate to use is
provided in OMB Circular A–94. The
OMB’s Circular A–94 states that a real
discount rate of 7 percent should be
used as a base-case for regulatory
analysis. The OMB considers the 7
percent rate as an estimate of the
average before-tax rate of return to
private capital in the U.S. economy. It
is a broad measure that reflects the
returns to real estate and small business
capital as well as corporate capital. It
approximates the opportunity cost of
capital, and it is the appropriate
discount rate whenever the main effect
of a regulation is to displace or alter the
use of capital in the private sector.
OMB Circular A–4 also states that a 3
percent discount rate should be used for
regulatory analyses and provides an
explanation of the use of the discount
rate as follows: ‘‘The effects of
regulation do not always fall exclusively
or primarily on the allocation of capital.
When regulation primarily and directly
affects private consumption (e.g.,
through higher consumer prices for
goods and services), a lower discount
rate is appropriate. The alternative most
often used is sometimes called the
‘social rate of time preference.’ This
simply means the rate at which ‘society’
discounts future consumption flows to
their present value.’’
The analysis also examines potential
costs and benefits using 10 and 12
percent discount rates. The
consideration of higher discount rates
are appropriate for this analysis, since
the rule imposes costs on the oil and gas
industry and the opportunity cost of not
having that available capital is generally
higher than 3 and 7 percent. The higher
rates also serve as a sensitivity test.
Uncertainty
The costs and benefits provided in
this analysis are estimates and come
with uncertainty. We describe the
primary sources of uncertainty below:
• Type well applicability: The
estimates for the rule rely largely on the
concept of the type well. In terms of cost
calculations, the uncertainty lies in an
average number of wells that would be
covered under a type well approval.
While the BLM is confident that the
average number of wells that an
operator completes in a field is a good
measure with which to base the
estimate, the measure is positively
skewed by a fewer number of firms with
a high number of wells. This does not
suggest a problem with the data, but
rather that the experiences of operators
will vary, and that the likely scenario is
that the typical operator completes
fewer wells than the average. In terms
of benefit calculations, there is
uncertainty about the effectiveness of
the type well concept, and how reliably
the CEL results on casing strings of a
type well assure adequate cementing for
subsequent wells in the same geologic
area.
• Length of delay time to run a CEL:
A large source of uncertainty is the
amount of time that the CEL
requirement might delay drilling
operations. The BLM received
comments suggesting that the CEL
would delay drilling operations for up
to 72 hours. The CEL on the surface
casing, in particular, poses a new step
in the drilling process for operators. A
large source of uncertainty is the extent
to which operators would be subject to
delays, and if so, how they will be able
to incorporate this new requirement and
minimize or eliminate potential delays
through operating efficiencies.
• Percent of wells encountering
problems during the cementing process:
Cementing problems and downhole
conditions, in general, are not widely
reported metrics. This analysis uses 3
percent as the basis for calculating the
potential costs and benefits.
• Benefits of specific provisions for
well integrity and NOI Sundry
submission: Further uncertainty lies in
the estimation of benefits and the
cumulative effect of the rule’s
provisions on mitigating the potential
risks of hydraulic fracturing operations.
This rule has specific provisions that
would help operators and the BLM
better identify potential issues in
wellbore integrity and fracturing design,
before operations begin. However, it is
difficult to attribute benefits to one
single test (for instance the CEL) when
that is only one part of the overall
evaluation of wellbore integrity.
Results
Where appropriate, this analysis
monetizes costs and benefits expected to
occur over the next 10 years, from 2013
to 2022. This period of analysis was
chosen because 10 years is the length of
the primary lease term on BLMmanaged lands. The analysis presents a
range of expected outcomes due to
uncertainty about the generalization of
costs and benefits across all hydraulic
fracturing operations. In developing the
rule, the BLM considered several
alternatives. The alternatives primarily
focused on two topic areas: Verification
of proper cementing behind casing
strings through CELs and the
management of flowback fluids from
operations. One alternative would
require CELs on casing strings
protecting usable water for all wells and
the use of storage tanks to manage
flowback. A second alternative would
require CELs on casing strings
protecting usable water for all wells but
does not establish requirements for
storage tanks or lined pits. Table 3 and
Table 4 show a summary of incremental
costs and benefits, respectively, for the
rule and the alternatives examined. To
annualize the incremental costs and
benefits, the analysis calculates the
annualized value (AV). Where
monetized, the results are presented in
2012 dollars.
The entire results are available in the
full Economic Analysis and Regulatory
Flexibility Analysis available at the
address listed in the ADDRESSES section
of this rule.
TABLE 3—SUMMARY OF COSTS
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[$Million]
Revised
proposed rule
Annualized value
Undiscounted ...............................................................................................................................
Discounted at 3% ........................................................................................................................
12–20
12–19
1 Discount factor = 1/(1+ r)t where r is the
discount rate and t is time measured in years during
which benefits and costs are expected to occur.
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Alternative 1
119–213
118–213
Alternative 2
119–213
118–213
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TABLE 3—SUMMARY OF COSTS—Continued
[$Million]
Revised
proposed rule
Annualized value
Discounted at 7% ........................................................................................................................
Discounted at 10% ......................................................................................................................
Discounted at 12% ......................................................................................................................
The annualized values of the costs do
not vary significantly across different
discount rates. This is expected for
several reasons. When the original cost
schedule is relatively constant over time
(neither front-loaded nor back-loaded)
the AV will be relatively similar to the
average cost. This is expected with
compliance costs related to this rule,
since the total compliance costs for the
rule are expected to be relatively similar
over future years, owing to similar
12–19
12–19
12–19
Alternative 1
118–212
117–211
117–211
Alternative 2
118–212
117–211
117–211
activity data (i.e., the number of
hydraulic fracturing operations) and
that the compliance costs for a single
operation are contained within a short
timeframe.
TABLE 4—SUMMARY OF NON-MONETIZED BENEFITS
Rule
(percent)
Non-monetized benefits
Percent of individual hydraulic fracturing plans reviewed by the BLM .......................................
Percent of hydraulic fracturing operations using unlined pits .....................................................
Percent of individual wells where wellbore integrity is demonstrated with CELs on casing
strings that protect usable water ..............................................................................................
Percent of wells where wellbore integrity is demonstrated with pressure tests .........................
Percent of hydraulic fracturing operations where chemical content of fluids are disclosed .......
Estimated
baseline
(percent)
Non-monetized benefits
Likelihood of Minor Incident .............................................................................
Likelihood of Major Incident .............................................................................
sroberts on DSK5SPTVN1PROD with PROPOSALS
Estimated Costs of Revised Proposed
Rule
Annualized costs to the industry are
estimated to be between about $12 and
$20 million when undiscounted and
when using discount rates of 3, 7, 10,
and 12 percent. The net present value of
total costs over the 10-year period are
estimated to be between $102 to $166
million when discounted at 3 percent,
between $84 and $136 million when
discounted at 7 percent, between $73
and $119 million when discounted at 10
percent, and between $67 and $109
million when discounted at 12 percent.
The largest cost burden lies with the
CEL requirement, which is also the
source of the greatest amount of
uncertainty when developing estimates.
Drilling methods, procedures, and
requirements vary across operations,
locations, and States, so it is challenging
to place an exact dollar figure on the
appropriate cost.
The estimated costs for the CEL
requirement are driven to a large extent
by the amount of time operators might
have to maintain idle drilling
equipment on-site. The lower bound of
the estimated CEL requirement includes
the annual costs of conducting CELs on
the surface casing, assuming that
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Alternative 2
(percent)
11
0
100
0
100
0.15
8
100
100
96
100
100
96
100
100
Rule
2.70
0.03
operators using a small rig to drill the
surface holes of wells would likely
avoid the costs of maintaining idle
drilling equipment. The estimate
possibly represents the lowest possible
cost; however, there is a chance it could
be even lower depending on the ability
of the operators on other wells to
maximize efficiencies and reduce
delays. The upper bound of the
estimated CEL requirement does not
account for the potential of operators to
reduce delays below 24 hours per CEL
on the surface casing and 48 hours on
the intermediate casing. While the
estimate possibly represents the
maximum total cost, it may
underestimate the total costs if CELs
result in delays assumed.
The BLM has assumed delay times to
account for additional compressive
requirements and ancillary delays that
could occur. However, there are several
ways for operators to reduce the amount
of idle time. The Economic Analysis
prepared for this rule analyzed the
sensitivity of the upper bound total
estimates to assumed idle times. If
operators are able to reduce the assumed
delays by 25 percent, then the upper
bound costs estimates would be reduced
by 19 percent. On the other hand, if the
Alternative 1
(percent)
Alternative 1
N/A
N/A
N/A
N/A
Alternative 2
N/A
N/A
assumptions underestimate the delay
times by 25 percent, then the upper
bound estimate would be increased by
19 percent.
The administrative compliance costs
are non-trivial and are based on a per
submission cost of $478. It is likely that
operators, over time, will be able to gain
efficiencies and reduce costs below the
estimates provided.
The costs provided are estimates of
the direct costs and not the overall costs
to society. There is uncertainty about
the effect that the rule would have
across all potential hydraulic fracturing
operations. The rule has a provision for
type well approval of the NOI Sundry
and log requirements (unless the
operator encounters problems with
improper cementing) and affords
operators drilling many wells in a
geologic area greater efficiency than it
does for operators drilling a single well
or few wells. If one assumes that
operators cannot derive efficiencies to
avoid the costs of idle rig time, it could
favor activity in development fields over
exploratory areas.
There is also flexibility in how the
various BLM authorized officers might
treat applications for variances, and to
what extent that will allow operators to
potentially reduce costs. There are well
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construction methods, such as the use of
a ‘‘frac string,’’ that reduce the pressures
placed on the intermediate casing and
surface casing strings during hydraulic
fracturing operations. This is one
potential area where an operator might
receive a variance.
Average Compliance Costs for Operators
The provisions of the rule would
result in compliance costs ranging from
$3,138 to $5,110 for all hydraulic
fracturing operations differentially, for
example, if the operation is for a type
well versus a subsequent well.
Averaging the total compliance costs for
the industry in the first year of
regulation by the number of hydraulic
fracturing operations, the BLM expects
the compliance costs to range from
$3,138 to $5,110 per operation. The CEL
requirements represent the bulk of that
portion, $2,591 to $4,564. Average
compliance costs per operation for each
of the policy options are shown in Table
5.
TABLE 5—AVERAGE COMPLIANCE COSTS IN 2013 ACROSS ALL OPERATIONS FOR THE RULE, ALTERNATIVE 1, AND
ALTERNATIVE 2
Average across all operations
Requirement
Revised proposed rule
Low
Count of Hydraulic Fracturing Operations (in 2013) .......
Alternative 1
High
Low
3,566
Alternative 2
High
3,566
Low
High
3,566
CEL on Surface Casing ...................................................
CEL on Intermediate Casing ...........................................
CEL if Inadequate Cementing .........................................
Lining Pits ........................................................................
NOI Sundry ......................................................................
SR Sundry ........................................................................
Variance Requests ...........................................................
$1,980
409
202
9
54
478
5
$3,953
409
202
9
54
478
5
$24,894
5,140
0
9
478
478
48
$49,692
5,140
0
9
478
478
48
$24,894
5,140
0
0
478
478
48
$49,692
5,140
0
0
478
478
48
Total ..........................................................................
3,138
5,110
31,047
55,845
31,038
55,836
sroberts on DSK5SPTVN1PROD with PROPOSALS
BLM Administrative Burden
The processing of NOI Sundry, SR
Sundry, and variance requests
associated with the rule would pose
additional burden to the BLM; however,
it is unclear the extent to which the
BLM can meet the additional burden
with existing capacity. An additional
8.44 FTE of workload is estimated to be
required to meet the administrative
burden of the rule in the first year of
implementation.
Benefits of the Revised Proposed Rule
The rule provisions, as described in
the revised proposed rule, would
require an operator to conduct tests on
a well before it conducts hydraulic
fracturing operations on that well. For
all operators on Federal and Indian land
the revised proposed rule would compel
operators to conduct an average of 293
CELs per year on surface casings, 14
CELs per year on intermediate casings,
and 110 CELs per year on casing strings
where there is an initial indication of
inadequate cementing.
Relative to the initial proposed rule,
the revised proposed rule would not
compel as many CELs. Therefore, there
is a chance that the rule would not
reduce as much risk as the alternatives.
The rule would ensure that operators
demonstrate wellbore integrity with
pressure tests on 100 percent of the
wells and with CELs on the casing
strings that protect usable water on 8
percent of wells. The level of risk
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reduction across subsequent wells relies
on the replication of adequate
cementing across multiple wells in a
geographic area with the same geologic
characteristics.
The rule would compel 110 CELs to
demonstrate that inadequate cementing
was corrected by operators. As such, it
requires a verification of proper
remedial cementing on the very wells
that pose greater risk.
Under the rule, operators would
submit an average of 432 NOI Sundry
applications per year covering about
3,816 hydraulic fracturing operations
(average over the 10-year period, 2013–
2022). The BLM would receive
individual hydraulic fracturing plans for
an estimated 11 percent of the expected
operations, and the remaining 89
percent of operations would be for
subsequent wells to a type well. The
type well provision, relative to the
alternatives, reduces burden on the
industry and the BLM. The submission
of NOI Sundry applications would
provide the BLM with the necessary
information to make informed decisions
about the public’s resources and thus
improve the public welfare, and have
the same benefits for Indian resources
and Indian welfare.
The rule is estimated to compel only
six additional lined pits per year,
simply because most of the States where
the BLM manages oil and gas resources
already require lined pits. For those six
pits, the requirement would
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immediately remove sources of harm to
the environment and the public from
the contamination of the surface
environment with fracturing fluids.
The rule would compel 3,816 Sundry
reports and public disclosures of the
chemical content of the hydraulic
fracturing fluids. The increase in
information about additives could aid
water users when they consider the
potential effects of hydraulic fracturing
operations and constituent chemicals.
Overall, the rule would potentially
reduce the risks associated with
hydraulic fracturing operations. The
BLM estimated the likelihood of an
incident resulting from a hydraulic
fracturing operation could be between
0.03 and 2.70 percent. Damage from an
incident could cost between $15,000
and $1 million for remediation plus any
lost revenue from unrecoverable
resources, including spilled or stranded
resources.
Economic Impact Analysis and
Distributional Assessments Energy
System Impact Analysis
Executive Order 13211 requires that
agencies prepare and submit to the
Administrator of the Office of
Information and Regulatory Affairs
(OIRA), OMB, a Statement of Energy
Effects for certain actions identified as
significant energy actions. Section 4(b)
of Executive Order 13211 defines a
‘‘significant energy action’’ as ‘‘any
action by an agency (normally
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Federal Register / Vol. 78, No. 101 / Friday, May 24, 2013 / Proposed Rules
published in the Federal Register) that
promulgates or is expected to lead to the
promulgation of a final rule or
regulation, including notices of inquiry,
advance notices of proposed
rulemaking, and notices of proposed
rulemaking: (1)(i) That is a significant
regulatory action under Executive Order
12866 or any successor order, and (ii) is
likely to have a significant adverse effect
on the supply, distribution, or use of
energy; or (2) that is designated by the
Administrator of OIRA as a significant
energy action.’’
The additional burden posed by this
rule would vary by the type of well
proposed for hydraulic fracture. A key
consideration is the extent to which the
costs of the requirements might impact
investment, production, employment,
and a number of other factors. That is,
to what extent, if any, would an
operator choose to invest in other areas,
non-Federal and non-Indian lands,
when faced with the cost requirements
of the rule. Since the bulk of the costs
would apply to hydraulic fracturing
operations on wells that are yet to be
drilled (and not on existing wells and to
refracturing operations), operators will
be able to account for any cost increases
up front when making investment
decisions. The BLM believes that the
additional cost per hydraulic fracturing
operation is insignificant when
compared with the drilling costs in
recent years, the production gains from
hydraulically fractured wells
operations, and the net incomes of
entities within the oil and natural gas
industries.
Table 6 shows the average compliance
costs, by well type or operation, as a
percent of the total costs of drilling a
well. For a single well or a type well,
the compliance costs represent about 0.4
to 1.4 percent of the costs of drilling a
well. For a subsequent well to a type
well, the costs represent between 0.01
and 0.02 percent of the total drilling
costs. For existing wells and refracture
operations, the percentages are even
lower, at about 0.01 to 0.03 percent.
When averaging the compliance costs
across all operations, the costs represent
between 0.04 and 0.13 percent of the
costs of drilling a well.
Since the estimated compliance costs
are not a substantial when compared
with the total costs of drilling a well, the
BLM believes that the rule is unlikely to
have an effect on the investment
decisions of firms, and the rule is
unlikely to affect the supply,
distribution, or use of energy.
TABLE 6—THE AVERAGE COMPLIANCE COSTS OF THE REVISED PROPOSED RULE AS A PERCENT OF TOTAL DRILLING
COSTS
Well type
fracturing operation
Activity
Type well or single well
Low
(percent)
Percent of Drilling Costs for a Crude Oil,
Natural Gas, and Dry Well (2007$) 1 ...
Percent of Drilling Costs for a Crude Oil
Well (2007$) 1 .......................................
Percent of Drilling Costs for a Natural
Gas Well (2007$) 1 ...............................
Percent of Drilling Costs for a horizontal
well in the Bakken Three Forks (reported in 2010) 2 ...................................
Percent of Drilling Costs for a horizontal
well in the Marcellus Shale (reported in
2011) 3 ..................................................
High
(percent)
Subsequent
well under
type well
approval
(percent)
Average across all
operations
(percent)
Existing
well
(percent)
Refracture
operation
(percent)
Low
(percent)
High
(percent)
0.7128
1.3301
0.0167
0.0243
0.0241
0.0752
0.1225
0.7434
1.3871
0.0174
0.0253
0.0251
0.0784
0.1277
0.7611
1.4202
0.0178
0.0259
0.0257
0.0803
0.1308
0.5507
1.0275
0.0129
0.0188
0.0186
0.0581
0.0946
0.3913
0.7301
0.0092
0.0133
0.0132
0.0413
0.0672
sroberts on DSK5SPTVN1PROD with PROPOSALS
NOTES:
1 Average drilling costs in 2007 range from $3.9 million to about $4.2 million. U.S. Energy Information Administration (January 31, 2012). Costs
of Crude Oil and Natural Gas Wells Drilled.
2 Costs of $5.4 million cited by Investopedia from Continental Resources. Investopedia (March 12, 2010). Oil Service Costs to Move Higher.
3 Costs of $7.6 million cited by Marcellus Drilling News from a University of Pittsburgh Study (Marcellus Drilling News (September 2011) How
much does it cost to drill a single Marcellus well? $7.6M.
Employment Impact Analysis
Executive Order 13563 reaffirms the
principles established in Executive
Order 12866, but calls for additional
consideration of the regulatory impact
on employment. It states, ‘‘Our
regulatory system must protect public
health, welfare, safety, and our
environment while promoting economic
growth, innovation, competitiveness,
and job creation.’’ An analysis of
employment impacts is a standalone
analysis and the impacts should not be
included in the estimation of benefits
and costs.
This proposed rule would require
operators, who have not already done
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so, to conduct one-time tests on a well
or make a one-time installation of a
mitigation control feature. In addition,
operators would be required to perform
administrative tasks related to a onetime event.
Compliance with the operational
requirements is expected to shift
resources from firms in the crude oil
and natural gas extraction industries
(NAICS codes:: 211111—Crude
Petroleum and Natural Gas Extraction,
211112—Natural Gas Liquid Extraction)
to firms providing support services for
drilling oil and gas wells (NAICS code:
213111—Drilling Oil and Gas Wells).
For example, the requirement for a CEL
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on the surface casing represents a
burden to the operator, but a benefit to
the company running the log.
Of principal interest is the extent to
which the financial burden is expected
to change operators’ investment
decisions. If the financial burden is not
significant and all other factors are
equal, then one would expect operators
to maintain existing levels of investment
and employment. The BLM believes that
the proposed rule would result in an
additional cost per well stimulation that
is small and will not alter the
investment or employment decisions of
firms.
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Firms in the support services for oil
and gas drilling industry are likely to
benefit from the rule, since they would
likely carry out the operational
requirements of the rule. Though we do
not know the incremental revenue gains
from performing these services, the
operational requirements themselves are
likely to require additional capacity.
sroberts on DSK5SPTVN1PROD with PROPOSALS
Executive Order 12866, Regulatory
Planning and Review
In accordance with the criteria in
Executive Order 12866, the Office of
Management and Budget has
determined that this rule is a significant
regulatory action.
The rule will not have an annual
effect on the economy of $100 million
or more or adversely affect in a material
way the economy, a sector of the
economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, or tribal
governments or communities. However,
the rule may raise novel policy issues
because of the requirement that
operators provide to the BLM
information regarding hydraulic
fracturing operations that they are not
currently providing to the BLM.
This rule would not create
inconsistencies or otherwise interfere
with an action taken or planned by
another agency. This rule would not
change the relationships of the oil and
gas operations with other agencies.
These relationships are included in
agreements and memoranda of
understanding that would not change
with this rule. In addition, this rule
would not materially affect the
budgetary impact of entitlements,
grants, loan programs, or the rights and
obligations of their recipients. Please see
the discussion of the impacts of the rule
as described earlier in this section of the
preamble.
Regulatory Flexibility Act
Congress enacted the Regulatory
Flexibility Act of 1980 (RFA), as
amended, 5 U.S.C. 601–612, to ensure
that Government regulations do not
unnecessarily or disproportionately
burden small entities. The RFA requires
a regulatory flexibility analysis if a rule
would have a significant economic
impact, either detrimental or beneficial,
on a substantial number of small
entities. For the purposes of this
analysis, the BLM assumes that all
entities (all lessees and operators) that
may be affected by this rule are small
entities, even though that is not actually
the case.
The rule deals with hydraulic
fracturing on all Federal and Indian
lands (except those excluded by statute).
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There would be some increased costs
associated with the enhanced
recordkeeping requirements and some
new operational requirements.
However, the BLM expects that these
costs would be minor in comparison to
overall operations costs. Therefore, the
BLM has determined under the RFA
that the rule would not have a
significant economic impact on a
substantial number of small entities.
Please see the discussion earlier in this
section of the preamble for a discussion
of the impacts of the rule.
Small Business Regulatory Enforcement
Fairness Act
The Regulatory Flexibility Act as
amended by the Small Business
Regulatory Enforcement Fairness Act
(SBREFA) generally requires an agency
to prepare a regulatory flexibility
analysis of any rule subject to notice
and comment rulemaking requirements
under the Administrative Procedure Act
or any other statute, unless the agency
certifies that the rule will not have a
significant economic impact on a
substantial number of small entities.
Small entities include small businesses,
small governmental jurisdictions, or
small not-for-profit enterprises.
The BLM reviewed the Small
Business Administration (SBA) size
standards for small businesses and the
number of entities fitting those size
standards as reported by the U.S.
Census Bureau in the 2007 Economic
Census. Using the Economic Census
data, the BLM concludes that about 99
percent of the entities operating in the
relevant sectors are small businesses in
that they employ fewer than 500
employees.
The BLM also examined potential
impacts on small businesses that are
most likely to be impacted by the rule
and, more specifically, the requirements
that would pose a burden to operators.
Using Automated Fluid Mineral
Support System data for well
completions, the BLM compiled a list of
firms that completed wells within the
past 5 years. The BLM expects that these
firms are most likely to be financially
impacted by the CEL requirements.
From that list the BLM researched
company annual report filings with the
SEC to determine annual company net
incomes and employment figures. From
the original list, the BLM found 55
company filings. Of those, 33 firms were
classified as small businesses.
Using the net income data for the
small businesses that filed SEC Form
10–K, the BLM used the estimated
compliance costs per well type or
fracturing operation, and the average
costs across all operations to calculate
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the percent of compliance costs as a
portion of annual company net incomes
for 2011. Averaging results for the small
businesses that the BLM examined, the
average costs of the rule are expected to
represent between 0.041 and 0.066
percent of the company net incomes.
Therefore, after considering the
economic impact of the rule on these
small entities, the screening analysis
indicates that this rule will not have a
significant economic impact on a
substantial number of small entities.
Unfunded Mandates Reform Act
Under the Unfunded Mandates Act,
agencies must prepare a written
statement about benefits and costs prior
to issuing a proposed or final rule that
may result in aggregate expenditure by
State, local, and tribal governments, or
by the private sector, of $100 million or
more in any one year.
This rule does not contain a Federal
mandate that may result in expenditures
of $100 million or more for State, local,
and tribal governments, in the aggregate,
or to the private sector in any one year.
Thus, the rule is also not subject to the
requirements of Sections 202 or 205 of
the Unfunded Mandates Reform Act
(UMRA).
This rule is also not subject to the
requirements of Section 203 of UMRA
because it contains no regulatory
requirements that might significantly or
uniquely affect small governments; it
contains no requirements that apply to
such governments nor does it impose
obligations upon them.
Executive Order 12630, Governmental
Actions and Interference With
Constitutionally Protected Property
Rights (Takings)
Under Executive Order 12630, the
rule would not have significant takings
implications. A takings implication
assessment is not required. This rule
would establish recordkeeping
requirements for hydraulic fracturing
operations and some additional
operational requirements on Federal
and Indian lands. All such operations
are subject to lease terms which
expressly require that subsequent lease
activities be conducted in compliance
with subsequently adopted Federal laws
and regulations. The rule conforms to
the terms of those Federal leases and
applicable statutes, and as such the rule
is not a governmental action capable of
interfering with constitutionally
protected property rights. Therefore, the
rule would not cause a taking of private
property or require further discussion of
takings implications under this
Executive Order.
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Executive Order 13352, Facilitation of
Cooperative Conservation
Under Executive Order 13352, the
BLM has determined that this rule
would not impede facilitating
cooperative conservation and would
take appropriate account of and
consider the interests of persons with
ownership or other legally recognized
interests in land or other natural
resources. This rulemaking process
involved Federal, State, local and tribal
governments, private for-profit and
nonprofit institutions, other
nongovernmental entities and
individuals in the decision-making. The
process provides that the programs,
projects, and activities are consistent
with protecting public health and safety.
sroberts on DSK5SPTVN1PROD with PROPOSALS
Executive Order 13132, Federalism
Under Executive Order 13132, this
rule would not have significant
Federalism effects. A Federalism
assessment is not required because the
rule would not have a substantial direct
effect on the States, on the relationship
between the national government and
the States, or on the distribution of
power and responsibilities among the
various levels of government. The rule
would not have any effect on any of the
items listed. The rule would affect the
relationship between operators, lessees,
and the BLM, but would not impact
States. Therefore, under Executive
Order 13132, the BLM has determined
that this rule would not have sufficient
Federalism implications to warrant
preparation of a Federalism Assessment.
Executive Order 13175, Consultation
and Coordination With Indian Tribal
Governments
Under Executive Order 13175, the
President’s memorandum of April 29,
1994, ‘‘Government-to-Government
Relations with Native American Tribal
Governments’’ (59 FR 22951), The
Department of the Interior Policy on
Consultation with Indian Tribes (Dec. 1,
2011), and 512 Departmental Manual 2,
the BLM evaluated possible effects of
the rule on federally recognized Indian
tribes. The BLM approves proposed
operations on all Indian onshore oil and
gas leases (except those excluded by
statute). Therefore, the rule has the
potential to affect Indian tribes. In
conformance with the Department’s
policy on tribal consultation, the Bureau
of Land Management held four tribal
consultation meetings to which over 175
tribal entities were invited. The
consultations were held in:
• Tulsa, Oklahoma on January 10,
2012;
• Billings, Montana on January 12,
2012;
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• Salt Lake City, Utah on January 17,
2012; and
• Farmington, New Mexico on
January 19, 2012.
The purpose of these meetings was to
solicit initial feedback and preliminary
comments from the tribes. To date, the
tribes have expressed concerns about
the BLM’s Inspection and Enforcement
program’s ability to enforce the terms of
this rule; previously plugged and
abandoned wells being potential
conduits for contamination of
groundwater; and the operator having to
provide documentation that the water
used for the fracturing operation was
legally acquired. The BLM considered
these concerns during the drafting of the
proposed rule.
After publication of the proposed
rule, the BLM held another series of
meetings to obtain comments and
recommendations from tribes and tribal
organizations. Those meetings were
held in June 2012 in Salt Lake City,
Utah; Farmington, New Mexico; Tulsa,
Oklahoma; and Billings, Montana. The
BLM also engaged in one-on-one
consultations as requested by several
tribes. Some tribal representatives were
concerned about risks to the quality of
their vital water supplies. Others,
though, were more concerned with the
risk that increased compliance costs
would drive the industry off of Indian
lands, and deprive the tribes of muchneeded revenues and economic
development.
The BLM has considered and
responded to the concerns expressed by
the tribal representatives both orally and
in written comments, as described
above. In particular, it has made
changes that will reduce economic
burdens of compliance for many
operators. Several tribes provided
written and oral comments critical of
the proposed rule. Other tribes argued
that the proposed rules violated tribal
sovereignty. The proposed rule,
however, is not unique. Regulations
promulgated by the Bureau of Indian
Affairs render the BLM’s operating
regulations in 43 CFR part 3160
applicable to oil and gas leases of trust
and restricted Indian lands, both tribal
and individually-owned. See 25 CFR
211.4, 212.4, and 225.4.
Some tribes insist that those BIA
regulations are in violation of FLPMA,
which they argue restricts the BLM’s
authority to Federal lands. Section 301
of FLPMA, however, charges the
Director of the BLM to carry out
functions and duties as the Secretary
may prescribe with respect to the lands
and the resources under the Secretary’s
jurisdiction according to the applicable
provisions of FLPMA and any other
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31669
applicable law. 43 U.S.C. 1731(a). See
also 43 U.S.C. 1731(b). The Act of
March 3,1909 (1909 Act) (at 25 U.S.C.
396), the Indian Minerals Leasing Act
(IMLA) (at 25 U.S.C. 396d) and the
Indian Mineral Development Act
(IMDA) (at 25 U.S.C. 2107) provide the
Secretary of the Interior with authority
to promulgate regulations governing oil
and gas operations and mineral
agreements on certain Indian lands. As
previously cited, the Secretary, through
the regulations promulgated by the BIA,
has assigned to the BLM part of the
Secretary’s trust responsibilities to
regulate oil and gas operations on those
Indian lands. This rule concerning
Indian lands is promulgated pursuant to
the 1909 Act, the IMLA, and the IMDA,
and will be implemented by the BLM
under those authorities, consistent with
Section 301 of FLPMA.
Some tribes have asked that the
proposed rule exempt Indian lands from
its scope. Such an exemption would
require the Secretary of the Interior to
conclude, among other things, that
usable waters in Indian lands, and the
persons who use such waters, are less
deserving of protection than waters and
water users on Federal land. The
Department of the Interior declines to
reach that conclusion.
Some tribes have advocated that the
proposed rule should allow Indian
tribes to decide individually whether
the hydraulic fracturing regulations
would apply on their lands. The BIA’s
regulations, however, apply all of the
BLM’s oil and gas operating regulations
to Indian lands, and do not allow the
tribes to pick and select which of the
BLM’s regulations apply on their lands.
The tribes, however, report that
industry representatives have
threatened not to bid on Indian leases if
the initial proposed rule were
promulgated. The tribes are concerned
that a major source of revenue and of
economic development might leave
Indian lands because of the costs of
compliance with the proposed rule. The
BLM has carefully considered the tribes’
comments, along with those of the oil
and gas industry and of concerned
citizens and governments. The revised
proposed rule includes several changes
from the initial proposed rule to reduce
the costs and other burdens of
compliance. Examples include allowing
operators to use any one of a class of
CELs to verify the adequacy of cement
casings, not requiring the CEL to be
submitted or approved before fracturing
operations if there is no indication of
problems with the cementing, and the
‘‘type well’’ approach allowing an
operator’s approved group of wells that
conform to the operator’s proven type
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well in the same field to be
hydraulically fractured without
additional CELs, unless there is a
problem with the cementing. The
revised proposed rule also explicitly
states that BLM will require isolation of
zones that the tribes designate for
protection from oil and gas operations,
and will not require isolation of zones
that tribes have exempted from
protection. (Note, though, that the
revised proposed rule would not exempt
an operator from the provisions of the
SDWA.) Furthermore, the BLM could
approve a variance applicable to all or
parts of Indian lands, provided the
variance meets or exceeds the
effectiveness of the revised proposed
rule. Such a variance could allow an
operator’s compliance with a tribe’s
standard or procedure to be accepted as
compliance with the revised proposed
rule, thus reducing the compliance
burdens for operators. Such changes
should significantly reduce compliance
costs for operators while still assuring
protection of usable water resources.
The BLM is aware that the revised
proposed rule would nonetheless result
in some higher costs for operators on
Federal and Indian lands, compared
with compliance costs for hydraulic
fracturing on non-Federal, non-Indian
lands in several States. Regulatory
compliance costs, however, are only one
set in a long list of costs that operators
compare to anticipated revenues when
deciding whether and how much to bid
on a Federal or Indian lease. It has not
been the BLM’s experience that
regulatory compliance costs have
caused the industry as a whole to avoid
valuable oil and gas resources on
Federal and Indian lands.
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Executive Order 12988, Civil Justice
Reform
Under Executive Order 12988, the
Office of the Solicitor has determined
that this rule would not unduly burden
the judicial system and meets the
requirements of Sections 3(a) and 3(b)(2)
of the Order. The Office of the Solicitor
has reviewed the rule to eliminate
drafting errors and ambiguity. It has
been written to minimize litigation,
provide clear legal standards for affected
conduct rather than general standards,
and promote simplification and avoid
unnecessary burdens.
Paperwork Reduction Act
The Paperwork Reduction Act (PRA)
(44 U.S.C. 3501–3521) provides that an
agency may not conduct or sponsor, and
a person is not required to respond to,
a ‘‘collection of information,’’ unless it
displays a currently valid control
number. Collections of information
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include requests and requirements that
an individual, partnership, or
corporation obtain information, and
report it to a Federal agency (44 U.S.C.
3502(3); 5 CFR 1320.3(c) and (k)).
The BLM included its information
collection request in the proposed rule
and invited public comment. OMB did
not approve or disapprove the request at
that time. The BLM has revised the
information collection that was in the
proposed rule and has re-submitted its
information collection request. In
accordance with the PRA, the BLM is
inviting public comment on its request
that OMB approve new uses of Form
3160–5 (Sundry Notices and Reports on
Wells). The BLM is proposing that these
new uses would replace certain existing
uses of Form 3160–5 for hydraulic
fracturing operations.
OMB has approved the use of Form
3160–5 under control number 1004–
0137, Onshore Oil and Gas Operations
(43 CFR part 3160), to collect
information on a number of operations,
including some hydraulic fracturing
operations. Once the BLM is authorized
to collect hydraulic fracturing
information in accordance with
finalized new section 3162.3–3 and new
control number 1004–0203, the BLM
will request revision of control number
1004–0137 to:
• Add the new hydraulic fracturing
uses and burdens of Form 3160–5 to
control number 1004–0137;
• Remove the existing hydraulic
fracturing uses and burdens from the
existing approval of Form 3160–5; and
• Discontinue new control number
1004–0203.
The new collection of information
would be required to obtain or retain a
benefit for the operators of Federal and
Indian (except on the Osage
Reservation, the Crow Reservation, and
certain other areas) onshore oil and gas
leases, units, or communitization
agreements that include Federal leases.
The BLM has requested a 3-year term of
approval for the new control number.
The information collection request for
this revised proposed rule has been
submitted to OMB for review under 44
U.S.C. 3504(h) of the Paperwork
Reduction Act. A copy of the request
can be obtained from the BLM by
electronic mail request to Candice
Money at cmoney@blm.gov or by
telephone request to 202–912–7144.
You may also review the information
collection request online at https://
www.reginfo.gov/public/do/PRAMain.
The BLM requests comments to:
• Evaluate whether the proposed
collection of information is necessary
for the proper performance of the
functions of the agency, including
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whether the information will have
practical utility;
• Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used;
• Enhance the quality, utility, and
clarity of the information to be
collected; and
• Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submission of
responses.
Comments on the information
collection requirements should be sent
to both OMB and the BLM as directed
in the ADDRESSES section of this
preamble. OMB is required to make a
decision concerning the collection of
information contained in this revised
proposed rule between 30 to 60 days
after publication of this document in the
Federal Register. Therefore, a comment
to OMB is best assured of having its full
effect if OMB receives it by June 24,
2013.
Summary of Information Collection
Requirements
The revised proposed rule is intended
to increase transparency for the public
regarding the fluids and additives used
in hydraulic fracturing, and to protect
Federal and Indian resources. The
proposed provisions that include
information collection requirements are
amendments to 43 CFR 3162.3–2 and
new 43 CFR 3162.3–3.
OMB has approved the use of Form
3160–5 under control number 1004–
0137 for the operations listed in existing
section 3162.3–2. As revised in the
proposed rule, section 3162.3–2 would
no longer include hydraulic fracturing
jobs (i.e., nonroutine fracturing, routine
fracturing, and acidizing) on the list of
operations for which prior approval and
subsequent reports would be required.
Other categories of operations would
remain subject to the information
collection requirements in section
3162.3–2. Once the BLM is authorized
to collect hydraulic fracturing
information under new section 3162.3–
3 and a new control number, the BLM
will request revision of control number
1004–0137 by removing the hydraulic
fracturing burdens from the existing
approval of Form 3160–5. New section
3162.3–3 would require operators to use
Form 3160–5 both to seek prior BLM
approval of hydraulic fracturing
operations, and to submit a report on
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subsequent actual hydraulic fracturing
operations. It would also encourage
operators to use Form 3160–5 if they
want to request a variance from the
requirements of new section 3162.3–3.
In accordance with the PRA, the BLM
invited public comments on the
information collection in the initial
proposed rule. One commenter
submitted comments specifically in
response to this opportunity. In
addition, some commenters addressed
the necessity, practical utility, and/or
estimated burdens of the proposed
collections.
1. Necessity/Avoidance of Unnecessary
Duplication
The PRA requires each Federal agency
to certify that its collections of
information are necessary for the proper
performance of agency functions, and
are not unnecessarily duplicative of
information otherwise reasonably
accessible to the agency. 43 U.S.C.
3506(c)(3)(A) and (B).
One commenter stated that the
proposed collections are unnecessary,
given the existing Eight-Point Drilling
Program associated with APDs and the
subsequent well completion reports. In
addition, the commenter stated that
operators on Indian lands already
comply with Colorado State rules that
make Federal disclosure a redundant
and unnecessary burden on operators.
Other commenters also questioned
whether the proposed collections are
necessary and avoid unnecessary
duplication. For example:
• One commenter stated that the
proposed collection of both pre- and
post-fracturing information is a
requirement to submit basically the
same information twice, and
recommended that the BLM consider
requiring submission of pre-completion
information and then requiring
operators to advise the BLM of any postcompletion changes or deviations;
• Another commenter recommended
that operators be allowed to submit a
generic or Master Plan for similar
operations on a plan of development, at
the field or unit level;
• One commenter stated that the
proposed collection of information
about the water source to be used in
hydraulic fracturing duplicates
protections afforded by the
Environmental Protection Agency and
States under the Clean Water Act and
the Safe Drinking Water Act;
• One commenter stated that the
proposed collections duplicate Staterequired collections in Colorado, New
Mexico, Alabama, and Texas;
• One commenter stated that the
proposal to collect an estimate of the
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volume of fluid to be recovered during
flowback, swabbing, and recovery from
production facility vessels (43 CFR
3162.3–3(c)(6)(i)) duplicates a
requirement in Wyoming for postfracturing reporting as to the amounts,
handling, and disposal or reuse of
hydraulic fracturing fluid; and
• One commenter stated that the
information in the NOI Sundry and the
Subsequent Report Sundry Notice
duplicates information required and
approved by individual States, and
suggested that the BLM provide for
exemptions for operators in States that
have adopted hydraulic fracturing
regulations, or accept information filed
under State laws or regulations in lieu
of requiring operators to submit
duplicative information to the BLM for
approval.
Some commenters specifically
questioned the necessity of proposed
section 3162.3–3(c)(2), which would
have required the Notice of Intent
Sundry to include the ‘‘proposed
measured depths (both top and bottom)
of all occurrences of usable water and
the CBLs (or another log acceptable to
the authorized officer) proving that the
occurrences of usable water have been
isolated to protect them from
contamination.’’
Some comments included statements
of support. One commenter stated that
full disclosure of chemicals involved in
the hydraulic fracturing process results
in a transparent process that benefits
industry, regulatory agencies, and the
public.
Some other commenters generally
supported transparency and full
disclosure of pollution data. For
example, one commenter stated that the
post-fracturing collection of information
on the volume of water used in the
fracturing process will aid water
resource managers in planning water
resources on and near Federal lands,
and suggested that the same type of
information be collected on the Notice
of Intent Sundry.
Some commenters were supportive of
disclosure of information through
FracFocus.org to avoid duplicating or
creating another platform for disclosure.
Response: Because hydraulic
fracturing has been a growing practice
in recent years, the BLM has determined
that the collections of information in the
revised proposed rule are necessary to
enable the BLM to meet its statutory
obligations to regulate operations
associated with Federal and some
Indian oil and gas leases; prevent
unnecessary or undue degradation; and
manage public lands using the
principles of multiple use and sustained
yield. The collections of information
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31671
will assist in the modernization of the
BLM’s management of hydraulic
fracturing operations in ways not
anticipated when the existing collection
requirements approved under control
number 1004–0137 were developed, and
will enable the BLM to ensure that
operators are using best practices in
fracturing operations. Moreover, the
information that States, tribes, or other
Federal agencies collect is not
necessarily reasonably accessible to the
BLM. For these reasons, the BLM has
determined that the collections in the
revised proposed rule are necessary, and
are not unnecessarily duplicative of
existing Federal, tribal, or State
collection requirements. Accordingly,
the BLM is not adopting the suggestion
that it provide for exemptions for
operators on Indian lands or in States
that have promulgated hydraulic
fracturing regulations; or that the BLM
accept information filed under State or
tribal laws or regulations in lieu of
information that meets BLM standards.
However, if information submitted in
accordance with State laws or
regulations meets the standards
prescribed by the BLM, such
information may be submitted to the
BLM in accordance with the revised
proposed rule.
In response to comments that
requiring both pre- and post-fracturing
information amounts to a requirement to
submit basically the same information
twice, the BLM has deleted the
following pre-fracturing collections:
• Submission of a CBL for approval
before commencing fracturing
operations, which was part of proposed
43 CFR 3162.3–3(c)(2); and
• Submission of a pre-fracturing
certification of compliance with all
applicable permitting and notice
requirements, which was proposed as
43 CFR 3162.3–3(c)(4).
The revised proposed rule (at 43 CFR
3162.3–3(d)) also allows an NOI Sundry
to be submitted for a single well or a
type well covering a group of wells
sharing substantially similar geological
characteristics within the same geologic
formation. If the submission is for a
group of wells, the information should
describe a ‘‘type well,’’ defined in the
revised proposed rule to mean an oil
and gas well that can be used as a model
for well completion in a field where
geologic characteristics are substantially
similar across the field, and operations
such as drilling, cementing, and
hydraulic fracturing are likely to be
successfully replicated using the same
design. This provision will give
operators an opportunity to streamline
the submission of pre-fracturing
information in appropriate
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circumstances. However, the revised
proposed rule provides (at 43 CFR
3162.3–3(e)(4)) that where there are
indications of problems with the
cementing of casings, the operator must
submit information showing that the
problem has been corrected before
commencing hydraulic fracturing
operations, and (at 43 CFR 3162.3–3(i))
that post-fracturing data for each well is
required.
The BLM has taken these actions in
recognition that:
• The BLM can meet its statutory
responsibilities without collecting a full
complement of pre-fracturing data; but
• The BLM needs more complete
post-fracturing information in order to
meet its statutory responsibilities.
The BLM has not adopted the
suggestions to:
• Allow operators to meet their prefracturing information-submission
obligations by submitting a generic or
master plan for similar operations on a
plan of development, at the field or unit
level;
• Allow operators to meet their postfracturing obligations solely by advising
the BLM of any post-completion
changes or deviations; or
• Require data about water volume in
pre-fracturing as well as post-fracturing
information collections.
Both the proposed rule and the
revised proposed rule include
provisions that require more detailed
data after fracturing than before
fracturing. For example, the information
about water volume that is required
before fracturing is limited to a plan that
includes the estimated total volume of
fluid to be used. See section 3162.3–
3(d)(4) of the revised proposed rule
(proposed as 43 CFR 3162.3–3(c)(5)).
Regarding post-fracturing information,
the BLM has revised proposed section
3162.3–3(g)(1) (designated as section
3162.3–3(i)(1) of the proposed rule) to
require the total water volume used and
in other paragraphs within subsection
(i) of the revised proposed rule,
operators are required to provide:
• The actual surface pressure and rate
at the end of each stage of the hydraulic
fracturing operation, and the actual
flush volume, rate, and final proposed
pump pressure (section 3162.3–3(i)(3));
and
• The volume of fluid recovered
during flowback, swabbing, or recovery
from production facility vessels (section
3162.3–3 (i)(5)(i)).
In both the initial proposed and
revised proposed rule, the BLM has
identified water volume to be a
necessary element of both pre- and postfracturing information collections. The
BLM is requiring all hydraulic
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fracturing and refracturing operations to
isolate all usable water and other
mineral-bearing formations and protect
them from contamination. 43 CFR
3162.3–3(b) and 3162.5–2. Operators are
thus on notice that they must meet this
performance standard during all
operations covered by this rule. The
commenter’s suggestion seems to be to
collect pre-fracturing information about
water volume that is as detailed, or
similarly detailed, as that which will be
collected after fracturing. However,
upon consideration of this comment, the
BLM has determined that the same
amount of detail both before and after
fracturing is not necessary in order to
enable the BLM to verify that the
proposed engineering design is adequate
for safely conducting the proposed
hydraulic fracturing. In addition, the
BLM understands that such detail is
unlikely to be available before
commencing hydraulic fracturing. The
BLM, therefore, has not adopted the
commenter’s suggestion. Regarding the
comments about FracFocus, section
3162.3–3(i) of the revised proposed rule
allows the following required postfracturing information to be submitted
to the BLM through FracFocus, another
data base specified by the BLM, or in a
Subsequent Report Sundry Notice:
• True vertical depth of the well;
• Total water volume used; and
• For each chemical used (including
base fluid) the trade name, supplier,
purpose, ingredients, Chemical Abstract
Service Number (CAS #), maximum
ingredient concentration in additive (%
by mass), and maximum ingredient
concentration in hydraulic fracturing
fluid (% by mass).
The initial proposed rule, at 43 CFR
3162.3–3(g), would have required that
this information, as well as additional
information, be included in SR Sundry
Notices, and provided no other options
for submission. However, the preamble
to the initial proposed rule indicated
that this information is intended to be
posted on a public Web site, and that
the BLM was working with the
Groundwater Protection Council to
determine whether the disclosure can be
integrated into FracFocus. Some
commenters expressed concerns that
this statement in the preamble could
result in duplicative submissions of
information. By clarifying the regulatory
text, the BLM is preventing such
unnecessary duplication.
2. Practical Utility
The PRA requires each Federal agency
to certify that its collections of
information have ‘‘practical utility.’’ 43
U.S.C. 3506(c)(3)(A). A collection has
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practical utility if the agency can use the
information that is collected.
Some commenters questioned
whether the BLM has sufficient
expertise and staffing to use the
information that is collected. One
commenter specifically stated that it has
seen no indication that the BLM intends
to provide the training and education to
enable its staff to use the information.
One commenter also stated that the
proposed collections could result in
submissions of inaccurate information
to the BLM because the details of a
hydraulic fracturing design are typically
not available to operators until after a
well has been drilled and specific
details regarding the target formation
have been obtained. The commenter
suggested that a more appropriate
approach would be to collect
appropriate information as it is obtained
and for information purposes only.
Response: The BLM employs many
petroleum engineers and technicians,
and they are well qualified to use the
information required by the revised
proposed rule, and thus disagrees with
commenters that question the BLM’s
ability to use the information that is
required in the revised proposed rule.
The BLM also disagrees with statements
to the effect that pre-fracturing data will
be inaccurate. The industry has many
years of experience collecting and
enhancing the accuracy of pre-fracturing
engineering and data collection.
3. Reduction of Burdens on the Public
The PRA requires each Federal agency
to certify that its collections of
information:
• Reduce respondents’ burdens to the
extent practicable and appropriate;
• Are written using plain, coherent,
and unambiguous terminology that is
understandable to those who are to
respond;
• Will be implemented in ways
consistent and compatible, to the
maximum extent practicable, with
respondents’ existing reporting and
recordkeeping practices; and
• To the maximum extent practicable,
use information technology to reduce
burden and improve data quality,
agency efficiency, and responsiveness to
the public.
43 U.S.C. 3506(c)(3)(C) through (E) and
(J).
One commenter stated that the BLM
underestimated the annual costs
associated with the proposed rule. Some
commenters commented generally that
the BLM has underestimated burdens
under the Paperwork Reduction Act,
other statutes, and various executive
orders.
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Other comments included the
following:
• One commenter stated that the BLM
should consider ways to minimize the
submission of information by allowing
operators to conduct fracturing
operations within acceptable operating
ranges and allowing operators to use
standard completion reports; and
• One commenter suggested that, to
reduce the burdens on operators, the
BLM should allow operators to submit
generic hydraulic fracturing plans for a
targeted zone in resource play areas that
can be referenced when an APD is
submitted. Similarly, another
commenter requested that the rule
provide for acceptance of a general
Operator’s Master Fluid Management
Plan that may be used consistently
across a plan of development.
Response: The BLM has revised its
estimates of the burdens to respondents,
in part because of responses to
comments that are described above.
Specifically, the BLM has deleted some
aspects of the pre-fracturing collection
from the revised proposed rule, and has
provided in the revised proposed rule
for submission of pre-fracturing data
either for each well or for a type well
covering a group of wells sharing
substantially similar geological
characteristics within the same geologic
formation. These revisions of the
proposed rule result in a reduction of
the estimated annual number of NOI
Sundries from 1,700 to 415. They also
result in a reduction of the estimated
number of Variance Requests, from 170
to 41, because such requests apply to
NOI Sundries. These estimates are the
average of the expected responses over
the first 3 years of implementation.
The estimated number of annual SR
Sundry Notices has increased because
the revised proposed rule (at 43 CFR
3162.3–3) now requires post-fracturing
data on both fracturing and re-fracturing
operations. This revision results in an
increase in the estimated annual
responses, from 1,700 to 3,657.
The following table shows the
itemized estimated burdens associated
with the revised proposed rule:
B.
Number of
responses/
revised proposed
rule
A.
Type of response
C.
Hours per
response
(same for
proposed and
revised
proposed rule)
D.
Total
hours/revised
proposed rule
(column B ×
column C)
Sundry Notices and Reports on Wells/Well Stimulation/Notice of Intent Sundry (43
CFR 3162.3–3) Form 3160–5 ......................................................................................
Sundry Notices and Reports on Wells/Well Stimulation/Subsequent Report Sundry
Notice (43 CFR 3162.3–3) Form 3160–5 ....................................................................
Sundry Notices and Reports on Wells/Well Stimulation/Variance Request (43 CFR
3162.3–3) Form 3160–5 ..............................................................................................
415
8
3,320
3,657
8
29,256
41
8
328
Totals ........................................................................................................................
4,113
............................
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The general comments about the
BLM’s analysis under the Paperwork
Reduction Act, other statutes, and
various executive orders did not address
the specific information collection
associated with the proposed rule.
Therefore, the BLM has not changed the
collection in response to these
comments. However, the BLM invites
further comments on the revised
collection in this revised proposed rule.
The BLM has not adopted the
suggestions to allow operators to
conduct fracturing operations within
acceptable operating ranges, to allow
operators to use standard completion
reports, or to allow operators to submit
Fluid Management Plans or generic
hydraulic fracturing plans for a targeted
zone in resource play areas that can be
referenced when an APD is submitted.
Such provisions would not enable the
BLM to meet its statutory
responsibilities.
National Environmental Policy Act
The BLM has prepared an
environmental assessment (EA) that
concludes that this rule would not
constitute a major Federal action that
may result in a significant adverse effect
on the human environment under
section 102(2)(C) of the National
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Environmental Policy Act (NEPA), 42
U.S.C. 4332(2)(C). The EA and the draft
Finding of No Significant Impact are
available for review and on file in the
BLM Administrative Record at the
address specified in the ADDRESSES
section.
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).
Executive Order 13211, Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use
Under Executive Order 13211,
agencies are required to prepare and
submit to OMB a Statement of Energy
Effects for significant energy actions.
This Statement is to include a detailed
statement of ‘‘any adverse effects of
energy supply, distribution, or use
(including a shortfall in supply, price
increases, and increase use of foreign
supplies)’’ for the action and reasonable
alternatives and their effects.
Section 4(b) of Executive Order 13211
defines a ‘‘significant energy action’’ as
‘‘any action by an agency (normally
published in the Federal Register) that
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promulgates or is expected to lead to the
promulgation of a final rule or
regulation, including notices of inquiry,
advance notices of proposed
rulemaking, and notices of proposed
rulemaking: (1)(i) That is a significant
regulatory action under Executive Order
12866 or any successor order, and (ii) is
likely to have a significant adverse effect
on the supply, distribution, or use of
energy; or (2) that is designated by the
Administrator of OIRA as a significant
energy action.
The BLM believes that the additional
cost per hydraulic fracturing operation
is insignificant when compared with the
drilling costs in recent years, the
production gains from hydraulically
fractured wells operations, and the net
incomes of entities within the oil and
natural gas industries. For a single well
or a type well, the compliance costs
represent about 0.4 to 1.5 percent of the
costs of drilling a well. For a well
subsequent to a type well, the costs
represent between 0.04 and 0.08 percent
of the total drilling costs. For existing
wells and refracture operations, the
percentages are even lower, at about
0.01 to 0.03 percent. When averaging
the compliance costs across all
operations, the costs represent between
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0.04 and 0.13 percent of the costs of
drilling a well.
Since the estimated compliance costs
are not a substantial when compared
with the total costs of drilling a well, the
BLM believes that the rule is unlikely to
have an effect on the investment
decisions of firms, and the rule is
unlikely to affect the supply,
distribution, or use of energy. As such,
the rule is not a ‘‘significant energy
action’’ as defined in Executive Order
13211.
Clarity of the Regulations
Executive Order 12866 requires each
agency to write regulations that are
simple and easy to understand. We
invite your comments on how to make
these proposed regulations easier to
understand, including answers to
questions such as the following:
1. Are the requirements in the
proposed regulations clearly stated?
2. Do the proposed regulations
contain technical language or jargon that
interferes with their clarity?
3. Does the format of the proposed
regulations (grouping and order of
sections, use of headings, paragraphing,
etc.) aid or reduce their clarity?
4. Would the regulations be easier to
understand if they were divided into
more (but shorter) sections?
5. Is the description of the proposed
regulations in the SUPPLEMENTARY
INFORMATION section of this preamble
helpful in understanding the proposed
regulations? How could this description
be more helpful in making the proposed
regulations easier to understand?
Please send any comments you have
on the clarity of the regulations to the
address specified in the ADDRESSES
section.
Authors
The principal authors of this rule are:
Subijoy Dutta of the BLM Washington
Office; Donato Judice of the BLM Great
Falls, Montana Oil and Gas Field Office,
assisted by the BLM’s Division of
Regulatory Affairs and the Department
of the Interior’s Office of the Solicitor.
sroberts on DSK5SPTVN1PROD with PROPOSALS
List of Subjects 43 CFR Part 3160
Administrative practice and
procedure; Government contracts;
Indians—lands; Mineral royalties; Oil
and gas exploration; Penalties; Public
lands—mineral resources; Reporting
and recordkeeping requirements.
43 CFR Chapter II
For the reasons stated in the
preamble, and under the authorities
stated below, the Bureau of Land
Management amends 43 CFR part 3160
as follows:
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PART 3160—ONSHORE OIL AND GAS
OPERATIONS
1. The authorities citation for part
3160 is revised to read as follows:
■
Authority: 25 U.S.C. 396d and 2107; 30
U.S.C. 189, 306, 359, and 1751; and 43 U.S.C.
1732(b), 1733, and 1740.
Subpart 3160—Onshore Oil and Gas
Operations: General
§ 3160.0–3
[Amended]
2. In § 3160.0–3 add ‘‘the Federal
Land Policy and Management Act (43
U.S.C. 1701 et seq.),’’ after ‘‘the Mineral
Leasing Act for Acquired lands, as
amended (30 U.S.C. 351–359),’’.
■ 3. Amend § 3160.0–5 by adding
definitions of ‘‘annulus,’’ ‘‘bradenhead,’’
‘‘hydraulic fracturing,’’ ‘‘hydraulic
fracturing fluid,’’ ‘‘proppant,’’
‘‘refracturing,’’ ‘‘type well,’’ and ‘‘usable
water,’’ in alphabetical order and by
removing the definition of ‘‘fresh
water’’.
The additions read as follows:
■
§ 3160.0–5
Definitions.
*
*
*
*
*
Annulus means the space around a
pipe in a wellbore, the outer wall of
which may be the wall of either the
borehole or the casing; sometimes also
called annular space.
*
*
*
*
*
Bradenhead means a heavy, flanged
steel fitting connected to the first string
of casing that allows the suspension of
intermediate and production strings of
casing and supplies the means for the
annulus to be sealed.
*
*
*
*
*
Hydraulic fracturing means those
operations conducted in an individual
wellbore designed to increase the flow
of hydrocarbons from the rock formation
to the wellbore through modifying the
permeability of reservoir rock by
fracturing it. Hydraulic fracturing does
not include enhanced secondary
recovery such as water flooding, tertiary
recovery, recovery through steam
injection, or other types of well
stimulation operations such as
acidizing.
*
*
*
*
*
Hydraulic fracturing fluid means the
liquid or gas, and any associated solids
used in hydraulic fracturing, including
constituents such as water, chemicals,
and proppants.
*
*
*
*
*
Proppant means a granular substance
(most commonly sand, sintered bauxite,
or ceramic) that is carried in suspension
by the fracturing fluid that serves to
keep the cracks open when fracturing
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fluid is withdrawn after a hydraulic
fracture operation.
*
*
*
*
*
Refracturing means a hydraulic
fracturing operation subsequent to the
completion of a prior hydraulic
fracturing operation in the same well.
For purposes of this definition, a
hydraulic fracturing operation is
completed when a well begins
producing oil or gas, or when
equipment necessary to inject the
hydraulic fracturing fluid at sufficient
pressure to fracture the stratum is
removed from the well pad, whichever
occurs earlier.
*
*
*
*
*
Type well means an oil and gas well
that can be used as a model for well
completion in a field where geologic
characteristics are substantially similar
within the same field, and where
operations such as drilling, cementing,
and hydraulic fracturing are likely to be
successfully replicated using the same
design.
*
*
*
*
*
Usable water means generally those
waters containing up to 10,000 parts per
million (ppm) of total dissolved solids.
The following geologic zones are
deemed to contain usable water:
(1) Underground sources of drinking
water as defined by the U.S.
Environmental Protection Agency or by
State law (for Federal lands) or tribal
law (for Indian lands);
(2) Zones in use for supplying water
for agricultural or industrial purposes,
regardless of the concentration of total
dissolved solids, unless the operator
demonstrates that the existing
agricultural or industrial user would not
be adversely affected;
(3) Zones designated by a State (for
Federal lands) or a tribe (for Indian
lands) as requiring isolation or
protection from oil and gas operations;
and
(4) Zones containing up to 10,000
ppm of total dissolved solids that are
not excluded by paragraphs (A), (B), or
(C) of this definition. The following
geologic zones are deemed not to
contain usable water:
(A) Zones from which an operator is
authorized to produce hydrocarbons;
(B) Zones designated as exempted
aquifers pursuant to the Safe Drinking
Water Act; and
(C) Zones which the State (for Federal
lands) or the tribe (for Indian lands) has
designated as exempt from any
requirement to be isolated or protected
from oil and gas operations.
*
*
*
*
*
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Subpart 3162—Requirements for
Operating Rights Owners and
Operators
4. Amend § 3162.3–2 by revising the
first sentence of paragraph (a) and
revising paragraph (b) to read as follows:
■
§ 3162.3–2
Subsequent well operations.
(a) A proposal for further well
operations must be submitted by the
operator on Form 3160–5 for approval
by the authorized officer prior to the
operator’s commencing operations to
redrill, deepen, perform casing repairs,
plug-back, alter casing, recomplete in a
different interval, perform water shut
off, combine production between zones,
and/or convert to injection. * * *
(b) Unless additional surface
disturbance is involved and if the
operations conform to the standard of
prudent operating practice, prior
approval is not required for acidizing
jobs or recompletion in the same
interval; however, a subsequent report
on these operations must be filed on
Form 3160–5.
*
*
*
*
*
■ 5. Revise § 3162.3–3 to read as
follows:
sroberts on DSK5SPTVN1PROD with PROPOSALS
§ 3162.3–3 Subsequent well operations;
Hydraulic fracturing.
(a) Activities To Which This Section
Applies.
This section applies to all hydraulic
fracturing operations, and refracturing
operations. All other injection activities
must comply with section 3162.3–2.
(b) Isolation of Usable Water to
Prevent Contamination. All hydraulic
fracturing and refracturing operations
must meet the performance standard in
section 3162.5–2(d) of this title.
(c) When an Operator Must Submit
Notification for Approval of Hydraulic
Fracturing. A proposal for hydraulic
fracturing or refracturing must be
submitted by the operator and approved
by the BLM before commencement of
operations. The proposal may be
submitted in one of the following ways:
(1) The operator may submit with its
application for permit to drill the
information required in paragraph (d) of
this section;
(2) The operator may submit a
proposal for hydraulic fracturing
operations on Form 3160–5 (Sundry
Notices and Reports on Wells) as a
Notice of Intent Sundry for approval by
the authorized officer prior to hydraulic
fracturing. If the hydraulic fracturing
operation would cause additional
surface disturbance, the proposal must
include a surface use plan of operations;
or
(3) If an operator has received BLM
approval for hydraulic fracturing
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operations, it must submit a new Notice
of Intent Sundry if:
(i) Hydraulic fracturing or refracturing
operations have not commenced within
5 years after the effective date of
approval of the fracturing operation;
(ii) The operator has significant new
information about the geology of the
area, the stimulation operation or
technology to be used, or the anticipated
impacts of the fracturing operation to
any resource; or
(iii) The operator proposes
refracturing of the well. For refracturing
operations, the operator must submit
any information in this section that is
required by the authorized officer,
including a mechanical integrity test.
(d) What the Notice of Intent Sundry
Must Include. The authorized officer
may prescribe that each proposal
contain all or a portion of the
information set forth in section 3162.3–
1 of this title. The Sundry Notice may
be submitted for a single well or a group
of wells within the same geologic
formation. If the submission is for a
group of wells, the information should
describe a type well. If the type well has
not been completed, the cement
evaluation log described in paragraph
(e)(2) of this section must be provided
to BLM before drilling operations may
begin on the other wells in the group.
If information submitted in accordance
with State (on Federal lands) or tribal
(on Indian lands) laws or regulations
meets the standards prescribed by the
BLM, such information may be
submitted to the BLM as part of the
Sundry Notice.
The Notice of Intent Sundry must
include the following:
(1) The geological names, a geological
description, and the proposed measured
depth of the top and the bottom of the
formation into which hydraulic
fracturing fluids are to be injected;
(2) The measured or estimated depths
(both top and bottom) of all occurrences
of usable water by use of a drill log from
the subject well or another well in the
vicinity and within the same field;
(3) The proposed measured depth of
perforations or the open-hole interval,
estimated pump pressures, and
information concerning the source and
location of water supply, such as reused
or recycled water, or rivers, creeks,
springs, lakes, ponds, and wells, which
may be shown by quarter-quarter
section on a map or plat, or which may
be described in writing. It must also
identify the anticipated access route and
transportation method for all water
planned for use in fracturing the well;
(4) A plan for the proposed hydraulic
fracturing design that includes, but is
not limited to, the following:
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(i) The estimated total volume of fluid
to be used;
(ii) The anticipated surface treating
pressure range;
(iii) The maximum injection treating
pressure;
(iv) The estimated or calculated
fracture direction, length, and height,
including the estimated fracture
propagation plotted on the well
schematics and on a map. The map
must be of a scale no smaller than
1:24,000; and
(v) The estimated vertical distance to
the nearest usable water aquifer above
the fracture zone;
(5) The following information
concerning the handling of recovered
fluids:
(i) The estimated volume of fluid to be
recovered during flowback, swabbing,
and recovery from production facility
vessels;
(ii) The proposed methods of
handling the recovered fluids,
including, but not limited to, pit
requirements, pipeline requirements,
holding pond use, re-use for other
stimulation activities, or injection; and
(iii) The proposed disposal method of
the recovered fluids, including, but not
limited to, injection, hauling by truck,
or transporting by pipeline; and
(6) The authorized officer may request
additional information prior to the
approval of the Notice of Intent Sundry.
(e) Monitoring of Cementing
Operations and Cement Evaluation Log
Prior to Hydraulic Fracturing.
(1) During cementing operations the
operator must monitor and record the
flow rate, density, and treating pressure
and submit a cement operation
monitoring report to the authorized
officer within 30 days after completion
of the hydraulic fracturing operations.
(2) The operator must run a cement
evaluation log or logs on each casing
that protects usable water and the
operator must submit those logs to the
authorized officer within 30 days after
completion of the hydraulic fracturing
operations, except as provided under
(e)(3) of this section. A cement
evaluation log, is any one of a class of
tools that verify the integrity of annular
cement bonding, such as, but not
limited to, a cement bond log, ultrasonic
imager, variable density logs, microseismograms, CBLs with directional
receiver array, ultrasonic pulse echo
technique, or isolation scanner. An
operator may select the tool used to
prepare the CEL, as long as it is at least
as effective in verifying the integrity of
annular cement bonding as is a cement
bond log.
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(3) An operator is not required to run
a cement evaluation log on the casings
of a subsequent well where an operator:
(i) Submitted a cement evaluation log
for a type well (see paragraph (d) of this
section) that shows successful cement
bonding to protect against downhole
fluid cross-migration into water zones;
and
(ii) Completes a subsequent well or
wells with the same specifications and
geologic characteristics as the type well,
and approved in the same group sundry
notice for the same field (see paragraph
(d) of this section), and the cementing
operations monitoring data parallels
those of the type well.
(4) For any well, if there is an
indication of an inadequate cement job
(such as, but not limited to, lost returns,
cement channeling, gas cut mud, or
failure of equipment), then the operator
must report that information to the
authorized officer within 24 hours,
followed by a written report within 48
hours. Prior to commencing hydraulic
fracturing operations, the operator must
run a cement evaluation log showing
that the inadequate cement job has been
corrected and the occurrences of usable
water have been isolated to protect them
from contamination. At least 72 hours
before commencing the hydraulic
fracturing operation, the operator must
submit:
(i) A signed certification indicating
that the operator corrected the
inadequate cement job; and
(ii) Documentation that shows that
there is adequate cement bonding.
(5) The operator must submit the
information required by paragraph
(e)(1), and (e)(2) of this section with the
Subsequent Report Sundry Notice
required in paragraph (i) of this section.
(f) Mechanical Integrity Testing Prior
to Hydraulic Fracturing. Prior to
hydraulic fracturing, or refracturing, the
operator must perform a successful
mechanical integrity test (MIT) of the
vertical sections of the casing.
(1) If hydraulic fracturing through the
casing is proposed, the casing must be
tested to not less than the maximum
anticipated treating pressure.
(2) If hydraulic fracturing through a
fracturing string is proposed, the
fracturing string must be inserted into a
liner or run on a packer-set not less than
100 feet below the cement top of the
production or intermediate casing. The
fracturing string must be tested to not
less than the maximum anticipated
treating pressure minus the annulus
pressure applied between the fracturing
string and the production or
intermediate casing.
(3) The MIT will be considered
successful if the pressure applied holds
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for 30 minutes with no more than a 10
percent pressure loss.
(g) Monitoring and Recording During
Hydraulic Fracturing.
(1) During any hydraulic fracturing or
refracturing operation, the operator
must continuously monitor and record
the annulus pressure at the bradenhead.
The pressure in the annulus between
any intermediate casings and the
production casing must also be
continuously monitored and recorded.
A continuous record of the annulus
pressure during the fracturing operation
must be submitted with the required
Subsequent Report Sundry Notice (Form
3160–5, Sundry Notices and Reports on
Wells) identified in paragraph (i) of this
section.
(2) If during any hydraulic fracturing
or refracturing operation the annulus
pressure increases by more than 500
pounds per square inch as compared to
the pressure immediately preceding the
stimulation, the operator must take
immediate corrective action and must
orally notify the authorized officer as
soon as practicable, but no later than 24
hours following the incident. Within 30
days after the hydraulic fracturing
operations are completed, the operator
must submit a report containing all
details pertaining to the incident,
including corrective actions taken, as
part of a Subsequent Report Sundry
Notice (Form 3160–5, Sundry Notices
and Reports on Wells).
(h) Storage of all recovered fluids
must be in either tanks or lined pits.
The authorized officer may require any
other BLM approved method to protect
the mineral resources, other natural
resources, and environmental quality
from the release of recovered fluids.
(i) Information that Must be Provided
to the Authorized Officer After
Completed Operations. The information
required in paragraphs (i)(1) through
(i)(8) of this section must be submitted
to the authorized officer within 30 days
after the hydraulic fracturing or
refracturing operations are completed.
The information is required for each
well, even if the BLM approved
fracturing of a group of wells (see
§ 3162.3–3(d)). The information
required in paragraph (i)(1) of this
section must be submitted to the
authorized officer through FracFocus,
another BLM-designated database, or in
a Subsequent Report Sundry Notice
(Form 3160–5, Sundry Notices and
Reports on Wells). If information is
submitted through FracFocus or another
designated database, the operator must
specify that the information is for a
Federal or an Indian well, certify that
the information is correct, and certify
compliance with applicable law as
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required by paragraph (i)(7)(ii) or
(i)(7)(iii) of this section using FracFocus
or the designated database. The
information required in paragraphs (i)(2)
though (i)(8) of this section must be
submitted to the authorized officer in a
Subsequent Report Sundry Notice. The
operator is responsible for the
information submitted by a contractor or
agent, and the information is considered
to have been submitted directly from the
operator to the BLM. The operator must
submit the following information:
(1) The true vertical depth of the well,
total water volume used, and for each
chemical used (including base fluid) the
trade name, supplier, purpose,
ingredients, Chemical Abstract Service
Number (CAS #), maximum ingredient
concentration in additive (% by mass),
and maximum ingredient concentration
in hydraulic fracturing fluid (% by
mass).
(2) The actual measured depth of
perforations or the open-hole interval,
and actual pump pressures and the
source(s) and location(s) of the water
used in the hydraulic fracturing fluid.
(3) The actual surface pressure and
rate at the end of each stage of the
hydraulic fracturing operation, and the
actual flush volume, rate, and final
pump pressure.
(4) The actual, estimated, or
calculated fracture length, height and
direction;
(5) The following information
concerning the handling of recovered
fluids:
(i) The volume of fluid recovered
during flowback, swabbing, or recovery
from production facility vessels;
(ii) The methods of handling the
recovered fluids, including, but not
limited to, transfer pipes and tankers,
holding pond use, re-use for other
stimulation activities, or injection; and
(iii) The disposal method of the
recovered fluids, including, but not
limited to, injection, hauling by truck,
or transporting by pipeline. The
disposal of fluids produced during the
flowback from the hydraulic fracturing
process must follow the requirements
set out in Onshore Order Number 7,
Disposal of Produced Water, Section
III.B. (October 8, 1993, 58 FR 58506).
(6) If the actual operations deviate
from the approved plan, the deviation(s)
must be documented and explained.
(7) A certification signed by the
operator that:
(i) Wellbore integrity was maintained
prior to and throughout the hydraulic
fracturing operation, as required by
paragraph (b) of this section. The
operator must also certify that it
complied with the requirements in
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paragraphs (e), (f), (g), and (h) of this
section;
(ii) For Federal lands, the hydraulic
fracturing fluid used complied with all
applicable permitting and notice
requirements as well as all applicable
Federal, State, and local laws, rules, and
regulations; and
(iii) For Indian lands, the hydraulic
fracturing fluid used complied with all
applicable permitting and notice
requirements as well as all applicable
Federal and tribal laws, rules, and
regulations.
(8) The operator must submit well
logs and records of adequate cement
bonds including the cementing
operations monitoring report, any
cement evaluation log, and the result of
the mechanical integrity test as required
by paragraphs (e)(1), (e)(2), and (f) of
this section.
(9) The authorized officer may require
the operator to provide documentation
substantiating any information
submitted under paragraph (i) of this
section.
(j) Identifying Information Claimed to
be Exempt from Public Disclosure.
(1) For the information required in
paragraph (i)(1) of this section, the
operator will be deemed to have waived
any right to protect from public
disclosure information submitted with a
Subsequent Report Sundry Notice or
through FracFocus or another
designated database. For information
required in paragraph (i)(1) of this
section that the operator claims to be
exempt from public disclosure, the
operator must submit to the BLM an
affidavit that:
(i) Identifies the Federal statute or
regulation that allows withholding of
the information from the BLM or
prohibits the BLM from disclosing the
information if it were in the BLM’s
possession;
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(ii) Affirms that the information is not
publicly available;
(iii) Affirms that the information is
not required to be publicly available
under any applicable law;
(iv) Affirms that the release of the
information would likely harm the
operator’s competitive position; and
(v) Affirms that the information is not
readily apparent through reverse
engineering.
(2) The BLM may require any operator
to disclose to the BLM any information
claimed to be exempt from public
disclosure, along with any other
relevant information.
(3) If the BLM determines that the
information is not exempt from
disclosure, the BLM will make the
information available to the public after
providing the operator with no fewer
than 10 business days’ notice of the
BLM’s determination.
(4) The operator must maintain
records of the information claimed to be
exempt from disclosure for the period of
time as required by section 3162.4–1(d)
of this title.
(k) Requesting a Variance from the
Requirements of this Section. The
operator may make a written request to
the authorized officer for a variance
from the requirements under this
section. The BLM encourages
submission using a Sundry Notice
(Form 3160–5, Sundry Notices and
Reports on Wells). In cooperation with
a State (for Federal lands) or a tribe (for
Indian lands), the BLM may issue a
variance that would apply to all wells
within a State or within Indian lands, or
to specific fields or basins within the
State or the Indian lands, if the BLM
finds that the variance meets the criteria
in paragraph (k)(2) of this section.
(1) A request for a variance must
specifically identify the regulatory
provision of this section for which the
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31677
variance is being requested, explain the
reason the variance is needed, and
demonstrate how the operator will
satisfy the objectives of the regulation
for which the variance is being
requested.
(2) The authorized officer, after
considering all relevant factors, may
approve the variance, or approve it with
one or more conditions of approval,
only if the BLM determines that the
proposed alternative meets or exceeds
the objectives of the regulation for
which the variance is being requested.
The decision whether to grant or deny
the variance request is entirely within
the BLM’s discretion.
(3) A variance under this section does
not constitute a variance to provisions
of other regulations, laws, or orders.
(4) Due to changes in Federal law,
technology, regulation, BLM policy,
field operations, noncompliance, or
other reasons, the BLM reserves the
right to rescind a variance or modify any
conditions of approval. The authorized
officer must provide a written
justification if a variance is rescinded or
a condition of approval is modified.
■ 6. Amend § 3162.5–2 by revising the
first sentence of paragraph (d) to read as
follows:
§ 3162.5–2
Control of wells.
*
*
*
*
*
(d) Protection of usable water and
other minerals. The operator must
isolate all usable water and other
mineral-bearing formations and protect
them from contamination.
*
*
*
*
*
Tommy P. Beaudreau,
Acting Assistant Secretary, Land and
Minerals Management.
[FR Doc. 2013–12154 Filed 5–23–13; 8:45 am]
BILLING CODE 4310–84–P
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]]>Agencies
[Federal Register Volume 78, Number 101 (Friday, May 24, 2013)]
[Proposed Rules]
[Pages 31635-31677]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-12154]
[[Page 31635]]
Vol. 78
Friday,
No. 101
May 24, 2013
Part II
Department of the Interior
-----------------------------------------------------------------------
Bureau of Land Management
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43 CFR Part 3160
Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands; Proposed
Rule
Federal Register / Vol. 78 , No. 101 / Friday, May 24, 2013 /
Proposed Rules
[[Page 31636]]
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DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Part 3160
[WO-300-L13100000.FJ0000]
RIN 1004-AE26
Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands
AGENCY: Bureau of Land Management, Interior.
ACTION: Supplemental notice of proposed rulemaking and request for
comment.
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SUMMARY: On May 11, 2012, the Bureau of Land Management (BLM) published
in the Federal Register a proposed rule entitled Oil and Gas; Well
Stimulation, Including Hydraulic Fracturing, on Federal and Indian
Lands. The BLM has used the comments on that draft to make improvements
and is now seeking additional comment on a revised proposed rule. Key
issues in this updated draft include: the use of an expanded set of
cement evaluation tools to help ensure that usable water zones have
been isolated and protected from contamination; and more detailed
guidance on how trade secrets claims will be handled, modeled on the
procedures promulgated by the State of Colorado. The revised proposed
rule would also provide opportunities for the BLM to coordinate
standards and processes with individual States and tribes to reduce
administrative costs and to improve efficiency.
DATES: Send your comments on this supplemental notice of proposed
rulemaking (SNPR) to the BLM on or before June 24, 2013. The BLM need
not consider, or include in the administrative record for the final
rule, comments that the BLM receives after the close of the comment
period or comments delivered to an address other than those listed
below (see ADDRESSES). If you wish to comment on the information
collection requirements in this SNPR, please note that the Office of
Management and Budget (OMB) is required to make a decision concerning
the collection of information contained in this SNPR between 30 to 60
days after publication of this document in the Federal Register.
Therefore, a comment to OMB is best assured of being considered if OMB
receives it by June 24, 2013.
ADDRESSES: Mail: U.S. Department of the Interior, Director (630),
Bureau of Land Management, Mail Stop 2134 LM, 1849 C St. NW.,
Washington, DC 20240, Attention: 1004-AE26. Personal or messenger
delivery: Bureau of Land Management, 20 M Street SE., Room 2134 LM,
Attention: Regulatory Affairs, Washington, DC 20003. Federal
eRulemaking Portal: https://www.regulations.gov. Follow the instructions
at this Web site.
Comments on the information collection requirement: Fax: Office of
Management and Budget (OMB), Office of Information and Regulatory
Affairs, Desk Officer for the Department of the Interior, fax 202-395-
5806. Electronic mail: oira_submission@omb.eop.gov. Please indicate
``Attention: OMB Control Number 1004-0203,'' regardless of the method
used to submit comments on the information collection burdens. If you
submit comments on the information collection burdens, please provide
the BLM with a copy of your comments, at one of the addresses shown
above.
FOR FURTHER INFORMATION CONTACT: Steven Wells, Division Chief, Fluid
Minerals Division, 202-912-7143 for information regarding the substance
of the rule or information about the BLM's Fluid Minerals Program.
Persons who use a telecommunications device for the deaf (TDD) may call
the Federal Information Relay Service (FIRS) at 1-800-877-8339 to
contact the above individual during normal business hours. FIRS is
available 24 hours a day, 7 days a week to leave a message or question
with the above individual. You will receive a reply during normal
business hours.
SUPPLEMENTARY INFORMATION:
Executive Summary
``Hydraulic fracturing,'' a process used to stimulate production
from oil and gas wells, has been a growing practice in recent years.
Public awareness of hydraulic fracturing has grown as new horizontal
drilling technology has allowed increased access to shale oil and gas
resources across the country, sometimes in areas that have not
previously or recently experienced significant oil and gas development.
The rapid expansion of this practice has caused public concern about
whether fracturing can lead to or cause the contamination of
underground water sources, whether the chemicals used in fracturing
should be disclosed to the public, and whether there is adequate
management of well integrity and the ``flowback'' fluids that return to
the surface during and after fracturing operations.
The Bureau of Land Management (BLM) oversees approximately 700
million subsurface acres of Federal mineral estate and 56 million
subsurface acres of Indian mineral estate across the United States.
This revised proposed rule and the initial proposed rule would
modernize BLM's management of hydraulic fracturing operations by
ensuring that hydraulic fracturing operations conducted on the public
mineral estate (including split estate where the Federal Government
owns the subsurface mineral estate) follow certain best practices,
including: (1) The public disclosure of chemicals used in hydraulic
fracturing operations on Federal and Indian lands; (2) Confirmation
that wells used in fracturing operations meet appropriate construction
standards; and (3) A requirement that operators put appropriate plans
in place for managing flowback waters from fracturing operations.
Like the initial proposed rule, this revised proposed rule would
apply to Indian lands so that these lands and communities receive the
same level of protection provided on public lands. In most cases, the
requirements in this rule can be satisfied by submitting additional
information during the existing process that the BLM currently applies
to operators when reviewing and approving an operator's Application for
Permit to Drill (APD) on public or Indian lands. The rule would require
that disclosure of the chemicals used in the fracturing process be
provided to the BLM after the fracturing operation is completed. This
information may be submitted to the BLM through an existing Web site
known as FracFocus.org, already used by some states for reporting
mandatory chemical disclosure of hydraulic fracturing chemicals.
Submission of this information through this Web site allows an operator
to provide the public and many State and tribal regulators with prompt
access. This approach also has the benefit of reducing reporting
burdens for oil and gas operators by avoiding duplicative reporting
requirements and administrative duties for the BLM in many instances.
The BLM developed this revised proposed rule and the initial
proposed rule with the intention of improving public awareness and
strengthening oversight of hydraulic fracturing operations without
introducing unnecessary new procedures or delays in the process of
developing oil and gas resources on public and Indian lands. Some
states, like Colorado, Wyoming, Arkansas, and Texas, have issued their
own regulations addressing disclosures and oversight for oil and gas
drilling operations. Operators with leases on Federal lands must comply
with both BLM's regulations and with State
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operating requirements, including State permitting and notice
requirements to the extent they do not conflict with BLM regulations.
State regulations pertaining to hydraulic fracturing operations are not
uniform. The States that have regulated hydraulic fracturing typically
require some notification to a state agency and some require reporting
on FracFocus. Other States have not taken action in this area. This
revised proposed rule seeks to create a consistent oversight and
disclosure model that will apply across all public and Indian lands
that are available for oil and gas development, and aims to streamline
and minimize the efforts required to comply with any new requirements,
while also protecting Federal and tribal interests and resources.
Currently nearly 36 million acres of Federal land are under lease for
potential oil and gas development. These leases can be found on public
land and for public minerals in 24 states The BLM has revised the
proposed rule to reduce some of the information requirements to avoid
duplication with the requirements of States (on Federal land) and
tribes (on tribal land). The BLM has considered various options to
encourage streamlining, flexibility, and more efficient operation on
both BLM and tribal leases.
The BLM has for many years had a number of agreements with certain
States and tribes concerning implementation of the various regulatory
programs in logical and effective ways. The BLM will work with States
and tribes to establish formal agreements that will leverage the
strengths of partnerships, and reduce duplication of efforts for
agencies and operators, particularly in implementing the revised
proposed rule as consistently as possible with State or tribal
regulations.
Similarly, the BLM has been looking to State regulations governing
hydraulic fracturing for elements that should be incorporated into the
revised proposed rule. Examples include allowing disclosure of chemical
constituents of fracturing fluids through FracFocus, as required by
several states, and adoption of the Colorado system of having operators
submit an affidavit that undisclosed information about chemicals is
entitled to protection as trade secrets.
Regarding Indian lands, the BLM fully embraces the statutes,
Executive Orders, and other statements of governmental or departmental
policy in favor of promoting tribal self-determination and control of
resources. The Indian Mineral Leasing Act (IMLA), however, subjects all
oil and gas operations on trust or restricted Indian lands to the
Secretary's regulations and does not authorize the Secretary to allow
tribes to opt out of these regulations. Nonetheless, the BLM is
actively addressing ways to use tribal rules in the implementation of
the revised proposed rule. For example, the proposed rule recognizes
the authority that may be delegated to the States and the tribes to
implement various environmental programs under the Safe Drinking Water
Act to protect underground sources of drinking water and has been
revised to defer to State (on Federal land) or tribal (on tribal land)
designations of aquifers as either requiring protection from oil and
gas operations, or as exempt from any requirement to isolate water-
bearing zones in section 3162.3-3(b).
The revised proposed rule also adds a provision allowing the BLM to
approve a variance that would apply to all lands within the boundaries
of a State, a tribe, or described as field-wide or basin-wide, that is
commensurate with the state or tribal regulatory scheme. The BLM must
determine that the variance would meet or exceed the effectiveness of
the revised proposed rule. State and tribes would be invited to work
with the BLM to craft variances that would allow technologies,
processes or standards required or allowed by the State or tribe to be
accepted as compliance with the rule. Such variances would allow the
BLM and the States and tribes to improve efficiency and reduce costs
for operators and for the agencies.
The proposed changes to existing hydraulic fracturing oversight are
partly in response to recommendations put forward by the Shale Gas
Production Subcommittee of the Secretary of Energy's Advisory Board in
2011. Also, current BLM regulations governing hydraulic fracturing
operations on public lands are more than 30 years old and were not
written to address modern hydraulic fracturing technologies and
practices. In preparing this revised proposed rule, the BLM received
input from members of the public and stakeholders, and consulted with
tribal representatives.
The changes from the original proposed well stimulation rule are
discussed in greater detail below, but some of the notable changes
include the following. This revised proposed rule would require use of
cement evaluation logs (CELs) in the place of the originally proposed
cement bond logs (CBL). The use of the broader term of CEL is intended
to allow a variety of logging methods to be used to show the adequacy
of cementing, including technologies such as ultrasonic logs, variable
density logs, micro-seismograms, standard CBLs, CBLs with directional
receiver array, ultrasonic pulse echo technique, and isolation
scanners. CBLs would be accepted because they are one of the
technologies included in CELs. However, if a State (on Federal land) or
tribe (on Indian land) designates some other technology to meet its
requirements for hydraulic fracturing wells that is at least as
effective in assuring adequate cementing, the BLM may allow use of that
technology as a variance from the CEL requirement.
The revised proposed rule would also change the operation of the
trade secrets provision. The revised proposed rule allows operators to
submit to the BLM an affidavit asserting exemption from disclosure of
certain information having to do with the hydraulic fracturing fluid.
The rule also gives the BLM the ability to demand the specific chemical
details of any materials being proposed for trade secret exemption.
Further, although the BLM is not proposing a material change in the
provision that allows hydraulic fracturing flowback fluids to be stored
either in tanks or in lined pits, the BLM seeks comments on the costs
and benefits of requiring flowback fluids to be stored only in closed
tanks. Other provisions of the initial proposed rule have been modified
for clarity or in response to comments. Accordingly, the entire revised
proposed rule is available for public comment.
The BLM has analyzed the costs and the benefits of this proposed
action in an accompanying Regulatory Impact Analysis available in the
rulemaking docket. The estimated costs range from $12 million to $20
million per year. The range reflects uncertainty about the
generalization of costs across all hydraulic fracturing operations. The
potential benefits of the rule are more challenging to monetize than
the costs, but that does not mean that the rule is without benefits.
The rule creates a consistent, predictable regulatory framework, in
accordance with the BLM's stewardship responsibilities under the
Federal Land Policy and Management Act and other statutes, for
hydraulic fracturing involving BLM-administered lands. The rule is
designed to reduce the environmental and health risk that can be posed
by hydraulic fracturing operations, particularly in the way the rule
addresses flowback fluids, well construction, and hydraulic fracture
design. The rule would ensure that operators demonstrate wellbore
integrity with pressure tests on 100 percent of the hydraulically
fractured wells and with
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CELs on the casing strings that protect usable water on each type well.
A type well is an oil and gas well that can be used as a model for well
completion in a field where geologic characteristics are substantially
similar. The authorized officer would evaluate whether substantially
similar geologic conditions exist during review of the APD or sundry
notice requesting approval of a group of wells for a field. CELs would
be required only of type wells, ``wildcat'' wells that are not approved
as part of a field development proposal, and whenever there is evidence
of a problem with the cement job. The BLM is asking for comments on the
effectiveness of this proposal.
I. Public Comment Procedures
II. Background
III. Discussion of the Revised Proposed Rule and Comments on the
Proposed Rule
IV. Procedural Matters
I. Public Comment Procedures
If you wish to comment, you may submit your comments by any one of
several methods: Mail: You may mail comments to U.S. Department of the
Interior, Director (630), Bureau of Land Management, Mail Stop 2134LM,
1849 C Street NW., Washington, DC 20240, Attention: 1004-AE26. Personal
or messenger delivery: Bureau of Land Management, 20 M Street SE., Room
2134LM, Attention: Regulatory Affairs, Washington, DC 20003. Federal
eRulemaking Portal: https://www.regulations.gov. Follow the instructions
at this Web site.
You may submit comments on the information collection burdens
directly to the Office of Management and Budget, Office of Information
and Regulatory Affairs, Desk Officer for the Department of the
Interior, fax 202-395-5806, or oira_submission@omb.eop.gov. Please
include ``Attention: OMB Control Number 1004-0203'' in your comments.
If you submit comments on the information collection burdens, please
provide the BLM with a copy of your comments, at one of the addresses
shown above.
Please make your comments as specific as possible by confining them
to issues directly related to the content of this revised proposed
rule, and explain the basis for your comments. The comments and
recommendations that will be most useful and likely to influence agency
decisions are:
1. Those supported by quantitative information or studies; and
2. Those that include citations to, and analyses of, the applicable
laws and regulations.
The BLM is not obligated to consider or include the comments
received after the close of the comment period (see DATES) or comments
delivered to an address other than those listed above (see ADDRESSES)
in the Administrative Record for the rule.
Comments, including names and street addresses of respondents, will
be available for public review at the address listed under ADDRESSES
during regular hours (7:45 a.m. to 4:15 p.m.), Monday through Friday,
except holidays. Before including your address, telephone number, email
address, or other personal identifying information in your comment, be
advised that your entire comment--including your personal identifying
information--may be made publicly available at any time. While you can
ask in your comment to withhold from public review your personal
identifying information, we cannot guarantee that we will be able to do
so.
II. Background
Well stimulation techniques, such as hydraulic fracturing, are
commonly used by oil and natural gas producers to increase the volumes
of oil and natural gas that can be extracted from wells. Hydraulic
fracturing techniques are particularly effective in enhancing oil and
gas production from shale gas or oil formations. Until quite recently,
shale formations rarely produced oil or gas in commercial quantities
because shale does not generally allow flow of hydrocarbons to
wellbores unless mechanical changes to the properties of the rock can
be induced. The development of horizontal drilling, combined with
hydraulic fracturing, has made the production of oil and gas from shale
feasible. Hydraulic fracturing involves the injection of fluid under
high pressure to create or enlarge fractures in the reservoir rocks.
The fluid that is used in hydraulic fracturing is usually accompanied
by proppants, such as particles of sand, which are carried into the
newly fractured rock and help keep the fractures open once the
fracturing operation is completed. The proppant-filled fractures become
conduits for fluid migration from the reservoir rock to the wellbore
and the fluid is subsequently brought to the surface. In addition to
the water and sand (which together typically make up 98 to 99 percent
of the materials pumped into a well during a fracturing operation),
chemical additives are also frequently used. These chemicals can serve
many functions in hydraulic fracturing, including limiting the growth
of bacteria and preventing corrosion of the well casing. The exact
formulation of the chemicals used varies depending on the rock
formations, the well, and the requirements of the operator.
Hydraulic fracturing is a common and accepted practice, and has
been, in oil and gas production for decades. The BLM estimates that
about 90 percent (approximately 3,400 wells per year) of wells drilled
on Federal and Indian lands are stimulated using hydraulic fracturing
techniques. Although many of these are conventional wells, much of the
new activity occurs on wells designed to produce shale oil and gas or
to employ horizontal drilling techniques. Over the past 10 years, there
have been significant technological advances in horizontal drilling,
which is frequently combined with hydraulic fracturing. This
combination, together with the discovery that these techniques can
release significant quantities of oil and gas from large shale
deposits, has led to production from geologic formations in parts of
the country that previously did not produce significant amounts of oil
or gas. The resulting expansion of oil and gas drilling into new parts
of the country because of the availability of new horizontal drilling
technologies has significantly increased public awareness of hydraulic
fracturing and the potential impacts that it may have on water quality
and water consumption, unless adequately regulated and safely
implemented.
The BLM's existing hydraulic fracturing regulations are found at 43
CFR 3162.3-2. These regulations were established in 1982 and last
revised in 1988, long before the latest hydraulic fracturing
technologies became widely used. In response to public interest in
hydraulic fracturing and in the BLM's regulation of hydraulic
fracturing, in particular, the Department of the Interior (Department)
held a forum on hydraulic fracturing on November 30, 2010, in
Washington, DC, attended by the Secretary of the Interior and more than
130 interested parties. The BLM later hosted public forums (in
Bismarck, North Dakota on April 20, 2011; Little Rock, Arkansas on
April 22, 2011; and Golden, Colorado on April 25, 2011) to collect
broad input on the issues surrounding hydraulic fracturing. More than
600 members of the public attended the April 2011 forums. Some of the
comments frequently heard during these forums included concerns about
water quality, water consumption, and a desire for improved
environmental safeguards for surface operations. Commenters also
strongly encouraged the agency to require public disclosure of the
chemicals used in hydraulic fracturing operations on Federal and Indian
lands. Commenters from the oil and gas industry suggested
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changes that would make the implementation of the rule more
practicable, from their perspective, and some opposed adoption of any
such rules affecting hydraulic fracturing on the Federal mineral
estate. Further, the BLM distributed copies of the then-draft rule to
affected federally recognized tribes in January 2012 and invited
comments from affected tribes.
Around the time of the BLM's forums, at the direction of President
Barack Obama, the Secretary of Energy convened a Shale Gas Production
Subcommittee (Subcommittee) of the Secretary of Energy Advisory Board
to evaluate hydraulic fracturing issues. The Subcommittee met with
industry, service providers, state and Federal regulators, academics,
environmental groups, and many other stakeholders. On August 18, 2011,
the Subcommittee issued initial recommendations in its ``90-day Interim
Report.'' The Subcommittee issued its final report, entitled ``Shale
Gas Production Subcommittee Second Ninety Day Report'' on November 18,
2011. The Subcommittee recommended, among other things, that more
information be provided to the public about hydraulic fracturing
operations whether or not they occur on the Federal mineral estate,
including disclosure of the chemicals used in fracturing fluids. The
Subcommittee also recommended the adoption of stricter standards for
wellbore construction and testing. The final report also recommended
that operators engaging in hydraulic fracturing undertake pressure
testing to ensure the integrity of all casings. These reports are
available to the public from the Department of Energy's Web site at
https://www.shalegas.energy.gov.
On May 11, 2012, the BLM published in the Federal Register the
initial proposed rule entitled ``Oil and Gas; Well Stimulation,
Including Hydraulic Fracturing, on Federal and Indian Lands'' (77 FR
27691). The comment period on the initial proposed rule closed on July
10, 2012. At the request of public commenters, on June 26, 2012, the
BLM published in the Federal Register a notice extending the comment
period for 60 days (77 FR 38024). The extended comment period closed on
September 10, 2012. The BLM received over 177,000 comments on the
initial proposed rule from individuals, Federal and state governments
and agencies, interest groups, and industry representatives. After
reviewing the comments on the proposed rule, the BLM now proposes to
revise the initial proposed rule. As did the initial proposed rule,
this revised proposed rule would apply to all wells administered by the
BLM, including those of Federal, tribal, and individual Indian trust
lands. Substantive comments on the initial proposed rule that informed
the BLM's decisions on the revised proposed rule are discussed in the
section-by-section discussion of this preamble. In the final rule, the
BLM will provide a complete discussion of the comments submitted on the
initial proposed rule (although some are discussed in this preamble)
and those received as a result of this revised proposed rule.
The BLM's revised proposed rule is generally consistent with the
American Petroleum Institute's (API) guidelines for well construction
and well integrity. See API Guidance Document HF 1, Hydraulic
Fracturing Operations--Well Construction and Integrity Guidelines,
First Edition, October 2009. HF1 discusses the importance of
maintaining wellbore integrity with casing and a cementing program. It
recommends pressure tests after cementing casing strings, and describes
some circumstances where CBLs are used to verify adequate cementing.
The API also has published guidelines for water management that support
the use of lined pits for water management. See API Guidance Document
HF 2--Water Management Associated with Hydraulic Fracturing, First
Edition, 2010.
Based on the input provided from a broad array of sources,
including the individuals who spoke at the BLM's public forums and the
recommendations of the Subcommittee, BLM proposed critical improvements
to its regulations for hydraulic fracturing on May 11, 2012. Careful
consideration of the comments received on the proposed rule, however,
showed that further improvements and clarifications were appropriate.
As did the initial proposed rule, this revised proposed rule would
apply to all wells administered by the BLM, including those on Federal,
tribal, and individual Indian trust lands.
Tribal consultation is a critical part of this rulemaking effort,
and the Department is committed to making sure tribal leaders play a
significant role as BLM and the tribes work together to develop
resources on public and Indian lands in a safe and responsible way.
During the proposed rule stage, the BLM initiated government-to-
government consultation with tribes on the proposed rule and offered to
hold follow-up consultation meetings with any tribe that desires to
have an individual meeting. In January 2012, the BLM held four regional
tribal consultation meetings, to which over 175 tribal entities were
invited. To build upon established local relationships, the individual
follow-up consultation meetings involved the local BLM authorized
officers and management, including State Directors. After the issuance
of the proposed rule, tribal governments, tribal members, and
individual Native Americans were also invited to comment directly on
the proposed rule.
In June 2012, the BLM held additional regional consultation
meetings in Salt Lake City, Utah; Farmington, New Mexico; Tulsa,
Oklahoma; and Billings, Montana. Eighty-one tribal members representing
27 tribes attended the meetings. In these sessions, the BLM and tribal
representatives engaged in substantive discussions of the proposed
hydraulic fracturing rule. A variety of issues were discussed,
including but not limited to the applicability of tribal laws,
validating water sources, inspection and enforcement, wellbore
integrity, and water management, among others. Additional individual
consultations with tribal representatives have taken place since that
time. Also consultation meetings were held at the National Congress of
American Indian Conference in Lincoln, Nebraska, on June 18, 2012, and
at New Town, North Dakota on July 13, 2012.
Responses from tribal representatives informed the agency's actions
in defining the scope of acceptable hydraulic fracturing operations.
One of the outcomes of these meetings is the requirement in this rule
that operators certify that operations on Indian lands comply with
tribal laws.
The revised proposed rule also seeks to create less of an
administrative burden than the initial proposed rule while providing
the same benefits. This change was made in response to both tribal and
industry comments.
The BLM has been and will continue to be proactive about tribal
consultation under the Department's newly formalized Tribal
Consultation Policy, which emphasizes trust, respect and shared
responsibility in providing tribal governments an expanded role in
informing Federal policy that impacts Indian lands. Consultation will
continue during the comment period of this revised proposed rule.
Tribal governments, tribal members, and individual Native Americans
were also invited to comment directly on the proposed rule, as they are
invited to comment on the revised proposed rule.
Several tribal representatives and tribal organizations have
commented that the hydraulic fracturing rule should not apply on Indian
land, or that tribes should be allowed to decide not to have the rule
apply on their land (that is, ``opt out'' of the rule). The BLM fully
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embraces the statutes, Executive Orders, and other statements of
governmental or departmental policy in favor of promoting tribal self-
determination and control of resources. In addition, the Department
remains bound by specific statutes in which Congress has delegated
specific authority and duties to the Department regarding the
management and regulation of resources. The IMLA provides in pertinent
part as follows: ``All operations under any oil, gas, or other mineral
lease issued pursuant to the terms [hellip] of this title or any other
Act affecting restricted Indian lands shall be subject to the rules and
regulations promulgated by the Secretary of the Interior.'' 25 U.S.C.
396d. The Department has consistently interpreted this statutory
directive as allowing uniform regulations governing mineral resource
development on Indian and Federal lands. Thus, an opt-out provision
would not be consistent with the Department's procedures under IMLA,
and the revised proposed rule does not provide such an option.
There has also been a suggestion that the Secretary should delegate
her regulatory authority to the tribes if the tribe has regulations
that meet or exceed the standards in the BLM regulation. The IMLA does
not authorize the Secretary to delegate her regulatory responsibilities
to the tribes, and therefore the revised proposed rule does not include
a delegation provision. Nonetheless, there are opportunities for tribes
to assert more control over oil and gas operations on tribal land by
entering into Tribal Energy Resource Agreements under the Indian Energy
Development and Self-Determination Act (part of the Energy Policy Act
of 2005), and to pursue contracts under the Indian Self-Determination
and Education Assistance Act of 1975.
Also, the proposed rule has been revised to defer to State (on
Federal land) or tribal (on Indian land) designations of aquifers as
either requiring protection from oil and gas operations, or as exempt
from the requirement to isolate water-bearing zones in section 3162.3-
3(b). Revised section 3162.3(k) provides that for lands within the
jurisdiction of a State or a tribe that State or tribe could work with
the BLM to craft a variance that would allow compliance with State or
tribal requirements to be accepted as compliance with the rule, if the
variance meets or exceeds this rule's standards. The BLM is also
seeking comments on whether compliance with State or tribal
requirements to disclose chemical constituents of hydraulic fracturing
fluids should be deemed as compliance with the proposed rule if the
State or tribal requirements meet or exceed the standard in the rule at
section 3162.3-3(i).
As explained elsewhere in this preamble, the BLM intends to reach
out to States and to tribes to review existing agreements, to
strengthen those that could provide a greater role for States and
tribes, and to reach new agreements where there have been none. The BLM
will seek new and improved agreements to reduce regulatory burdens and
to increase efficiency, while fulfilling the Secretary's
responsibilities mandated by statutes as steward for the public lands
and trustee for Indian lands.
The BLM invites the public's comments on whether there are other
opportunities in the revised proposed rule to incorporate or to defer
to State or tribal standards or requirements.
Although greater use of State or tribal standards or procedures
could reduce compliance costs for operators and increase consistency,
enforcement issues could arise. On Federal lands, the BLM enforces the
Federal regulations and lease conditions, and the States enforce their
regulations. On Indian lands, the BLM enforces the Federal regulations
and the terms of the leases, and the tribes have the power to enforce
their own law. Comments are requested on practical enforcement
challenges that might arise if the BLM incorporates or defers to State
or tribal laws or procedures, and on any proposed solutions.
Over the past few years, in response to strong public interest,
several States--including Colorado, Wyoming, Arkansas, and Texas--have
substantially revised their State regulations related to hydraulic
fracturing. One of the BLM's key goals in updating its regulations on
hydraulic fracturing is to complement State efforts by providing a
consistent standard across all public and Indian lands nationwide. The
BLM has revised the initial proposed rule to make reported information
consistent and easily accessible to the public. For instance, the BLM
is working closely with the Groundwater Protection Council and the
Interstate Oil and Gas Compact Commission so that operators may report
chemicals used in hydraulic fracturing operations to BLM through the
existing FracFocus.org Web site, which is already well established and
used by many States. This online database includes information from oil
and gas wells in approximately 12 States and includes information from
over 500 companies. The BLM understands that the database is in the
process of being improved and will in the near future have enhanced
search capabilities and allow for easier reporting of information. If
operators are unable to use FracFocus or elect not to, they may elect
to report chemicals used on Federal or Indian lands directly to the
BLM. The BLM intends to report that information to the public through
FracFocus.
The BLM recognizes the efforts of some States to regulate hydraulic
fracturing and seeks to avoid duplicative regulatory requirements.
However, it is important to recognize that a major impetus for a
separate BLM rule is that States are not legally required to meet the
stewardship standards applying to public lands and do not have trust
responsibilities for Indian lands under Federal laws. Thus, the rule
may expand on or set different standards from those of States that
regulate hydraulic fracturing operations, but do not need to adhere to
the same resource management and public involvement standards
appropriate on Federal lands under Federal law. This revised proposed
rule encourages efficiency in the collection of data and the reporting
of information by proposing to allow operators in States that require
disclosure on FracFocus to meet both the State and the BLM requirements
through a single submission to FracFocus.
III. Discussion of the Revised Proposed Rule and Comments on the
Proposed Rule
As was discussed in the proposed rule, the BLM is revising its
hydraulic fracturing regulations, found at 43 CFR 3162.3-2, and adding
a new section 3162.3-3. Existing section 3162.3-3 would be retained and
renumbered.
The Federal Land Policy and Management Act (FLPMA) directs the BLM
to manage the public lands so as to prevent unnecessary or undue
degradation, and to manage those lands using the principles of multiple
use and sustained yield. FLPMA defines multiple use to mean, among
other things, a combination of balanced and diverse resource uses that
takes into account long-term needs of future generations for renewable
and non-renewable resources. FLPMA also requires that the public lands
be managed in a manner that will protect the quality of their
resources, including ecological, environmental, and water resources.
The Mineral Leasing Act and the Mineral Leasing Act for Acquired Lands
authorize the Secretary to lease Federal oil and gas resources, and to
regulate oil and gas operations on those leases, including surface-
disturbing activities. The Act of March 3, 1909, the
[[Page 31641]]
Indian Mineral Leasing Act and the Indian Mineral Development Act
assigns regulatory authority to the Secretary over Indian oil and gas
leases on trust lands (except those excluded by statute, i.e., the Crow
Reservation in Montana, the ceded lands of the Shoshone Reservation in
Wyoming, the Osage Reservation in Oklahoma, and the coal and asphalt
lands of the Choctaw and Chickasaw Tribes in Oklahoma). As stewards of
the public lands and minerals and as the Secretary's regulator for
operations on oil and gas leases on Indian lands, the BLM has evaluated
the increased use of hydraulic fracturing practices over the last
decade and determined that the existing rules for hydraulic fracturing
require updating. The Secretary delegated to the BLM his authority to
oversee operations on Indian mineral leases through the Departmental
Manual (235 DM 1.K) under the Indian Allotted Lands Leasing Act and the
Tribal Lands Leasing Act. The Secretary also approved the authorities
section of the regulations which give the BLM authority under
additional Indian related statutes.
As discussed in the background section of this preamble, the
increased use of well stimulation activities over the last decade has
also generated concerns among the public about hydraulic fracturing and
about the chemicals used in hydraulic fracturing. The proposed rule and
this revised proposed rule are intended to increase transparency for
the public regarding the fluids used in the hydraulic fracturing
process, in addition to providing assurances that wellbore integrity is
maintained throughout the fracturing process and that the fluids that
flow back to the surface from hydraulic fracturing operations are
properly stored, disposed of, or treated. The following chart explains
the major changes between the proposed regulations and the regulations
in this revised proposed rule.
----------------------------------------------------------------------------------------------------------------
Initial proposed regulation Revised proposed pegulation Substantive changes
----------------------------------------------------------------------------------------------------------------
43 CFR 3160.0-5 Definitions............. 43 CFR 3160.0-5 Definitions This revised proposed rule would revise
the proposed term ``stimulation fluid''
to ``hydraulic fracturing fluid'' to be
consistent with other changes to the
rule. It also would delete the
definition of ``well stimulation'' and
add a definition of ``hydraulic
fracturing,'' which excludes acidizing,
enhanced secondary recovery and tertiary
recovery. The terms used in other
sections of this rule were also revised
to make those sections consistent with
the changes here. The rule would also
include definitions of the terms
``refracturing'' and ``type well.''
``Refracturing'' is defined as a
hydraulic fracturing operation
subsequent to an initial completion of
an oil and gas well which used hydraulic
fracturing previously. ``Type well'' is
defined in this section to mean an oil
and gas well that can be used as a model
for other wells drilled by the same
operator across the field. The revised
proposed rule also clarifies the
definition of ``usable water'' by
specifying types of geologic zones that
would be deemed to contain usable water,
and other types that would be deemed not
to contain usable water.
43 CFR 3162.3-2(a) Subsequent Well 43 CFR 3162.3-2(a) The revised proposed rule would replace
Operations. Subsequent Well Operations. the term ``commingling'' with the term
``combining'' to avoid confusion with
the term ``commingling'' that is used in
calculating royalties on production.
43 CFR 3162.3-3(a) Subsequent Well 43 CFR 3162.3-3(a) The revised proposed rule would change
Operations; Well Stimulation. Subsequent Well the scope of the regulation to apply
Operations; Hydraulic only to hydraulic fracturing operations,
Fracturing. and not to other ``well stimulation''
activities. It would clarify that the
regulation also applies to refracturing
operations.
(None).................................. 43 CFR 3162.3-3(b) This new paragraph would require that all
Isolation of Usable Water fracturing and refracturing operations
to Prevent Contamination. meet the performance standard in section
3162.5-2(d), which requires that
operators must isolate all usable water
and other mineral-bearing formations and
protect them from contamination.
43 CFR 3162.3-3(c) What the Notice of 43 CFR 3162.3-3(d) What the The revised proposed rule would add a new
Intent Sundry Must Include. Notice of Intent Sundry provision that allows the Notice of
Must Include. Intent (NOI) Sundry to be submitted for
a single well or a group of wells with
the same geological characteristics. If
it is for a group of wells, the
information should be for a ``type
well.''
43 CFR 3162.3-3(c)(2)................... 43 CFR 3162.3-3(d)(2)...... The revised proposed rule would delete
the requirement to submit a CBL for
approval prior to commencing fracturing
operations. Section 3162.3-3(i)(8),
would require that a CEL be submitted
after fracturing operations, unless
there are problems with the cement job.
The revised proposed rule would also add
a requirement that the depths of usable
water aquifers be based on a drill log
of the subject well or of another well
in the field.
43 CFR 3162.3-3(c)(4)................... Deleted.................... The revised proposed rule would delete
the requirement that the operator submit
a pre-hydraulic fracturing certification
that it will comply with all applicable
permitting and notice requirements.
43 CFR 3162.3-3(c)(3)................... 43 CFR 3162.3-3(d)(3)...... The revised proposed rule would add to
the list of the source and location of
water supply ``reused or recycled
water.''
43 CFR 3162.3-3(c)(5)................... 43 CFR 3162.3-3(d)(4)...... The revised proposed rule would add to
the requirements for a hydraulic
fracturing design that the operator must
include the estimated fracture direction
and propagation plotted on the well
schematics and on a topographical map of
the same scale as the map used in the
APD. It would also add a requirement to
supply the estimated vertical distance
to the nearest usable water aquifer
above the fracture zone.
[[Page 31642]]
43 CFR 3162.3-3(c)(6)................... 43 CFR 3162.3-3(d)(5)...... The revised proposed rule would remove
``chemical composition'' from the
information that is required to be
submitted regarding the handling of
recovered fluids.
43 CFR 3162.3(d) Mechanical Integrity 43 CFR 3162.3-3(f) The revised proposed rule would add
Testing Prior to Well Stimulation. Mechanical Integrity clarification that a mechanical
Testing Prior to Hydraulic integrity test (MIT) would be required
Fracturing. for a re-fracturing operation.
(None).................................. 43 CFR 3162.3-3(e)(1) The revised proposed rule would add a new
Monitoring of Cementing paragraph requiring that during
Operations and Cement cementing operations the operator must
Evaluation Log Prior to monitor and record the flow rate,
Hydraulic Fracturing. density, and treating pressure, and then
submit the monitoring report to the BLM
within 30 days of completion of the
hydraulic fracturing.
43 CFR 3162.3-3(c)(2)................... 43 CFR 3162.3-3(e)(2)...... The revised proposed rule would add a new
paragraph stating a general rule that an
operator must run a CEL on each casing
that protects usable water. A CEL may be
ultrasonic logs, variable density logs,
micro-seismograms, standard CBLs, CBLs
with directional receiver array,
ultrasonic pulse echo technique, an
isolation scanner or other tool of equal
effectiveness.
(None).................................. 43 CFR 3162.3-3(e)(3)...... The revised proposed rule would add a new
paragraph that provides an exception to
the CEL requirement where an operator's
``type well'' has been shown to have
successful cement bonding and subsequent
wells have the same specifications and
geologic parameters as the ``type
well,'' and the cementing operations
monitoring data parallels those of the
type well.
(None).................................. 43 CFR 3162.3-3(e)(4)...... The revised proposed rule would add a new
paragraph that if there is any
indication of inadequate cementing, the
operator must report it to the BLM
within 24 hours, with written
confirmation within 48 hours. The
operator would be required to run a CEL
showing that it has corrected the
cementing job, and that usable water has
been isolated to protect it from
contamination. At least 72 hours prior
to starting fracturing operations, the
operator must submit to the BLM a
certification indicating that it
corrected the inadequate cement job and
documentation showing that there is
adequate cement bonding.
(None).................................. 43 CFR 3162.3-3(e)(5)...... The revised proposed rule would add a new
provision stating that the operator must
submit the information required by
(e)(1) and (2) to the BLM in a
Subsequent Report Sundry Notice.
43 CFR 3162.3-3(e)(1)................... 43 CFR 3162.3-3(g)(1)...... This paragraph would be revised to apply
to refracturing operations as well as
fracturing operations. It also would be
revised to make it clear that that the
pressure in the annulus between any
intermediate casings and the production
casing must be continuously monitored
and recorded.
43 CFR 3162.3-3(e)(2) Monitoring and 43 CFR 3162.3-3(g)(2) This paragraph would be revised to apply
Recording During Well Stimulation. Monitoring and Recording to refracturing operations as well as
During Hydraulic fracturing operations. For any incident
Fracturing. of the annulus pressure increasing by
more than 500 psi, the revised proposed
rule would change the due date for a
Subsequent Report Sundry Notice from 15
days after the occurrence to 30 days
after completion of fracturing
operations.
43 CFR 3162.3-3(g) Information that Must 43 CFR 3162.3-3(i) Changes to this section would add a
be Provided to the Authorized Officer Information that Must be clarification that the information is
After Completed Operations. Provided to the Authorized required for each well fractured or
Officer After Completed refractured, even if the BLM approved a
Operations. Notice of Intent Sundry for a group of
wells. The new provision would allow
reporting of chemical information to the
BLM either directly or through FracFocus
or other database that the BLM
specifies. The revised proposed rule
would add a new provision that the
operator submitting chemical information
through FracFocus must specify that the
information is for a Federal or Indian
well, certify that the information is
correct, and certify that the operator
complied with applicable laws governing
notice and permits. The revised proposed
rule would also add a new provision
clarifying that the operator is
responsible for information submitted by
its hydraulic fracturing contractor.
43 CFR 3162.3-3(g)(1)................... 43 CFR 3162.3-3(i)(2)...... This revised section would delete the
requirement that the operator report the
actual access route and transportation
method for all water used in stimulating
the well, since this information is
provided before the operation is
approved.
[[Page 31643]]
43 CFR 3162.3-3(g)(2), (4) and (5)...... 43 CFR 3162.3-3(i)(1)...... The proposed regulation required two
separate reports or tables (one for all
additives of the actual stimulation
fluid by trade name and purpose, and
another for the complete chemical makeup
(including the Chemical Abstracts
Service Registry Number [CAS number]) of
all materials used in the actual
stimulation fluid). The revised proposed
rule would require the information
required in the FracFocus form: True
vertical depth of the well, total water
volume used, and for each chemical used
(including the base fluid) the trade
name, supplier, purpose, ingredients,
CAS number, maximum ingredient
concentration in the additive, and
maximum ingredient concentration in the
fracturing fluid.
43 CFR 3162.3-3(g)(6)................... 43 CFR 3162.3-3(i)(4)...... A new requirement would be added by this
rule to report the actual, estimated, or
calculated direction of the fractures.
43 CFR 3162.3-3(g)(7)................... Deleted.................... This revised proposed rule would delete
the provision that would have expressly
allowed the Subsequent Report Sundry
Notice to be completed in part by
attaching the hydraulic fracturing
contractor's job log so long as the
required information was included and
readily apparent.
43 CFR 3162.3-3(g)(8) and (9)........... 43 CFR 3162.3-3(i)(7)...... The revised proposed rule would revise
the requirement for certification of
wellbore integrity to include the
monitoring of cementing operations and
the CEL. It would also clarify that the
certification of compliance with
applicable law is different for Indian
lands than for Federal lands.
(None).................................. 43 CFR 3162.3-3(i)(8)...... This rule would add a new paragraph
requiring operators to submit the actual
cement operations monitoring report, any
CEL, and the MIT results.
(None).................................. 43 CFR 3162.3-3(i)(9)...... This rule would add a new paragraph
allowing the BLM to require the operator
to provide further information about any
representation submitted under paragraph
(i).
43 CFR 3162.3-3(h) and (i).............. 43 CFR 3162.3-3(j)(1) In this revised proposed rule these
through (4). sections have been significantly
revised. The regulations would no longer
require operators to submit all
information about chemicals to the BLM,
to segregate trade secrets, and to
justify the assertion of trade secret
protection. Instead, the regulations
would instruct operators not to disclose
trade secret information to the BLM or
on FracFocus. Operators would submit an
affidavit stating that the withheld
information is entitled to withholding
from the public under Federal statute or
regulation. The BLM would retain
authority to require operators to submit
the claimed trade secret information.
(None).................................. 43 CFR 3162.3-3(j)(4)...... This rule would add a new paragraph
requiring operators to keep the
information claimed to be trade secrets
for 6 years, by reference to existing 43
CFR 3162.4-1, which applies to all lease
operations.
* * *................................... 43 CFR 3162.3-3(k)......... This rule would add a new provision
allowing States and tribes to work with
the BLM to create variances applicable
to all lands within a field, a basin, a
State, or Indian lands. Such a variance
would have to meet or exceed the
effectiveness of the rule provision it
replaces.
----------------------------------------------------------------------------------------------------------------
Section-by-Section Discussion of the Revised Proposed Rule and
Discussion of Comments
Comments Addressed in This Revised Proposed Rule
In this revised proposed rule, the BLM discusses many of the
comments received on the proposed rule. The BLM will fully discuss
comments on the initial proposed and revised proposed rules in the
eventual announcement of the final rule. Commenters provided detailed
and helpful information. The BLM desires to demonstrate how public
comment assisted in framing the issues and to ultimately produce this
revised proposed rule. The Department does not address every comment in
this revised rule, because the changes in this revised proposed rule
have mooted some comments on the initial proposed rule. Other comments
were not central to the re-evaluation the BLM has undertaken, and thus
discussion of those few comments would not contribute to the public's
understanding of the reasons the BLM is publishing the revised proposed
rule.
Additionally, not every change in the revised proposed rule
responds to a specific comment. Some revisions clarify the proposed
rule, and still other revisions allow this revised rule to be more
effective with reduced costs and delays to operators and to the BLM.
This revised proposed rule identifies some issues on which the BLM
specifically seeks comments. The public, however, may submit comments
on any provision of the revised proposed rule. All comments received in
response to the initial proposed rule will be in the record of any
final rule; accordingly, the public does not need to resubmit comments
to the initial proposed rule in response to this revised proposed rule.
General Comments on the Initial Proposed Rule
The BLM received comments both supporting and questioning the need
for a rule regulating hydraulic fracturing. Supporters stated, among
other things, that the rule protects groundwater and ensures that
operators properly handle flowback water. In general, the opposition
stated that BLM regulation of hydraulic fracturing is unnecessary and
[[Page 31644]]
argued that no scientific basis exists that hydraulic fracturing causes
groundwater contamination and that it is a low-risk operation. The
opposition further argued that States should regulate hydraulic
fracturing and that many States already have current rules. The BLM
acknowledges that many States do have regulations in place; however,
not all of the States that contain Federal lands under the BLM's
jurisdiction have hydraulic fracturing regulations. Further, FLPMA and
other Federal law provide for public involvement that is not always
required in State law. In addition, the BLM has responsibilities for
Indian resources and State regulations do not apply to Indian lands.
Furthermore, States do not uniformly require measures that would uphold
the BLM's responsibilities for federally managed public resources, to
protect the environment and human health and safety on Federal and
Indian lands, and to prevent unnecessary or undue degradation of the
public lands. By taking additional steps to ensure wellbore integrity
and to control the handling of flowback water, potential impacts of
hydraulic fracturing can be mitigated.
Some commenters questioned whether the BLM's proposed regulations
are premature, because the Environmental Protection Agency (EPA) is
currently conducting a multi-year study on the potential impact of
hydraulic fracturing on drinking water resources, with a final report
due in 2014. The BLM is aware of the ongoing EPA study relating to the
impacts of hydraulic fracturing. While the EPA study may offer
additional information regarding the potential impacts of hydraulic
fracturing, nothing in the revised proposed regulations would
contradict or conflict with the EPA study, which does not focus on the
management of public lands and resources subject to Federal public
lands law. Notwithstanding the findings that will be included in the
EPA's anticipated study, this revised regulation prevents undue or
unnecessary degradation of public lands and furthers the Secretary's
trust responsibilities on Indian lands.
Some commenters disputed the authority of the BLM to regulate well
construction and regulate water supplies used for, or potentially
impacted by, hydraulic fracturing. Other commenters asserted that the
proposed rule infringes upon State and tribal water rights authority.
FLPMA directs the BLM to manage the public lands so as to prevent
unnecessary or undue degradation. FLPMA also requires that the public
lands be managed in a manner that will protect the quality of
resources, i.e. ecological, environmental, and water resources.
Regulating wellbore construction meets these mandates. The Indian lands
leasing statutes direct the Secretary to regulate oil and gas
operations on Indian lands. The Secretary has delegated his authority
for regulating downhole activities on Indian mineral leases to the BLM.
The BLM has historically regulated the construction of wellbores
through approvals of APDs (applying the Onshore Oil and Gas Order
Numbers 1 and 2). This rule would supplement existing regulations
regarding wellbore construction (Onshore Oil and Gas Order Number 2,
Drilling (53 FR 46790)).
The revised proposed regulations at sections 3162.3-3(d)(3) and
3162.3-3(i)(2) would require submission of information on water sources
to assist the BLM in assessing the environmental effects of individual
drilling operations. The National Environmental Policy Act and the
implementing regulations by the Council on Environmental Quality
require that Federal agencies assess the environmental impacts of their
proposed actions and inform their decision-making. The information on
water sources will be part of an environmental assessment regarding how
water is being supplied for the hydraulic fracturing operation. The BLM
does not intend to regulate water use, but instead to acquire
information on the water used incidental to oil and gas operations on
Federal and Indian lands. Acquisition of this information is similar to
requirements in Onshore Oil and Gas Order No. 1, Approval of Operations
(72 FR 10308) for drilling a well. Onshore Order No. 1 requires the
operator to identify the source, access route, and transportation
method for all water anticipated for use in drilling the proposed well.
Based on information received at this time, the requirement in Onshore
Order No. 1 has not caused conflicts with State or tribal water rights
authorities. Likewise, based on BLM's previous experience with the
information requirements of its existing onshore orders, BLM does not
anticipate that the requirements proposed here will cause any
conflicts. The revised proposed regulation does not regulate Indian,
State, and private water rights. Accordingly, the Department made no
revisions to the initial proposed rule as a result of these comments.
The BLM received some comments stating that the rule should clarify
the jurisdiction or scope of this rule. The revised proposed rule falls
under 43 CFR part 3160. The jurisdiction (scope) of all sections under
part 3160, which would include this revised proposed rule, is defined
in existing regulations at 43 CFR 3161(a), which states: ``[a]ll
operations conducted on a Federal or Indian oil and gas lease by the
operator are subject to the regulations in this part.'' Therefore, this
revised proposed rule would not apply to hydraulic fracturing
operations on private or State leases, even leases included in a
Federal or Indian agreement. The BLM's only jurisdiction on private and
State leases is for site security, measurement, and reporting of
production when the private or State lease is committed to a Federal or
Indian agreement. Existing regulations already define the jurisdiction
or scope of the revised proposed rule, so the Department made no
revisions to the initial proposed rule as a result of these comments.
Some commenters requested that the BLM coordinate permitting and
reporting with States to avoid duplication. Some commenters faulted the
BLM for undermining the efforts of State oil and gas commissions to
regulate hydraulic fracturing. The BLM has revised the initial proposed
rule to avoid duplication with State requirements. Nonetheless, the BLM
needs to have accurate information about the construction and
completion of oil and gas wells on Federal and Indian land. The BLM
acknowledges the efforts necessary to comply with State or tribal and
BLM regulations, but modern information technology significantly
reduces the time and expense of reporting the same information to both
a State or tribal agency and to the BLM. Federal law is clear that the
Federal Government has extensive authority over Federal lands and
Indian lands, and that State governments may exercise certain powers on
non-Indian lands, except in instances where Federal law preempts State
law. The notice, approval, testing, operational, and reporting
requirements of the revised proposed regulation would in no way
undermine the efforts of State agencies to regulate hydraulic
fracturing. The BLM recognizes the advantages to building upon existing
relationships established with the different States and tribes as a
prudent approach to maintaining efficiency and flexibility while
reducing duplication. It makes sense for both the BLM and the States or
tribes with oil and gas activity to explore ways to coordinate
implementation of this revised proposed rule. For States or tribes that
maintain hydraulic fracturing rules that meet or exceed the standards
that would be imposed by this revised proposed rule, the BLM will
pursue amending or
[[Page 31645]]
updating the existing agreement with each State or tribe to reflect the
expectation and responsibilities for each agency. An example of an
existing agreement is the State of Colorado which has a Memorandum of
Agreement with the BLM (and the United States Forest Service) for
Permitting and Oil and Gas Operations on BLM and National Forest
Service Lands in Colorado.
The BLM is committed to working with tribes to coordinate
implementation of this revised proposed rule with the tribes' laws,
rules, and permitting and inspection programs. The contents of such
agreements or understandings might be different for each tribe, but
such agreements actively seeking opportunities to share standards,
information, and processes should yield more consistency for operators
and better efficiency for the BLM and tribal agencies.
Some commenters said that the proposed rule is inconsistent with
existing laws or regulations such as the Energy Policy Act of 2005 and
EPA's New Source Performance Standards. For instance, some commenters
believed that the proposed permitting requirements would cause delays
in permitting that would violate the timeframes mandated by the Energy
Policy Act. The BLM disagrees with these comments. Changes from the
initial proposal in this revised proposed rule would reduce possible
permitting delays and BLM projected workload. The BLM would meet the
requirements of the Energy Policy Act by informing the operator what
steps remain to be completed and the schedule for completion of these
requirements for processing of their drilling permits. Often delays
occur from submittal of incomplete information or surveys as part of
the drilling permit proposal, or due to turnover in industry permitting
specialists. The BLM has increased the number of drilling permits
approved over the past 3 years, and does not believe such productivity
gains will be negatively impacted by this revised proposed rule. The
BLM received some comments that certain definitions and requirements in
the proposed rule were vague. The commenters stated that without
clarification, this purported vagueness could lead to misinterpretation
by operators and inconsistent application by BLM engineers and
inspectors. Because the revised proposed rule uses different approaches
to regulation than the initial proposed rule, some definitions have
been revised. The BLM worked to ensure the revisions also increased
clarity. The BLM believes that the definitions are sufficiently clear
to the industry, the BLM, and the public. To the extent that some
definitions might be construed as open-ended, it is because the rule
must allow for some degree of flexibility to accommodate the wide range
of geologic and environmental conditions encountered on Federal and
Indian leases.
Some commenters stated that the BLM does not have the staffing,
budget, or the number of experts needed to implement the rule, which
will cause delays in approvals. The BLM does not agree with the
assertion regarding the lack of BLM staff expertise. Also the revisions
proposed in this revised proposed rule would reduce the amount of staff
time required to implement the rule and limit any permitting delays.
The changes include the option of including multiple wells with
substantially similar geology in the permit application (type wells),
narrowing the scope of the rule to include only hydraulic fracturing,
and the elimination of the proposed requirement for the BLM to review
and approve CBLs prior to hydraulic fracturing. These changes are
discussed further in other sections of this rule.
Some BLM offices, especially those that process a large volume of
drilling applications, may experience delays in implementing the
revised proposed rule. The BLM is mindful of this issue and already
provides remote assistance from other offices. As with the
implementation of any new rule, some delays may be inevitable. This
rule, however, will help prevent unnecessary or undue degradation of
public lands and to provide protection to Indian trust resources.
Some commenters recommended that the BLM, State, or tribes should
inspect all hydraulic fracturing operations on Federal and Indian land.
The BLM did not revise the rule as a result of these comments. As part
of the BLM's annual inspection strategy, the BLM inspects all workover
operations, including hydraulic fracturing, on Federal and Indian lands
that are rated as a high priority. This rating depends on measuring
many factors, including the type of operation, the location, and the
potential impacts of the operation.
The BLM received some comments objecting to the application of the
rule to ``well stimulation'' operations which, as defined in the May
2012, proposed rule, includes any operation designed to increase the
permeability of the reservoir rock. The definition specifically
included acidization, but could also be interpreted to mean other
operations such as thermal stimulation and maintenance fracturing,
designed to open up fractures near the wellbore. Some of the commenters
stated that the requirements in the proposed rule were too onerous for
what they considered to be routine maintenance operations. The
commenters requested that the rule apply only to hydraulic fracturing
operations.
The BLM agrees with these comments and made several revisions to
the revised proposed rule as a result. Section 3162.3-3(a) has been
revised to apply only to hydraulic fracturing and refracturing, rather
than to well stimulation as stated in the proposed rule.
In addition, definitions of ``hydraulic fracturing'' and
``refracturing'' have been added to the revised proposed rule (section
3160.0-5) instead of the previous definition of well stimulation. In
this revised proposed rule, the term ``hydraulic fracturing''
specifically excludes enhanced secondary recovery, such as water
flooding, tertiary recovery, recovery through steam injection, and
other types of well stimulation such as acidizing.
Some commenters requested clarification of the requirements for
operators who conduct hydraulic fracturing operations on or near land
managed by other Federal agencies such as the National Park Service
(NPS) and the United States Forest Service (USFS). One commenter wanted
to ensure that a comprehensive NEPA document was prepared and that the
BLM include the NPS as a cooperating agency when hydraulic fracturing
operations are near National Parks. Another commenter wanted the rule
to specify that it applied to USFS managed land. When warranted, the
BLM invites other agencies, including the USFS and the NPS, to
participate in the preparation of the NEPA analysis.
The involvement of other agencies reflects the site-specific issues
and potential impacts to resources. On USFS lands, the USFS typically
has the lead responsibility for compliance with NEPA as part of its
review of the surface use plan of operation, and the BLM serves as a
cooperating or joint lead agency. The revised proposed rule, as with
all of the other regulations in 43 CFR part 3160 (see 43 CFR 3161.1--
Jurisdiction), would apply to USFS lands. No revisions were made to the
rule as a result of these comments.
The BLM received some comments requesting that the rule include a
ban on the use of diesel fuel in hydraulic fracturing operations.
Jurisdiction over the use of diesel fuel in hydraulic fracturing
operations lies with the EPA through its administration of the
Underground Injection Control (UIC)
[[Page 31646]]
program. (SDWA, Section 1421(d)(1)(B), 42 U.S.C. 300h(d)(1)(B)(ii,40
CFR 144.11). Owners or operators who inject diesel fuels during
hydraulic fracturing related to oil and gas operations must obtain a
UIC permit before injection begins. The EPA published draft permitting
guidance for oil and gas hydraulic fracturing operations using diesel
fuels in May 2012. Thus the BLM did not revise the rule as a result of
these comments.
The BLM received some comments that certain provisions of the
proposed rule were open ended, which would give BLM too much discretion
and would result in uncertainty, delays, and increased costs for
operators. For example, some comments suggested that the ability of the
BLM to request additional information in the Sundry Notice requesting
approval for hydraulic fracturing (section 3162.3-3(d)(7)) was open
ended. The BLM believes that the provisions in the revised proposed
rule are necessary to provide the flexibility essential to regulating
operations over a broad range of geologic and environmental conditions.
Requests for information from the Authorized Officer are
administratively appealable if an operator believes the directive lacks
a proper basis. The BLM did not revise the rule as a result of these
comments.
The BLM received some comments suggesting that all wells permitted
prior to the effective date of the rule should be exempt from the
provisions of the rule, that the rule be phased in over a period of 180
days, and that older wells should be reviewed for information only. The
BLM understands the commenters' concerns. Nonetheless, the primary goal
of this rule is to ensure that hydraulic fracturing does not cause
negative impacts to Federal or Indian resources, including groundwater
and surface water. This is achieved by ensuring wellbore integrity is
maintained throughout the hydraulic fracturing process and placing
restrictions on the handling of flowback water. Achieving these goals
is critical regardless of when the BLM approved the APD or if the
proposed operation will take place immediately after the effective date
of the rule or 180 days after the effective date of this rule. The BLM
did not revise the rule as a result of these comments.
Section Discussion
As an administrative matter, this rule would amend the authorities
section for the BLM's oil and gas operations regulations at 43 CFR
3160.0-3 to include FLPMA. Section 310 of FLPMA authorizes the
Secretary of the Interior to promulgate regulations to carry out the
purposes of FLPMA and other laws applicable to the public lands. See 43
U.S.C. 1740. This amendment would not be a major change and would have
no effect on lessees, operators, or the public.
This rule would remove the terms ``nonroutine fracturing jobs,''
and ``routine fracturing jobs,'' from 43 CFR 3162.3-2(a) and 43 CFR
3162.3-2(b). It would add a new section, 43 CFR 3162.3-3, for hydraulic
fracturing operations. In this rule, there would be no distinction
drawn between ``nonroutine'' or ``routine'' hydraulic fracturing
operations. Prior approval would be required for hydraulic fracturing
operations, but would be available concurrently with the prior approval
process that is already in place for general well drilling activities
through the APD process. The running of CELs on surface or intermediate
casing strings, which is currently an optional practice, would be
required for new wells where the casing protects usable water, except
for wells substantially similar to an operator's ``type well'' for
which the operator has demonstrated the efficacy of the cement bonding
of casing under similar geological conditions within the same field.
All wells would require mechanical integrity testing prior to hydraulic
fracturing.
The revised proposed rule includes eight new definitions for
technical terms used in the rule. These definitions will improve
readability and clarity of the regulations.
Published in this rule are the following definitions:
Annulus means the space around a pipe in a wellbore, the
outer wall of which may be the wall of either the borehole or the
casing; sometimes also called the annular space.
Bradenhead means a heavy, flanged steel fitting connected
to the first string of casing that allows suspension of intermediate
and production strings of casing, and supplies the means for the
annulus to be sealed off.
Hydraulic fracturing means those operations conducted in
an individual wellbore designed to increase the flow of hydrocarbons
from the rock formation to the wellbore through modifying the
permeability of reservoir rock by breaking it. Hydraulic fracturing
does not include enhanced secondary recovery such as water flooding,
tertiary recovery, recovery through steam injection, or other types of
well stimulation operations such as acidizing. The BLM changed the
proposed rule's term ``stimulation fluid'' to ``hydraulic fracturing
fluid'' throughout these regulations.
Hydraulic fracturing fluid means the liquid or gas, and
any associated solids used in hydraulic fracturing, including
constituents such as water, chemicals, and proppants.
Proppant means a granular substance (most commonly sand,
sintered bauxite, or ceramic) that is carried in suspension by the
fracturing fluid and that serves to keep the cracks open when
fracturing fluid is withdrawn after a hydraulic fracture treatment.
Refracturing means a hydraulic fracturing operation
subsequent to the completion of a prior hydraulic fracturing operation
in the same well. For purposes of this definition, a hydraulic
fracturing operation is completed when a well begins producing oil or
gas, or when equipment necessary to inject the hydraulic fracturing
fluid at sufficient pressure to fracture the stratum is removed from
the well pad, whichever occurs earlier.
Type well means an oil and gas well that can be used as a
model for well completion in a field where geologic characteristics are
substantially similar within the same field, and where operations such
as drilling, cementing, and completions using hydraulic fracturing are
likely to be successfully replicated using the same design.
Usable water means generally those waters containing up to 10,000
ppm of total dissolved solids.
The proposed rule used the term ``well stimulation'' to describe
the activities being regulated by this rule. In this revised proposed
rule, that term is replaced with the term ``hydraulic fracturing.'' The
reason for the change is because, after reviewing all of the comments
and considering the available information, the BLM has determined that
only hydraulic fracturing operations require the additional measures in
this rulemaking. This definition also has language that explains the
types of secondary recovery activities to which this rule does not
apply.
This rule also includes the following three terms that were not in
the proposal: Hydraulic fracturing fluid; refracturing; and type well.
These terms are defined so that there is a common understanding of the
regulatory provisions that follow.
This rule would delete the definition of ``fresh water,'' and is
consistent with how the BLM has been protecting all usable waters in
its onshore orders. Usable water includes fresh water (often defined as
water containing less than 5,000 parts per million (ppm) of total
dissolved solids (TDS)) and water that is
[[Page 31647]]
of lower quality than fresh water. The BLM has been more protective
when it seeks to protect all usable water during drilling operations,
not just fresh water. This policy was established upon the effective
date of Onshore Order No. 2, December 19, 1988. Water with up to 10,000
ppm TDS may be used for some agricultural or industrial purposes, often
with some treatment, and thus would continue to be protected under this
revised proposed rule. Not all waters of up to 10,000 ppm TDS need to
be isolated or protected from hydraulic fracturing operations;
clarifying edits have been added to help the public understand how the
rule will affect operations.
The rule would revise section 3162.3-2(a) by removing the phrase
``perform nonroutine fracturing jobs'' from the current 43 CFR 3162.3-
2(a). The phrase ``routine fracturing jobs, or'' would also be removed
from existing section 3162.3-2(b). This rule does not affect
requirements for acidizing jobs, and this rule would not remove the
reference to acidizing jobs from section 3162.3-2(b). Hydraulic
fracturing operations are addressed under section 3162.3-3.
In paragraph (a) of this section, the term ``commingling'' in the
initial proposed rule would be replaced with the term ``combining'' to
clarify the intent of this requirement and to avoid confusion with the
meaning of ``commingling'' as that term is used in a production
accounting context and in sections 3162.7-2 and 3162.7-3 of this title.
The term ``commingling'' in a production accounting context refers only
to the combining of production from different leases, communitized
areas (CA), participating areas (PA), or State or private mineral
estates prior to royalty measurement. Commingling, whether it is
downhole commingling or surface commingling, requires BLM approval to
ensure that the allocation method is consistent with Onshore Oil and
Gas Order Number 3, Site Security (54 FR 8056), Onshore Oil and Gas
Order Number 4, Measurement of Oil (54 FR 8086), and Onshore Oil and
Gas Order Number 5, Measurement of Gas (54 FR 8100), for royalty
measurement purposes. The combining of production from different
intervals or zones within a wellbore also requires BLM approval to
ensure that the zones proposed for combining are compatible from a
reservoir standpoint, regardless of the royalty implications. The
intent of the requirement in this section would be to address reservoir
concerns from combining zones or intervals; therefore, the word
``commingling'' was changed to ``combining.'' The royalty implications
of commingling production from different leases, CAs, PAs, or State and
private properties are handled under a separate approval process in 43
CFR 3162.7-2 and 3162.7-3.
Refracturing operations within 5 years from the approval of a
Notice of Intent Sundry would be considered a ``recompletion'' under
section 3162.3-2(b). The subsequent report on those operations would
require the information and certifications prescribed in section
3162.3-3(i) of this rule. Under section 3162.3-3(c)(3)(i), a
refracturing operation more than 5 years after the approval of the
Notice of Intent Sundry would require BLM's approval of a new Notice of
Intent Sundry.
The revised proposed rule would change the scope of the regulation
to apply only to hydraulic fracturing operations and not to other well
stimulation activities. Section 3162.3-3(a) would make it clear that
this section applies only to hydraulic fracturing operations and that
all other injection activities must comply with section 3162.3-2. This
language is necessary to make the distinction between hydraulic
fracturing and other well injection activities, such as secondary and
tertiary recovery operations. Secondary and tertiary recovery
operations do not involve the injection of chemicals at pressures high
enough to fracture strata, and thus do not raise the same concerns of
breaching the well bore and migrating into usable water.
New paragraph 3162.3-3(b) would require that all fracturing and
refracturing operations meet the performance standard in section
3162.5-2(d) of this title. Among other things, that section requires
operators to isolate all usable water and other mineral-bearing
formations and protect them from contamination.
Some commenters requested more clarity on how the definition of
usable water would apply to the requirement to isolate and protect
usable water from contamination from hydraulic fracturing operations.
The BLM has revised the definition of usable water to specify that, for
purposes of the hydraulic fracturing regulations, usable water includes
underground sources of drinking water, zones actually used for water
supply for industrial or agricultural purposes (unless the operator
shows that the industrial or agricultural user would not be harmed by
failure to protect or isolate), and zones designated by the State or
the tribe as requiring isolation or protection from oil and gas
operations. The BLM has also revised the section to specify that, for
the purposes of the hydraulic fracturing regulations, usable water does
not include the zone authorized for hydraulic fracturing, zones
designated as ``exempted aquifers'' under the Safe Drinking Water Act
(SDWA), and zones that the State or tribe have explicitly designated as
exempt from any requirement for oil and gas operators to isolate or
protect. Any other zones containing water that does not exceed 10,000
ppm TDS would be considered usable water. The BLM recognizes that
including aquifers not otherwise exempted would be consistent with its
Oil and Gas Onshore Orders, but may make the rule more stringent than
other Federal, State, and tribal laws. The BLM invites comments
specifically on the incremental costs associated with protecting zones
that contain up to 10,000 ppm of total dissolved solids, that are not
already protected under SDWA or equivalent State or tribal law, and not
excluded in the proposed definition (i.e., those aquifers protected by
part (4) in the proposed definition of usable water). BLM may consider
excluding such zones in the final rule.
The BLM believes that the revised language makes explicit the
appropriate deference to the expertise and professional judgment of the
State or tribal agencies entrusted to manage the groundwater resources
under their respective jurisdictions.
Section 3162.3-3(c) would require the BLM's approval of all
proposals for hydraulic fracturing or refracturing activity. The
operator has the option of applying for the BLM's approval in its APD,
including the information required by paragraph (d) of this section.
The operator may submit a Sundry Notice and Report on Wells (Form
3160-5) as a Notice of Intent Sundry for the hydraulic fracturing
proposal for the BLM's approval before the operator begins the
fracturing activity. This section would supersede and replace existing
section 3162.3-2(b) that states that no prior approval is required for
routine fracturing. That reference in the existing section would be
deleted. Also, an operator must submit a new Sundry Notice prior to
hydraulic fracturing activity:
If the BLM's previous approval for hydraulic fracturing is
more than 5 years old,
If the operator becomes aware of significant new
information about the relevant geology, the fracturing operation or
technology, or the anticipated impacts to any resource, or
If the operator proposes refracturing of the well.
The 5-year period is consistent with practices in some States,
including Montana, Wyoming, and Colorado,
[[Page 31648]]
which require that operators reconfirm well integrity for fracturing
operations through a pressure test every 5 years. The requirement to
submit a new NOI for refracturing is new to this revised proposed rule
and is added to clarify that approval of a single hydraulic fracturing
operation in a well does not allow for multiple refracturing procedures
without compliance with the notice, monitoring, and reporting
requirements.
The BLM understands the time-sensitive nature of oil and gas
drilling and well completion activities and does not anticipate that
the submittal of additional hydraulic fracturing-related information
with APD applications will significantly impact the timing of the
approval of drilling permits. The BLM believes that the additional
information that would be required by this rule would be reviewed in
conjunction with the APD and within the normal APD processing time
frame. Also, the BLM anticipates that requests to conduct hydraulic
fracturing operations on existing wells that have been in service more
than 5 years will be reviewed promptly. The BLM understands that delays
in approvals of operations can be costly to operators and the BLM
intends to avoid delays whenever possible. Furthermore, if an operator
believes that approval of hydraulic fracturing would be swifter if it
is not part of the APD, the operator has the option of submitting the
Notice of Intent Sundry at a later date. However, the operator does not
obtain an exemption from any requirement of this regulation by
submitting a Notice of Intent Sundry after drilling and cementing
operations have commenced.
Section 3162.3-3(d) has been revised from what was originally
proposed to allow the Sundry Notice required by this section to be
submitted for a single well or a group of wells. If the submission is
for a group of wells that share substantially similar geological
characteristics, the information should describe the ``type well.''
``Type well'' is a term commonly used in the oil and gas industry and
the BLM added it as a new definition in section 3160.0-5 of this rule.
By constructing and monitoring a type well, including running a CEL on
casing that encounters usable water, the operator demonstrates that its
engineering design and execution effectively isolate aquifers with
usable water in the field. The same operator may then replicate the
type well for each of the wells in the approved group for the same
field. The operator would not need to run a CEL on those wells unless
the monitoring data indicated a problem with the cementing.
Section 3162.3-3(d)(1) would require a report that includes the
geological names, a geological description, and the proposed measured
depth of the top and the bottom of the formation into which hydraulic
fracturing fluids would be injected. The report is needed so that the
BLM may determine the properties of the rock layers and the thickness
of the producing formation and identify the confining rocks above and
below the zone that would be stimulated.
Under this revised proposed rule, section 3162.3-3(d)(2) would be
revised by removing the reference to the CBL, because under this rule
prior approval of a CBL or other CEL would no longer be routinely
required. The change in this section is as a result of changes to
paragraph (e) and is necessary to make this section consistent with
those changes. Section 3162.3-3(d)(2) would be revised to require the
operator to submit the measured or estimated depths of all occurrences
of usable water using a drill log from the subject well or any other
well sharing the same geological characteristics within the same
geologic formation, which will help the BLM in its efforts to make sure
that water resources are protected. As it pertains to the depths of all
occurrences of usable water, the word ``estimated'' has been added
because at the planning stages of the operation, the actual measured
depths would not generally be available.
Although prior approval of a CEL would no longer be routinely
required, operators would be required to submit to the BLM the results
of a CEL with the post-completion sundry notice. The BLM will be
reviewing the well drilling and completion records and logs including
the CEL, to help verify that operators have complied with their duty to
assure that the casings are properly cemented.
Section 3162.3-3(d)(3) would require reporting of the measured
depth to the perforations in the casing and uncased hole intervals
(open hole). This section would also require the operator to disclose
specific information about the water source to be used in the
fracturing operation, including the location of the water that would be
used as the base fluid. The BLM needs this information to determine the
impacts associated with operations. This rule would add ``reused or
recycled water'' to the example list of sources and location of the
water supply to be used for fracturing operations. The rule makes it
clear that reused or recycled water is a recognized source of water
supply for these types of operations. The information required by this
paragraph does not interfere with State or tribal regulation of water
allocation. The operators would need to comply with all State or tribal
water laws, but need not disclose to the BLM the documents evidencing
their rights to use the water. This regulation would in no way
discourage operators from reusing or recycling water for new hydraulic
fracturing operations.
Initial proposed section 3162.3-3(c)(4) would have required
operators to certify in writing that they have complied with all
applicable Federal, tribal, State, and local laws, rules, and
regulations pertaining to fracturing fluids before a fracture is
attempted. This section has been deleted from the revised proposed rule
because the BLM believes that requiring this certification after the
operator has completed hydraulic fracturing operations (see section
3162.3-3 (i)(7)) adequately protects Federal and Indian lands and
resources and, therefore, the burden on industry of providing and on
the BLM of reviewing that information ahead of operations is not
justified.
Section 3162.3-3(c)(5) has been renumbered in this revised proposed
rule as section 3162.3(d)(4) and has been revised. Section 3162.3-
3(d)(4) would require the operator to submit a plan for the hydraulic
fracturing design. This information is needed in order for the BLM to
be able to verify that the proposed hydraulic fracturing design is
adequate for safely conducting the proposed well stimulation.
Section 3162.3-3(d)(4)(i) would require the operator to submit the
estimated total volume of fluids that will be used in the hydraulic
fracturing operations.
Section 3162.3-3(d)(4)(ii) would require submission of the
anticipated surface treating pressure range. This information is needed
by the BLM to verify that the maximum wellbore design burst pressure
will not be exceeded at any stage of the hydraulic fracturing
operation.
Section 3162.3-3(d)(4)(iii) would require the maximum injection
treating pressure information to be submitted. This information is
needed by the BLM to verify that the maximum allowable injection
pressure will not be exceeded at any stage of the hydraulic fracturing
operation.
Section 3162.3-3(d)(4)(iv) would require the operator to submit the
estimated fracture direction, length, and height, including the
fracture propagation plotted on a map so that the BLM can ensure that
the fracturing operations do not threaten aquifers, other resources, or
other operations. The rule would also require that the information
include the estimated
[[Page 31649]]
fracture propagation plotted on the well schematics and on a map. The
rule would require that the map must be of a scale no smaller than
1:24,000, which is the scale required for the map included in an APD.
The rule also would add a new paragraph 3162.3-3(d)(4)(v) that
requires submission of the estimated vertical distance to the base of
the nearest usable water aquifer above the fracture zone. The rule
would require this information to assure that usable water is isolated
from propagated fissures. Fracturing operations that are expected to
propagate fissures vertically to depths near those of usable water may
require closer scrutiny by the BLM than those with thousands of feet
between the fissures and aquifers.
Section 3162.3-3(d)(5) would require the operator to provide for
BLM's approval information about the handling of recovered fluids. This
information is being requested so that the BLM has all necessary
information regarding chemicals being used in the event that the
information is needed to help protect health and safety or to prevent
unnecessary or undue degradation of the public lands. The BLM has
deleted the requirement for operators to provide the estimated chemical
composition of flowback fluids because it would in effect require
operators to reveal the total chemical constituents of their hydraulic
fracturing fluids prior to operations. It would also require
speculation as to the chemistry of fluids in the target zone, and their
reactions, if any, with the hydraulic fracturing fluids. The BLM has
determined that operators may justifiably change the chemical
composition of hydraulic fracturing fluids after approval of fracturing
operations, and even during those operations in response to such
factors as availability of chemicals and unexpected geologic
conditions. Thus, the reliability of the pre-operational estimated
composition of flowback fluids could be imperfect. The composition of
actual flowback fluids could be appropriately determined from the post-
operational disclosure of the chemicals used in the fracturing
operations. It is most important at the approval stage, however, for
the operator to show that it has an adequate plan to manage and contain
the recovered fluids that would prevent them from contaminating surface
water or groundwater without regard to their specific chemical
composition.
Section 3162.3-3(d)(5)(i) would require the operator to submit to
the BLM an estimate of the volume of fluid to be recovered during
flowback, swabbing, and recovery from production facility vessels. This
information is required to ensure that the facilities needed to process
or contain the estimated volume of fluid will be available on location.
Section 3162.3-3(d)(5)(ii) would require the operator to submit to
the BLM the proposed methods of managing the recovered fluids. This
information is needed to ensure that the handling methods will
adequately protect public health and safety.
Section 3162.3-3(d)(5)(iii) would require the operator to submit to
the BLM a description of the proposed disposal method of the recovered
fluids. This is consistent with existing BLM regulations for produced
waters (i.e., Onshore Oil and Gas Order Number 7, Disposal of Produced
Water, (58 FR 47354)). This information is requested so that the BLM
has all necessary information regarding disposal of chemicals used in
the event it is needed to protect the environment and human health and
safety on Federal and Indian lands and to prevent unnecessary or undue
degradation of the public lands.
Section 3162.3-3(d)(6) would require the operator to provide, at
the request of the BLM, additional information pertaining to any facet
of the hydraulic fracturing proposal. For example, the BLM may require
new or different tests or logs in cases where the original information
submitted was inadequate, out of date, or incomplete. Any new
information that the BLM may request will be limited to information
necessary for the BLM to ensure that operations are consistent with
applicable laws and regulation, or that the operator is taking into
account site-specific circumstances. Such information may include, but
is not limited to, tabular or graphical results of an MIT, the results
of logs run, the results of tests showing the total dissolved solids in
water proposed to be used as the base fluid, and the name of the
contractor performing the hydraulic fracturing operation.
Comments on What the Notice of Intent Sundry Must Include
Some commenters requested baseline water testing prior to
hydraulic fracturing operations; however, the BLM cannot authorize
operators to enter non-Federal land to conduct baseline water testing,
so the BLM did not change the revised proposed rule as a result.
Whether to require baseline water testing on Federal land will be
addressed, as is the current practice, as part of the analysis under
the National Environmental Policy Act (NEPA) review, and the ``downhole
review'' by the BLM authorized officer pursuant to Onshore Oil and Gas
Orders Nos. 1 and 2. For example, if local drilling or geologic
conditions, such as downhole stratigraphy involving faults, fissures,
natural fractures, karst/limestone or other similar conditions require
extra vigilance for any leaks of wellbore fluids to the usable water,
then additional testing for baseline water could be required by the BLM
as a condition of approval (COA) of a drilling permit. Similarly, the
site-specific NEPA analysis of a drilling permit might reveal local
environmental conditions that indicate a need to require baseline
testing as a COA.
The BLM received some comments requesting that the BLM require up-
front disclosure of the chemicals proposed for use in the hydraulic
fracturing fluid. Commenters indicated that only through full up-front
disclosure could the BLM and the public assess impacts to water, land,
air quality, and human health and safety. The proposed rule was not
revised based on these comments. Analysis of the impacts from hydraulic
fracturing is done as part of the NEPA analysis conducted prior to the
issuance of permits. For the purposes of NEPA compliance, the exact
composition of the fluid proposed for use is not required because
chemicals used in the hydraulic fracturing process are generally
considered potentially hazardous for the purpose of impact analysis and
mitigation. Operators will be aware that the rule requires disclosure
of hydraulic fracturing chemicals after operations are complete and
operators will also be required to certify that the hydraulic
fracturing fluid used complied with all applicable permitting and
notice requirements and all applicable Federal, State, and local laws,
rules, and regulations (a separate but similar certification is
required for Indian lands). The operator would also be required to
certify that wellbore integrity was maintained prior to and throughout
hydraulic fracturing operations. The BLM believes that the post-
fracturing disclosures and certifications would provide adequate
assurances that the hydraulic fracturing operations protect public
health and safety and protect Federal and Indian resources.
The BLM also received comments in opposition to pre-disclosure of
chemical constituents because of trade secret concerns and positing
that the actual chemicals used will change from the pre-drilling stage
based on the results encountered during drilling. While the BLM agrees
with these comments, no revisions to the revised proposed rule were
made because neither the initial proposed rule nor the revised proposed
[[Page 31650]]
rule would require pre-disclosure of chemicals.
The BLM received some comments expressing concern about additional
delays that would be caused by the permitting process in the proposed
rule. According to the comments, unnecessary delays would be caused by
having to submit voluminous amounts of information for each well
proposed for hydraulic fracturing or acidization, the review and
approval of CBLs prior to hydraulic fracturing, and the lack of BLM
staff to perform these additional reviews. Based on consideration of
these comments, the initial proposed rule has been revised. The changes
include the option of including multiple wells with similar geology in
the permit application (``type wells''), narrowing the scope of the
rule to include only hydraulic fracturing, and the elimination of the
requirement for the BLM to review and approve CBLs prior to hydraulic
fracturing. These changes are discussed further in other sections of
this preamble.
The BLM received some comments regarding the amount of information
required in section 3162.3-3(c) of the proposed rule in order for the
BLM to grant approval of hydraulic fracturing operations. The
commenters stated that much of this information, such as flowback time
and flowback volume, is speculative. Commenters indicated that data
such as treatment volumes, chemical composition, and other specific
design parameters can only be determined after the well has been
drilled. Commenters also suggested that instead of providing site-
specific design details which could change, the BLM should allow
operators to submit a generic master design plan or type well proposal.
The BLM agrees with these comments. The revised proposed rule
(section 3162.3-3(d)) would provide for a more streamlined permitting
process by allowing a Notice of Intent Sundry Notice to cover a group
of wells with similar geologic characteristics, rather than just a
single well. If the Sundry Notice is for a group of wells, the
information required in section 3162.3-3(d) would be submitted for a
type well that represents a typical completion and hydraulic fracturing
procedure for the group of wells included in the Sundry Notice. The
requirement to submit a CBL prior to the BLM granting approval for
hydraulic fracturing is also being removed in the revised proposed
rule.
The BLM received some comments that suggested that more information
should be required prior to approving a plan or application for a
permit to hydraulically fracture a well. Some of the additional
information suggested to be obtained included the total amounts of
waste, recycling methods, produced fluid disposal plans, fluid
transportation plans, on-site storage and chemical composition of
flowback water, more geologic data, an emergency spill response plan,
and information about confining zones. All of the suggestions are
already parts of required APD components and other BLM regulations
including Onshore Orders Nos. 1, 2, and 7. The BLM did not revise the
rule as a result of these comments.
Some comments suggested that the BLM require more information both
pre- and post-hydraulic fracturing, including common chemical names,
composition of recovered fluids, sources of water used and storage/
containment methods. Existing regulations require advance approval of
plans for handling waste and hazardous materials and sources of water
used in drilling and completing wells on Federal and Indian lands. The
BLM did not revise the rule as a result of these comments.
The BLM received some comments stating that the proposed rule
should provide for ``estimates'' rather than actual information in the
permit application. The reason given for providing estimates is that
the hydraulic fracturing plan could change from the time it is approved
based on conditions encountered during drilling and for other reasons.
The BLM partially agrees with this comment and has revised the rule so
that it would allow the operator to submit information for a type well
drilled in an area of similar geology in lieu of submitting information
specific to every well proposed for hydraulic fracturing. The BLM
understands that some of the information such as formation depths, will
be estimations of various parameters; for example, well-specific
geological strata, formation depth/zone of perforation and fracture,
expected amount of fracturing fluid injection volumes and flowback from
the wellbore, expected pressure and temperature during drilling and
completions, etc. However, the BLM also requires that the operator
submit a Sundry Notice if major changes from the approved permit are
requested.
The BLM received some comments that the proposed rule requires
documentation that is duplicative of other regulatory requirements and
documents already submitted to the BLM, particularly the APD and Well
Completion reports. The BLM agrees that some of the data that would be
required in this rule is similar to that found or contained in other
reports, forms and approved plans. However, the BLM believes that the
requested information is unique to the hydraulic fracturing operation
and is necessary for the BLM to ensure that operations are conducted in
a manner that will protect groundwater, surface water, and other
resources. The BLM did not revise the rule as a result of this comment.
The BLM received some comments regarding the timeframes for hydraulic
fracturing permit approvals. The commenters suggested that the rule
should specify a set amount of time in which the BLM must complete its
review of hydraulic fracturing proposals, and if that time was
exceeded, the proposal would be automatically approved. The BLM did not
revise the rule as a result of these comments because the imposition of
a timeframe or ``automatic'' approvals could limit the BLM's ability to
ensure protection of usable water and other resources. The BLM cannot
abdicate its statutorily mandated responsibilities to prevent
unnecessary or undue degradation of public lands and to protect Federal
and Indian resources by establishing an artificial deadline. As
discussed in other sections, however, the revised proposed rule would
make several changes to the permitting process that would reduce the
possibility of unreasonable delays.
The BLM received some comments questioning the rationale or need
for the information requested in both the permit and the subsequent
report. The BLM has determined that the requested information is
important to assess the environmental impacts of the proposed operation
as well as to ensure that hydraulic fracturing operations will be
conducted in a manner that prevents waste of valuable minerals,
protects other resources, and ensures public health and safety. No
revisions to the rule were made as a result of this comment.
The BLM received some comments objecting to the requirement to
estimate or calculate fracture lengths both in the application for
hydraulic fracturing (section 3162.3-3(d)) and in the subsequent report
(section 3162.3-3(i)). The primary objection expressed by the
commenters is the difficulty, expense, and high degree of uncertainty
in estimating, calculating, or measuring fracture lengths. According to
the commenters, calculating fracture lengths requires elaborate
computer models, which are often proprietary, and measuring fracture
lengths requires seismic monitoring which adds time and expense. Some
commenters questioned the need for this information, especially given
that the target zone is usually thousands of feet below any known
usable water zones. Other commenters stated that there is a
[[Page 31651]]
significant economic incentive to contain fractures to the target zone
in order to minimize the volume of fluid required in the fracturing
process.
In order to evaluate the potential impacts of the proposed
hydraulic fracturing application, the BLM must have information showing
the estimated fracture lengths. This information is used to help ensure
that fractures will not intersect known fault zones, communicate with
older unplugged wells with questionable wellbore integrity, or
communicate with usable water zones. The BLM is aware that the fracture
lengths provided in the application and subsequent report are
estimates. For the subsequent report, the reporting of actual fracture
lengths can be used to identify potential problems. The BLM did revise
section 3162.3-3(i) as a result of these comments; moreover, section
3162.3-3(d) was revised to clarify how the estimated fracture lengths
are to be provided to the BLM in the application.
Section Discussion
Section 3162.3-3(e) is new to the rule. This section would require
monitoring of cementing operations and would require a CEL prior to
hydraulic fracturing operations for each casing that protects usable
water. The requirements are necessary to ensure that the usable water
aquifers intersected during well drilling have been isolated to protect
them from contamination. Because aquifers are permeable, operators
routinely isolate them from hydraulic fracturing operations by lining
the wellbore with a tubular casing (typically metal casing). ``Surface
casings'' are typically run for the top 1,000 to 1,500 feet of a well.
``Intermediate casings'' are used where necessary at greater depths.
Operators pump cement to the outside of the casing to assure that the
casing will transmit the pressures of hydraulic fracturing to the
surrounding rock without failure, and to assure that neither fracturing
fluids nor produced oil and gas leak through or around the casing and
are lost. Cementing operations, however, do not always yield a perfect
result. There may be gaps, voids, or channels between a casing and the
rock wall of the wellbore that lack adequate cement, and thus may be
vulnerable to failure or leaks. A CEL is a class of tools that can be
run down a casing to assess whether there are any significant gaps or
voids in the cement behind a casing. Operators typically run a CEL on
intermediate casings, but not on surface casings when the cement flows
back to the surface. For surface casing an operator generally observes
the cement in the annulus, and uses additional cement as needed. The
initial proposed regulations at section 3162.3-3(c)(2) would have
required a CBL prior to all hydraulic fracturing operations. However, a
CBL is only one of a suite of technologies that are described as CELs.
Under this revised proposed rule, other cement evaluation technologies,
either existing or developed in the future, that are equally effective
may be used. An ``equally effective'' technology in this context would
be any methodology or tool that is at least as reliable as a CBL in
detecting gaps or voids in the cement behind a casing and meets the
performance objective of validating the wellbore integrity and
isolating zones of usable water.
Operators may choose from several well logging techniques to
evaluate the quality of the cement behind casing. Various types of logs
provide different types of information. For example, a CBL presents the
reflected amplitude of an acoustic signal transmitted by a logging tool
inside the casing. Another acoustic log presents the waveforms of the
reflected signals detected by the logging tool receiver and provides
qualitative insights concerning the casing, the cement sheath and the
formation. Ultrasonic logging tools measure the resonant echoes.
Under this rule, operators would have the flexibility of using
suitable logs to confirm a good cement bond behind the casing to
protect and isolate usable water. The BLM will review those logs after
post-completion submission by the operator.
New section 3162.3-3(e)(1) would require the operator to monitor
and record the flowrate, density, and treating pressure, and to submit
a cement operation monitoring report to the BLM within 30 days after
completion of hydraulic fracturing operations. The required monitoring
data would provide important indications of problems with the cementing
of casings. That monitoring data would help to verify the results of a
CEL and for wells where no CEL is required will provide the primary
assurance that cementing operations conformed to those of a proven type
well.
New section 3162.3-3(e)(2) would require the operator to run a CEL
for each casing that protects usable water, unless it is exempt from
doing so under (e)(3) of this section, and to submit these logs to the
BLM within 30 days after completion of the hydraulic fracturing
operations. A CEL includes, but is not limited to, a CBL, ultrasonic
imager, variable density logs, micro-seismograms, CBLs with directional
receiver array, ultrasonic pulse echo technique, or isolation scanner.
Comments on Cement Bond Logs
The BLM received some comments in response to proposed sections
3162.3-3(b)(i), 3162.3-3(b)(ii), 3162.3-3(c)(2), that would have
required operators to run CBLs and obtain approval from the BLM prior
to commencing hydraulic fracturing operations. The commenters focused
on seven main issues: (1) Allowing the use of other technology besides
CBLs; (2) The use of other metrics to demonstrate zonal isolation; (3)
Delays and costs associated with running and obtaining approval of CBLs
prior to commencing hydraulic fracturing operations; (4) Reliability
and interpretation of CBLs; (5) The incorporation of API Standard 65-2;
(6) The ability for operators to challenge or appeal findings from the
BLM regarding CBL results; and (7) The possibility of requiring CBLs on
all casing strings, not just the surface casing. These comments are
discussed in further detail below.
Some commenters suggested that the BLM should allow the use of
other technologies in lieu of a CBL. The other technologies that were
suggested include ultrasonic logs, variable density logs, micro-
seismograms, standard CBLs, CBLs with directional receiver array,
ultrasonic pulse echo technique, and isolation scanners. The BLM agrees
with this comment and believes that these technologies could be
effective at demonstrating zonal isolation. Therefore, section 3162.3-
3(e)(2) would replace the term CBL with a more generic term, ``cement
evaluation log,'' (CEL) which would include the technologies suggested
by the commenters. It would also permit operators to use logging tools
which are the most appropriate in any given situation.
Some commenters stated that a CBL provides only one indication of
the quality of a cement job. The comments said that there are other,
perhaps more reliable, methods of determining the quality of the cement
job such as:
Monitoring cement returns to the surface during the cement
job. If good cement returns are achieved, it is a positive indication
that there were no unexpected or untreated voids or fractures in the
wellbore, which helps ensure that cement was properly placed between
the wellbore and the casing;
Placing centralizers on the lower joints of casing to
ensure the casing is concentric to the wellbore, allowing a uniform
cement sheath to form between the casing and the wellbore;
[[Page 31652]]
Witnessing the amount of ``fall back'' of cement in the
annulus; while it is normal for the top of the cement to retreat down
the annulus as the cement sets, excessive fall-back can indicate that
problems were encountered during the cement job;
Monitoring the pressures, flow rates, volumes, and
densities of cement during the cement job. If these parameters are
consistent with the values anticipated during the design of the cement
job, it is a good indication that no unexpected conditions were
encountered during the cementing and that a cement seal has been
established;
Ensuring that there were no equipment failures during the
cement job, such as line breaks or pump failures; and
Applying other analytic techniques such as temperature
logs and formation integrity tests.
Some commenters stated that the BLM should require the operator to
run a CBL only if one or more of these methods indicated a problem with
the cement job. The BLM agrees with these comments and proposes several
revisions in the revised proposed rule as a result. The revised
proposed rule includes a new section 3162.3-3(e)(1) that would
establish requirements for monitoring cementing operations, including
the need to monitor and record flow rate, density, and pumping pressure
of the cement. In addition, section 3162.3-3(e)(4) would require the
operator to run a CEL if there are indications of an inadequate cement
job such as lost returns, cement channeling, gas cut mud, or equipment
failure. If the monitoring information provides indications of an
inadequate cement job, the operator would also be required to notify
the BLM within 24 hours, submit a written report within 48 hours, and
to certify that the inadequate cement job had been corrected and
document that zonal isolation had been achieved prior to starting
hydraulic fracturing operations. The BLM also agrees with the
importance of centralizers in obtaining zonal isolation; however,
because Onshore Order No. 2 (Section III.B.1.f) already requires
centralizers on the bottom 3 joints of surface casing, an additional
requirement to run centralizers is not needed in this rule.
Some commenters objected to the cost of running a CBL on every well
and, perhaps more importantly, the delay associated with the BLM review
of CBLs prior to allowing operators to start hydraulic fracturing
operations. Some comments referenced the current delays in permitting
due to lack of staff and stated that this additional approval step
would only serve to exacerbate these delays. Several revisions are
included in the revised proposed rule as a result of these comments.
For wells where there are no indications of an inadequate cement job,
section 3162.3-3(e)(3) would provide an option to run a CEL only on a
type well that is representative of local geology and typical drilling
and completion techniques. If the CEL run on the type well demonstrated
zonal isolation, CELs would not be required on subsequent wells where
there were no indications of an inadequate cement job. However, Section
3162.3-3(e)(4) would require an operator to run a CEL on all wells
where there are indications of an inadequate cement job, such as, but
not limited to, lost returns, cement channeling, gas cut mud, or
failure of equipment, that show that remedial action and evaluation are
necessary. In addition, the revised proposed rule would eliminate the
need for the BLM to review and approve the CEL prior to commencing
hydraulic fracturing operations. Instead, operators would submit CELs
run under section 3162.3-3(e)(2) within 30 days of completing hydraulic
fracturing operations. CELs for type wells would have to be submitted
prior to exempting subsequent wells under 3162.3-3(e)(3) from the
requirement to run a CEL. Operators would submit CELs run under 3162.3-
3(e)(4) at least 72 hours prior to commencing hydraulic fracturing
operations; however no approval from the BLM would be necessary. The
BLM considered a requirement for operators to receive BLM approval
prior to commencing hydraulic fracturing operations in these cases. The
BLM believes that the combination of the proposed notice and
certification requirements would provide adequate assurance of wellbore
integrity prior to hydraulic fracturing without incurring additional
delay or workload. The proposed 24-hour notice would also allow the BLM
time to prioritize inspections of the hydraulic fracturing operation to
verify compliance with these proposed regulations, Onshore Order Number
2, and the approved APD.
The BLM received some comments expressing concern about the
reliability of CBLs and the difficulties of interpreting CBLs. Some
commenters stated that CBLs are not effective until the cement has
reached a certain compressive strength because CBLs work on the
principal of acoustic attenuation. At low compressive strengths,
commenters stated that the acoustic properties of cement and water are
very similar and it is difficult to delineate between the two when
interpreting logs. The commenters went on to state that the problem is
more pronounced in surface casing because the lower formation
temperature near the surface prolongs the setting process, requiring
more time to achieve levels of compressive strength that are required
for reliable log interpretation. Comments about the additional waiting
times varied. One commenter suggested that a CBL on the surface casing
and intermediate casing would delay drilling operations 24 hours for
each test. Other commenters suggested that the CBL requirement would
delay drilling operations by up to 72 hours for the surface casing
alone. The commenters suggested that during this time, operators would
be required to maintain idle drilling equipment on site, at a
significant cost to the operators.
After researching these concerns, the BLM acknowledges the
potential difficulties of running and interpreting CBLs. As a result,
the BLM has determined that requiring CBLs on every well may be
unnecessarily expensive, may induce unnecessary delay, and will not
provide increased protection beyond what will be available by requiring
a CEL on type wells. Therefore, the revised proposed rule would give
operators the option of running a CEL on a type well as discussed
previously. A CEL would still be required on all wells where there are
indications that there is an inadequate cement job. The BLM also
believes that allowing the use of other technology such as ultrasonic
logs could make the log interpretation less subjective.
The BLM also received some comments expressing concerns about the
ability of BLM staff to properly interpret CBLs. According to the
commenters, without adequate training and experience, the BLM could
misinterpret a CBL run in a wellbore with an adequate cement job and
conclude that there was an inadequate cement job. This
misinterpretation would result in additional time and expense for the
operator to either challenge the BLM's finding or to conduct expensive
and unnecessary remedial work. The BLM does not agree with the
assertion regarding the lack of staff training and experience. However,
the BLM believes that the previously discussed changes, including
providing a type well option, and eliminating the need for a
requirement to obtain BLM approval of CELs prior to starting hydraulic
fracturing operations, address the commenters' concerns.
The BLM received some comments which requested that the rule
include an appeal process for operators if the BLM
[[Page 31653]]
were to deny hydraulic fracturing on a well because the CBL could not
demonstrate zonal isolation. The BLM did not revise this rule as a
result of this comment because a BLM decision to deny authorization to
hydraulically fracture a well would be subject to the administrative
reviews already established in 43 CFR 3165.3 and 3165.4. In addition,
as discussed earlier, the revised proposed rule would eliminate the
requirement for operators to obtain BLM approval of CELs prior to
starting hydraulic fracturing operations.
Some commenters recommended that the BLM require operators to run
CELs on all casing strings, not just the surface casing because the
isolation of usable water, as required in Onshore Order No. 2, may be
accomplished by other casing strings. The proposed rule published in
May 2012 required CBLs on all casing strings protecting usable water.
The BLM clarified this requirement in 3162.3-3(e)(2), with exceptions
for type wells, in this revised proposed rule.
Section Discussion
New section 3162.3-3(e)(3) would explain that an operator is not
required to run a cement evaluation log on the casings if the operator:
(1) Had submitted a CEL for a type well that showed successful
cement bonding to protect against downhole fluid cross-migration; and
(2) Completes a subsequent well or wells with the same
specifications and geologic characteristics as the type well, and
approved in the same group sundry notice for a single field, and the
cementing operations monitoring data parallels those of the type well.
The BLM believes that where an operator has designed a type well to
be replicated across a field (and often from the same well pad), and
the cement monitoring data for each well and the CEL for the type well
show no indications of cement problems, the operator should be allowed
to construct the other wells in an approved group within the same field
without the expense and potential delays of running a CEL for each
well. The same well design and construction repeated within the same
field with the same monitoring data should yield the same result:
adequate cementing. After considering the comments, the BLM believes
that requiring each well to have a CEL for the surface casing as
originally proposed would impose costs and possibly delays on operators
without providing significant additional assurance of adequate
cementing to protect usable water aquifers. In view of the comments
that insist that a CBL on surface casing is unnecessary when the cement
returns to the surface, the BLM is also seeking comments on whether the
requirements to run a CEL on wells where there is no indication of an
inadequate cement job, as proposed in paragraphs 3162.3-3(e)(2) and
(e)(3), is appropriate, including specific information about the costs
and benefits of requiring CELs in such cases. Under new section 3162.3-
3(e)(4), for any well, if there is any indication of an inadequate
cement sheathing behind the casing such as, but not limited to, lost
returns, cement channeling, gas cut mud, or failure of equipment, the
operator would be required to notify the BLM within 24 hours of the
occurrence, followed by a written report within 48 hours. Furthermore,
the operator would be required to remedy the situation first following
the standard industry practice. When logging operations indicate that
the cement job is defective, either in the form of poor cement bonding
or communication between zones, a remedial cementing technique known as
squeeze cementing may be performed to establish zonal isolation. The
commonly used steps to remedy such problems include perforating the
casing at the defective interval and forcing, or ``squeezing,'' cement
slurry through the perforations and into the annulus to fill the voids.
In addition, squeeze cementing may be an effective technique for
repairing casing leaks caused by a corroded or split casing. The
objective is to restore the barrier integrity of the formations that
were disrupted by drilling. To confirm a good cement sheathing behind
the casing, the operator must run a CEL showing that usable water has
been isolated to protect it from contamination. If deemed necessary,
the BLM could require the operator to submit the CEL for BLM approval
prior to continued operations. At least 72 hours prior to commencing
hydraulic fracturing operations, the operator would be required to
submit to the BLM a signed certification indicating that the operator
corrected the inadequate cement job and documentation showing that
there is adequate cement bonding. These requirements were added because
the revised proposed rule has eliminated the requirement to submit a
CBL for each well for approval by the BLM prior to continuing
operations. Accordingly, where there are indications of a problem with
cementing, the BLM needs to have timely and complete information
showing correction of the problem. If an operator failed to report a
cementing problem, the BLM would utilize one or more of its existing
enforcement options. This could include: shutting down operations on
the well until the operator takes the appropriate corrective actions;
issuing an order of the authorized officer requiring remedial action;
or monetary assessments for failure to comply. The BLM would enforce
the appropriate action regardless of whether the original requirements
for the well included the running of a CEL. Also, the BLM would put a
high priority on witnessing that operator's operations on this and
future wells to ensure compliance with these proposed regulations,
Onshore Order Number 2, and the approved APD.
New section 3162.3-3(e)(5) would require operators to include in
the Subsequent Report Sundry Notice under section 3162.3-3(i) the
records and logs produced under sections 3162.3-3(e)(1) and (e)(2).
Section 3162.3-3(f) would require the operator to perform a
successful MIT before beginning hydraulic fracturing or refracturing
operations. This requirement is necessary to help ensure the integrity
of the wellbore under anticipated maximum pressures during hydraulic
fracturing operations. Wellbore integrity may be degraded over time,
and thus it is necessary to perform a MIT prior to each refracturing
operation.
Section 3162.3-3(f)(1) would require the MIT to emulate the
pressure conditions that would be seen in the proposed hydraulic
fracturing. This test would show that the casing is strong enough to
protect usable water and other subsurface resources during hydraulic
fracturing operations.
Section 3162.3-3(f)(2) would establish the minimum engineering
criteria for using a fracturing string as a technique during hydraulic
fracturing. The requirement to be 100 feet below the cement top would
be imposed to ensure that the production or intermediate casing is
surrounded by a competent cement sheath as required by Onshore Order
No. 2. The 100 foot requirement is required by some State statutes
(e.g., Montana Board of Oil and Gas Conservation, section 36.22.1106,
Hydraulic Fracturing) and is a generally accepted standard in the
industry. Testing would emulate the pressure conditions that would be
seen in the proposed hydraulic fracturing in order to ensure that the
casing used in the well would be robust enough to handle the pressures.
Section 3162.3-3(f)(3) would require the well to hold the pressure
for 30 minutes with no more than 10 percent pressure loss. This
requirement is the same standard applied in Onshore Order No. 2,
Section III.B.h., to confirm the mechanical integrity of the casing.
[[Page 31654]]
This language does not set a new standard in the BLM's regulations.
This test, together with the other requirements, would demonstrate if
the casing is strong enough to protect water and other subsurface
resources during hydraulic fracturing operations. The BLM believes that
all of these tests are important to show that reasonable precautions
have been taken to ensure the protection of other resources during
hydraulic fracturing operations.
Comments on Mechanical Integrity Testing
Some commenters objected to the cost of the requirement for an MIT
prior to hydraulic fracturing due primarily to the delay and the cost
of rig time. The BLM disagrees with this comment. A casing pressure
test is already required by Onshore Order No. 2. Section III.B.1.h. of
Onshore Order No. 2 requires that operators test all casing strings
below the conductor to 0.22 psi per foot of casing string length or
1,500 psi, whichever is greater, but not to exceed 70 percent of the
minimum internal yield. While the test pressure for the MIT may differ
from what is required by Onshore Order No. 2, there is no significant
increase in rig time required to run the MIT as proposed.
Mechanical integrity testing is a common hydraulic testing method;
operators typically conduct such tests after every surface- or
intermediate-casing cement job. Operators first perform a casing
pressure test to verify the mechanical integrity of the tubular string
and then drill out the casing shoe. Next, they perform a pressure
integrity test by increasing the internal casing pressure until it
exceeds the pressure that will be applied during the next drilling
phase. If no leakage is detected, the cement seal is deemed successful.
The BLM believes that performing a successful MIT prior to starting
hydraulic fracturing is essential to ensuring the casing and fracture
string (if used) are capable of withstanding the pressure used and
serves as an early indicator whether the applied pressures can be
successfully supported. No revisions to the initial proposed rule were
made as a result of this comment.
The BLM received some comments stating that an MIT is not needed on
every well and should only be required on wells that are more than 5
years old or if pressure exceeds 80% of casing yield. The BLM believes
that the requirements in section 3162.3-3(f)(1) of the revised proposed
rule are standard industry practice and are required to ensure the
casing is capable of withstanding the pressures applied during
hydraulic fracturing operations. No revisions to the revised proposed
rule were made as a result of this comment.
Some comments suggested that the BLM require the operator to
perform an MIT before and after hydraulic fracturing to ensure that
there were no casing failures during the hydraulic fracturing process.
No revisions to the revised proposed rule were made as a result of this
comment. Sections 3162.3-3(f)(1) and (f)(2) of this rule would require
the operator to test the casing and fracture string (if used) to the
maximum anticipated treating pressure. If the MIT is successful prior
to hydraulic fracturing and the treatment pressure does not exceed the
MIT test pressure, there is no reason to run another MIT after
treatment. The BLM believes that the tests required under this rule are
sufficient to show that the casing is strong enough to protect water
and other subsurface resources during hydraulic fracturing operations.
Some comments suggested changing the term ``MIT'' to ``pressure
testing.'' No revisions to the initial proposed rule were made as a
result of this comment. The BLM believes that the term ``Mechanical
Integrity Test'' is widely understood by industry, is used by many
State regulatory agencies, and accurately describes the intent of the
test. Nonetheless, we invite comments as to whether there are other
tests that would be equally effective as an MIT for confirming that
well casings will withstand the pressures of hydraulic fracturing
operations.
One comment recommended that the BLM should require reporting the
results of the MIT with the subsequent report rather than prior to
hydraulic fracturing. The BLM did not revise the rule as a result of
this comment because there is no specific provision in the revised
proposed rule that would require the operator to submit the MIT results
to the BLM prior to fracturing. A related comment suggested that the
BLM should be notified of any failures or anomalies in the MIT prior to
hydraulic fracturing. The BLM does not believe that a requirement to
notify the BLM of a failed MIT is necessary to ensure wellbore
integrity prior to fracturing. The revised proposed rule (section
3162.3-3(f)) would require a successful MIT prior to hydraulic
fracturing; therefore, if the MIT failed and the operator proceeded
with hydraulic fracturing operations, the operator would be in
violation of the rule and would be subject to enforcement actions. No
revisions to the initial proposed rule were made as a result of this
comment.
The BLM received some comments suggesting that the proposed 10
percent allowable loss in pressure during the MIT is excessive. No
revisions to the revised proposed rule were made as a result of this
comment. The proposed 10 percent allowable pressure drop for the MIT is
the same as the allowable pressure drop during the testing of casing
and blowout prevention equipment in Onshore Order No. 2. The allowable
pressure drop is included to set objective and enforceable standards of
what the BLM considers to be a successful test.
Section Discussion
Section 3162.3-3(g)(1) would require the operator to continuously
monitor and record the annulus pressure at the bradenhead and has been
revised to apply to refracturing as well as fracturing operations. The
pressure in the annulus between any intermediate casing and the
production casing must also be continuously monitored and recorded. The
pressure during the fracturing should be contained in the string
through which the fracturing fluid is being pumped. Unexpected changes
in the monitored and recorded pressure(s) provide an early indication
of the possibility that well integrity has been compromised and that
immediate action should be taken to prevent well failure. This
information is needed by the BLM to ensure that hydraulic fracturing
operations are conducted as designed. This information also shows that
fracturing fluids are going to the intended formation and not into
other geologic horizons such as aquifers. This section is different
from the proposal in that it would require monitoring and recording of
pressure between the annulus and any intermediate casing. This revised
proposed rule makes this distinction because monitoring and recording
of pressure in the annuli between all intermediate casings and the
production casing more accurately shows downhole conditions, whereas
the initial proposed rule required only monitoring and recording
pressure in the annulus between the production casing and the
intermediate string adjacent to the production string. Failure in other
casing strings would not have been identified. The revision is proposed
in order to detect potential failures of any casing string that may
contribute to cross zonal flow.
Section 3162.3-3(g)(2) has been revised to apply to fracturing and
refracturing operations and would require the operator to orally notify
the BLM as soon as possible, but no later than 24 hours following the
incident, if during the fracturing operation the
[[Page 31655]]
annulus pressure increases by more than 500 pounds per square inch over
the annulus pressure immediately preceding the fracturing. Within 30
days after the occurrence, the operator must submit a Subsequent Report
Sundry Notice (Form 3160-5, Sundry Notices and Report on Wells) to the
BLM containing all details pertaining to the incident, including
corrective actions taken. This information is needed by the BLM to
ensure that fracturing fluids are going into the formation for which
they were designed. The BLM also needs to obtain reasonable assurance
that other resources are adequately protected. An increase of pressure
in the annulus of this amount could indicate that the casing had been
breached during hydraulic fracturing. Consistent with the BLM's Onshore
Order No. 2, the operator must repair the casing should a breach occur.
This section is different from the initial proposed rule. The initial
proposed rule required the submission of the Subsequent Report Sundry
Notice within 15 days after the occurrence. The revised proposed rule
would require submission within 30 days after the occurrence. This
revision was made to this rule to reduce the number of reports required
from operators. The report can be part of the same Subsequent Report
Sundry Notice required in revised proposed section 3162.3-3(i).
Section 3162.3-3(h) would require the operator to store recovered
fluids in tanks or lined pits. This provision grants flexibility for
the operator to choose using either a lined pit or a storage tank. This
provision is necessary because flowback fluids could contain
hydrocarbons from the formation and could also contain additives and
other components that might degrade surface and groundwater if they
were to be released without treatment. This section is consistent with
existing industry practice and American Petroleum Institute (API)
recommendations for handling completion fluids, including hydraulic
fracturing fluids (see Section 6.1.6 of API Recommended Practice 51R,
Environmental Protection for Onshore Oil and Gas Production Operations
and Leases, First Edition, July 2009). Because the use of lined pits or
tanks for the storage of recovered fluids reasonably protects land and
water from spills or leaks of recovered fluids, the BLM believes that
this provision is consistent with FLPMA's mandate to prevent
unnecessary or undue degradation of the public lands and the BLM's
obligations to protect environmental quality and Indian trust
resources.
Typically, most of the hydraulic fracturing fluid that will be
recovered from a well is recovered before the well begins producing
significant quantities of oil or gas. Traces of the fracturing fluids,
however, may be produced for long periods of time thereafter, usually
with water from the formation. It is not the BLM's intent for the
proposed rule to displace Onshore Order No. 7 for disposal of produced
water. The BLM invites comments on the potential benefits of
distinguishing flowback fluid from produced water and suggested ways to
distinguish the two.
Commenters should consider that Onshore Order No. 7 allows for
temporary storage in reserve pits for up to 90 days, with the
possibility of an extension. Onshore Order No. 1 requires all pits to
be reclaimed within six months of well completion or well plugging,
with the possibility of a variance.
Additional conditions of approval for the handling of flowback
water may be placed on the operation by the BLM if needed to ensure
protection of the environment and other resources. The BLM recognizes
the ongoing efforts of States to regulate hydraulic fracturing
operations. This regulation would not preempt any State or tribal law
that might require use of such technologies as double-lined pits or
tanks as part of a reuse or recycling requirement.
Comments on the Handling of Recovered Fluids
Commenters expressed a variety of views on proposed section 3162.3-
3(f). That section would require storage of flowback fluids in lined
pits or tanks. Some commenters were critical of allowing storage of
flowback fluids in lined pits, stating that pits increase the
likelihood of accidental discharges, that pit liners may react with
flowback fluids and cause failures and seepage, that pits must be
fenced to exclude wildlife, and that the fluids stored in pits would
cause air pollution. Those commenters recommended that pits be double-
lined, that they be equipped with leak detection systems, or that
storage in pits be prohibited and that the rule should require flowback
fluid to be stored in tanks, or in a closed-loop containment and reuse
system. Some commenters were in favor of BLM's proposal to require a
plan for handling flowback fluids, as in proposed section 3162.3-
3(c)(6), but sought additional encouragement in the rule for injection
and recycling of those fluids.
Other commenters believed that requiring lined pits or tanks for
flowback fluids was appropriate. Some, though, argued that those
requirements were duplicative of the requirements of some State
regulations. Some commenters recommended that the rule simply adopt the
requirements of Onshore Order No. 7 for flowback pits.
The BLM shares commenters' concerns about contributions of pits to
air quality problems, and the possibility of failures, leaks, and
overflow events. The BLM is also concerned about excluding wildlife,
including migratory birds, from pits on well sites, but a separate
Instruction Memorandum has been issued and describes appropriate
fencing, netting, and other actions to help prevent wildlife and
livestock injury or mortality from various aspects of oil and gas
operations, including open pits. See the BLM's Instruction Memorandum
WO-IM-2013-033 of December 13, 2012. The BLM is also interested in
evaluating the costs of requiring flowback fluids to be stored in
closed tanks.
In a sampling of State regulations, it was found that most States
require flowback fluids to be stored in lined pits or tanks. One State,
California, requires storage in tanks, and another, New Mexico, allows
lined pits to be approved as a variance from requiring storage in
tanks. It also appears that some States, such as Texas and Oklahoma,
are encouraging the use of mobile recycling systems.
Onshore Order No. 7 allows disposal of produced water in unlined
pits in certain circumstances. The BLM does not believe that storage of
hydraulic fracturing flowback fluids in unlined pits is appropriate
because of the far greater volume of flowback fluids compared with
typical volumes of produced water, and because of the chemical
constituents of flowback fluids may pose different or increased risks
if they come into contact with surface water or groundwater.
The revised proposed rule at 3162.3-3(h) has not been materially
changed in response to the comments on the proposed rule. The revised
proposed rule would not preempt State laws that require the use of
tanks, or efforts to expand use of mobile recycling systems.
Some comments were also received requesting that the final rule
state that all flowback water be captured in tanks and removed from the
site without the use of pits. This would require that the BLM
distinguish flowback water from produced water and also require
additional tankage since flowback water is generally returned to the
surface mixed with water produced from the formation. The BLM seeks
comments on whether the following is an appropriate distinction: fluids
recovered from a hydraulically fractured well before it
[[Page 31656]]
begins production of oil or gas will be considered flowback and subject
to revised proposed rule section 3162.3-3(h); fluids recovered from a
hydraulically fractured well after it begins production of oil or gas
will be considered produced water and subject to Onshore Order No. 7.
The BLM is also interested in the public's views on whether such a
distinction should be in the regulation, or be issued as non-binding
guidance.
In view of comments raising concerns that flowback fluids present
hazards to the environment beyond those that can be controlled in lined
pits, the BLM is specifically requesting comments on whether the rule
should require flowback fluids to be stored only in closed tanks, and
not allow them to be stored in lined pits. Is the exclusive use of
tanks preferable for the handling of flow-flowback water from either an
environmental or economic perspective? Are there additional
environmental or economic concerns that should be considered as the BLM
considers a requirement for the use of tanks for the disposal of flow-
flowback waters? Another alternative would be for the rule to specify
that a lined pit must be equipped with a leak detection system, as is
required for lined pits for produced water under Onshore Order No. 7.
Some commenters advocated for requiring double-lined pits. The BLM asks
for comments on the costs and benefits of the foregoing alternatives
for storage of flowback fluids. Specific information about the
environmental and economic costs and benefits of those alternatives
would be most useful. Information on the prevalence of tank use versus
lined pits would also be helpful.
A number of comments were received on the proposed rule that raised
issues that are already addressed in other places in the BLM's Oil and
Gas operations regulations and the Onshore Orders. The Onshore Orders
may be viewed at: https://www.blm.gov/mt/st/en/prog/energy/oil_and_gas/operations/orders.print.html.
Section Discussion
Section 3162.3-3(i) has been reorganized from what was in the
proposed rule and would require the operator to submit to the BLM
certain information within 30 days after fracturing or refracturing
operations are complete. The information required by paragraph (i)(1)
of this section on the depth of the well, water volume used, and
information about the chemicals used in the fracturing fluid may be
submitted through FracFocus or another BLM-designated database, or in
the Subsequent Report Sundry Notice. If the information is submitted
through FracFocus, or another BLM-designated database, the operator
must specify whether the information is for a Federal or Indian well,
certify that the information is correct, and certify compliance with
applicable law. All other information required under paragraph (i)
would be submitted in the Subsequent Report Sundry Notice. If, for some
reason, the operator is unable to submit the information about the
chemicals through FracFocus or another BLM-designated database, the
operator must timely submit the required information directly to the
BLM. The BLM would determine if the hydraulic fracturing operation was
conducted as approved and would retain this information as part of the
individual well record and it would be available for use when the well
has been depleted and the plugging of the well is being designed. This
section would also make it clear that any information submitted by a
contractor or agent of the operator is considered to have been
submitted directly from the operator to the BLM. In other words, the
operator is responsible for information submitted by contractors or
agents. This section also would require the operator to submit
information to the BLM within 30 days after the hydraulic fracturing
operations are completed for each well, even if the BLM approved
hydraulic fracturing of a group of wells (see section 3162.3-3(c)).
Section 3162.3-3(i)(1) is new to the rule and would require that
the operator submit to the BLM the true vertical depth of the well,
total water volume used, and for each chemical used (including base
fluid) the trade name, supplier, purpose, ingredients, Chemical
Abstract Service Number (CAS ), maximum ingredient
concentration in additive (% by mass), and maximum ingredient
concentration in hydraulic fracturing fluid (% by mass). Total water
volume includes ``new'' water and any produced water or water reused or
recycled from prior hydraulic fracturing operations. The percent mass
value is the mass value for each component (Mc) divided by the value of
the entire fluid mass (Mt) times 100. (Mc/Mt)*100 = percent value. The
information should be based on the maximum potential for concentration,
and thus the total may exceed 100 percent by a reasonable, but minimal,
amount. The percent mass values should be for the entire stimulation
operation, not for the individual stages. Table 1 presents an example
of the kind of information that may be submitted.
Table 1--Sample Hydraulic Fracturing Fluid Product Component Information Disclosure
Well Identification/Location and Other Fracturing Information
----------------------------------------------------------------------------------------------------------------
Value Remarks
----------------------------------------------------------------------------------------------------------------
Fracture Date............................ Start mm/dd/yyyy............ Finish mm/dd/yyyy
State.................................... Wyoming.....................
County................................... Sublette....................
API Number............................... XX-XXX-XXXX.................
Operator Name:........................... XYZ COMPANY.................
Well Name and Number..................... Name and Number.............
Longitude................................ -109.123456.................
Latitude................................. 42.54321....................
Production Type.......................... Gas, wet gas, oil...........
True Vertical Depth (TVD) in feet........ 14,193......................
Total Fluid Volume Injected (gal).... X,XXX,XXX...................
----------------------------------------------------------------------------------------------------------------
[[Page 31657]]
Hydraulic Fracturing Fluid Composition
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chemical Max. ingredient Max. ingredient
abstract concentration in concentration in
Trade name Supplier Purpose Ingredients service number additive (% by HF Fluid (% by Comments
(CAS ) mass) mass)**
--------------------------------------------------------------------------------------------------------------------------------------------------------
SAND........................ XYZ Corp....... Proppant....... Crystalline 14808-60-7..... 100.00 7.48357
silica, quartz.
LGC-39 UC................... XYZ Corp....... Liquid Gel Polysaccharide. Confidential 60.00 0.16265
Concentrate. Business
Information.
--------------------------------------------------------------------------------------------------------------------------------------------------------
** A long list of other materials may follow
The information required in paragraph 3162.3-3(i)(1) may be
submitted directly to the BLM or through FracFocus or another BLM-
designated database service. Substantially similar information required
to be submitted by this section was proposed in sections 3162.3-3(g)(4)
and (g)(5). The required information has been restated to conform to
the fields for disclosure provided by FracFocus. Disclosure through
FracFocus, though voluntary, would save operators from submitting data
both to FracFocus and to the BLM in the States that require posting to
FracFocus. It would also provide to the public timely information from
a single Web site on fracturing operations on Federal, Indian (under
these regulations), and non-Federal/non-Indian wells (through State law
or voluntary submission). If the operator experiences any problem with
submitting required information through FracFocus, it should notify the
BLM promptly. The operator would be required to submit the information
to the BLM within 30 days after completing the hydraulic fracturing
operation, whether or not it is able to submit it through FracFocus.
Some commenters on the proposed rule were critical of FracFocus
because of limitations in its ability to search and aggregate data
across individual wells. The BLM has been in discussions with persons
responsible for FracFocus and expects that recent and foreseeable
improvements to the system will address many of these concerns.
Section 3162.3-3(i)(2) would require the operator to submit
information on the actual measured depth of perforations or the open-
hole interval (i.e., non-cased wellbore), the source and location(s) of
the water used in the hydraulic fracturing fluid, and actual pump
pressures. This information identifies the producing interval of the
well and would be available for use when the well has been depleted and
plugging of the well is being designed. The level of detail of the
required information about the sources of the water used has been
reduced from that in initial proposed section 3162.3-3(g)(1), because
the deleted information (access route and transportation method) would
not be useful to the BLM after the conclusion of operations. Requiring
a subsequent report on the actual sources of water used, however, would
allow the BLM to check the accuracy of the pre-fracturing notice and to
remain informed of important trends in sourcing of water for hydraulic
fracturing operations.
Section 3162.3-3(i)(3) would require submission of information on
the actual surface pressure and rate at the end of each fluid stage,
and the actual flush volume, rate, and final pump pressure. This
information is needed by the BLM for it to ensure that the maximum
allowable pressure was not exceeded at any stage of the hydraulic
fracturing operation.
Section 3162.3-3(i)(4) would require submission of information
pertaining to the actual, estimated, or calculated fracture length,
height, and direction. This information is required so that the BLM can
verify that the intended effects of the hydraulic fracturing operations
remain confined to the petroleum-bearing rock layers and will not have
unintended consequences on other rock layers or aquifers. The revised
rule requires an operator to indicate the direction of hydraulic
fracture. This was not in the initial proposed rule, and is necessary
for the BLM to have accurate information pertaining to the extent and
direction of the fracturing operations.
Section 3162.3-3(i)(5) would require submission of the following
information concerning the handling of recovered fluids:
(1) The volume of fluid recovered during flowback, swabbing, or
recovery from production facility vessels;
(2) The methods of handling the recovered fluids, including, but
not limited to, transfer pipes and tankers, holding pond use, re-use
for other stimulation activities, or injection; and
(3) The disposal method of the recovered fluids, including, but not
limited to, injection, hauling by truck, or transporting by pipeline.
The disposal of fluids produced during the flowback from the hydraulic
fracturing process must follow the requirements set out in Onshore
Order No. 7, Disposal of Produced Water, Section III. B.
The information is necessary to assure that the lands and waters
have not been contaminated by flowback fluids. The proposed regulation
at 3162.3-3(g)(10) included a requirement for information on pipeline
requirements. Pipeline systems are not ordinarily used for transfer of
flowback fluids. This revised proposed rule at section 3162.3-
3(h)(5)(ii), instead would require information on transfer pipes and
tankers.
Section 3162.3-3(i)(6) would state that if the actual operations
deviate from the approved plan, the deviation(s) must be documented and
explained. Understanding the complexities of hydraulic fracturing, the
BLM expects there often to be slight differences between the proposed
plan and the actual operation. The explanation would provide the BLM
with a better understanding not only of the particular well, but also
of the technologies used in various geologic areas.
Section 3162.3-3(i)(7) is a renumbered section that would require
the operator to submit to the BLM a certification signed by the
operator that:
(1) Wellbore integrity was maintained prior to and throughout the
hydraulic fracturing operation, as required by paragraph (b) of this
section. This requirement was originally proposed in section 3162.3-
3(h)(9). It would also require the operator to certify that it complied
with the requirements of paragraphs (e), (f), (g) and (h) of this
section; and
(2) For Federal lands, the hydraulic fracturing fluid used complied
with all applicable permitting and notice requirements as well as all
applicable Federal, State, and local laws, rules, and regulations; or
(3) For Indian lands, the hydraulic fracturing fluid used complied
with all applicable permitting and notice requirements as well as all
applicable
[[Page 31658]]
Federal and tribal laws, rules, and regulations.
Operators must certify that they have complied with the
requirements for monitoring cementing operations, mechanical integrity
testing, and monitoring during fracturing operations; the accuracy of
these certifications will be checked through the submission of the
monitoring and testing data as required in section 3162.3-3(i)(8).
Assurances of wellbore integrity are critical for knowing whether
further inquiries are needed to assess any environmental contamination.
The certification of compliance with applicable permitting and notice
requirements was in the proposed regulation both for the notice of
intent and for the subsequent operations. This rule would require only
that the certification be included with the Subsequent Operations
Sundry Notice.
In response to comments provided in meetings with tribal
representatives, in this revised proposed rule, the certification
required for Indian lands is detailed separately from the certification
required for Federal lands. Consistent with the overall approach of
this rule, the revision is to clarify that this part does not apply
State or local law to Indian lands. This section does not specify which
laws apply on Indian or on Federal lands, but only the necessary
certification.
Section 3162.3-3(i)(8) is also new to the revised proposed rule and
it would require the operator to submit evidence supporting the
information required in paragraphs (e)(1), (e)(2), and (f) of this
section, including the cement operations monitoring report, any CEL,
and the result of any MIT. The initial proposed rule would have
required submission to the BLM of cement bond logs prior to completing
operations, but that requirement has been revised in response to
comments that the costs of delays for CBLs would be excessive. As
mentioned above, requiring the monitoring and testing data, including
any CELs after operations, will be sufficient to check the accuracy of
operators' certification that the operations were in compliance with
the rule.
New section 3162.3-3(i)(9) would provide that the BLM may require
submission of data substantiating the information required in paragraph
(i) of this section. The required information would provide a more
complete record of the well. If there is an indication that a closer
examination is necessary, the operator would provide the authorized
officer with the data relevant to the information reported with the
Subsequent Operations Sundry Notice.
Comments on Information That Must Be Provided to the BLM After
Completed Operations
The BLM received some comments regarding the disclosure through the
FracFocus Web site of chemical constituents used by operators during
hydraulic fracturing operations. This online database includes
information from oil and gas wells in roughly 12 States and includes
information from over 500 companies. The commenters were divided
between those supporting disclosure using FracFocus and those opposed
to its use. Supporters of FracFocus indicated it was a common database
which many State agencies already use, that the BLM does not have the
necessary manpower to process and post information on their own, and
that FracFocus allows for transparency of data to the public.
The BLM agrees with these comments and has proposed revisions to
the proposed rule at section 3162.3-3(i) that would recognize FracFocus
as an approved method of disclosing chemicals. However, the BLM would
also accept other methods of disclosure, including the submittal of a
Sundry Notice, or the posting of the information in another BLM-
designated database. The revised proposed rule makes it clear that an
operator should not disclose any information on the Subsequent Report
Sundry Notice or on FracFocus that it believes to be exempt from
disclosure under the Trade Secrets Act or other Federal law. However,
under the revised proposed rule, the BLM would have the authority to
require the submittal Trade Secret information on a case-by-case basis.
A more detailed discussion of the Trade Secrets Act is provided under
that section of the preamble.
Commenters objecting to the use of FracFocus were concerned that
the database lacks search capability or filtering and sorting of
information, provides incomplete disclosure, and that copyright
protection prohibits data from being copied. Commenters also expressed
concerns that FracFocus is not updated in a timely manner, needs a
dedicated funding source independent from the oil and gas industry, and
that FracFocus is not a government run Web site and not subject to
Federal laws or oversight. Some comments proposed that the BLM develop
an independent government-run database for chemical disclosure.
While the BLM did not revise this rule in response to these
comments, it understands that FracFocus is in the process of improving
the database with enhanced search capabilities to allow for easier
reporting of information. In addition, information submitted to the BLM
through FracFocus will still be required to comply with this rule. The
BLM believes that working with the Groundwater Protection Council and
the Interstate Oil and Gas Compact Commission to improve FracFocus will
be more cost-effective and beneficial than creating a separate database
for Federal and Indian wells.
The BLM received some comments that suggested that the rule should
require the reporting of the maximum concentration of each constituent
in the hydraulic fracturing fluid instead of the actual concentration,
as was stated in the proposed rule. Commenters also suggested that the
concentration in percent of total fluids should be reported. The BLM
agrees with these suggestions because by using maximum concentration,
the information is consistent with the data fields in FracFocus and the
requirements of this rule. Most hydraulic fracturing operations are
conducted on one section or segment at a time along the length of the
horizontal well bore within the target zone. Operators may adjust or
vary the actual concentrations of chemicals in later fracturing
segments based on results in the earlier segments. In such a situation,
there may be no one concentration of certain chemicals, but the maximum
concentration could be readily reported. In addition, the maximum
concentration expressed in percent of total fluid would be helpful in
determining the toxicity of the fluid in case of accidental spill or
exposure. For these reasons, the revised proposed rule (section 3162.3-
3(i)(1)) would require the maximum concentration of each chemical used
in both the additive and in the hydraulic fracturing fluid.
The BLM received some comments objecting to the amount of
information required in the subsequent report required in section
3162.3-3(g). Some commenters suggested that the reporting of chemical
constituents should include only those constituents that were added and
not chemicals that could be native to the target zone. One comment
objected to the requirement that the subsequent report must be
submitted to the BLM and suggested that the operator maintain the
information and submit it only upon request. Some comments stated that
not all chemicals have a Chemical Abstracts Service Registry Number
(CAS) assigned to them and, therefore, should not be required.
The BLM did not change the revised proposed rule as a result of these
comments because the information required is important to its overall
goal of ensuring public safety and environmental protection.
[[Page 31659]]
The BLM received some comments that more information should be
required in the subsequent report, including the volume of the base
fluid and each chemical used and proppants. The BLM did not revise the
revised proposed rule as a result of these comments because the
information already required is sufficient to ensure public safety and
environmental protection.
The BLM also requests comments on whether, if the State (for
Federal lands) or the tribe (for Indian lands) requires submission of
the same or more information about the chemical constituents of
hydraulic fracturing fluids, and provides that the information would be
publicly available (except for trade secrets protected under State or
tribal law), the BLM should deem compliance with those disclosure
requirements within 30 days from completion of hydraulic fracturing
operations to be compliance with proposed section 3162.3-3(i)(1). Such
an amendment would reduce the compliance burden on operators in some
areas, compared with the revised proposed section 3162.3-3(i)(1).
However, if the State or the tribe does not require posting of the data
on FracFocus, it could be less convenient for the public or the BLM to
obtain the data, or to compare data across jurisdictions.
The BLM received some comments that stated an operator cannot
certify actions of a third party or a contractor. The BLM disagrees
with this comment. Existing regulations (43 CFR 3162.3(b)) specify that
an operator is responsible for the conduct of every contract service
provider on the operator's well site and lease, including the on-site
activities and regulatory compliance of any hydraulic fracturing
contractor. This requirement in the revised proposed rule is consistent
with existing Federal regulations; therefore the BLM did not revise
this rule as a result of this comment.
Some comments stated that the rule needs clarification on how to
certify that wellbore integrity has been maintained throughout the
hydraulic fracturing process. Certification of wellbore integrity would
include certification of the monitoring requirements proposed in
section 3162.3-3(f)(2). No revisions to the initial proposed rule were
made as a result of this comment.
The BLM received some comments that said the rule should require
operators to certify that they have complied with all Federal, State,
and local laws. The BLM did not revise the rule as a result of these
comments. The BLM believes, since all lease exploration, development,
construction, production, operations, and reclamation activity is
required to be conducted in a manner which conforms to all applicable
Federal, State, and local laws and regulations, that requiring
additional certifications, as suggested, would be redundant and cause
unnecessary delays in approval and processing of APDs and sundry
notices. All lease operations are already subject to the terms of the
lease and its stipulations, the regulations of 43 CFR part 3100,
Onshore Oil and Gas Orders, NTLs, the approved APD, and any written
instructions or orders of the BLM authorized officer. In addition, the
initial proposed rule and the revised proposed rule at section 3162.3-
3(i)(7) would require the operator to certify that the hydraulic
fracturing fluid used complied with all applicable permitting and
notice requirements as well as all applicable tribal or Federal, State,
and local laws, rules, and regulations. The BLM did not revise the rule
as a result of this comment. However, we note that BLM would not
normally take enforcement action based on an operator's innocent use of
chemicals inadvertently mis-labeled by the manufacturer. BLM does not
want to create an incentive in the rule that would make mis-labeled
chemicals more valuable than properly labeled chemicals.
Section 3162.3-3(j) is substantially different from the proposed
rule. This section would notify the operator of procedures it needs to
follow to identify information otherwise required to be submitted under
this section that the operator believes to be exempt, by law, from
public disclosure. The operator should not disclose any particular
information on the Subsequent Report Sundry Notice or through FracFocus
that it believes to be exempted from public disclosure by the Trade
Secrets Act or other Federal law. Instead, the operator should identify
that particular information as a trade secret. For any information
submitted under section 3162.3-3(j)(1), the operator would be deemed to
have waived any right to protect that information from public
disclosure. For the claimed exemption of any information required under
paragraph (i)(1) of this section, the operator would be required to
submit to the BLM an affidavit that:
(1) Identifies the Federal statute or regulation that prohibits the
public disclosure;
(2) Affirms that the information is not publicly available;
(3) Affirms that the information is not required to be publicly
available under any applicable law;
(4) Affirms that the release of the information would likely harm
the operator's competitive position; and
(5) Affirms that the information is not readily apparent through
reverse engineering.
For information which the operator does not believe to be exempt
from public disclosure, this regulation is similar to the proposed
regulations. Under section 3162.3-3(j)(2), any information provided in
a Subsequent Report Sundry Notice or through FracFocus or other
designated database would not be protected by the Trade Secrets Act or
other Federal law.
For information claimed to be exempt from public disclosure, this
rule is different from the proposed rule's exemption requirements. The
proposed regulation would have required operators to submit the
identities of all the chemicals used in the fracturing operations, to
segregate the information the operator considered to be exempt from
disclosure, and to justify the exemption. This rule does not require
submission to the BLM information exempt by law from public disclosure.
Instead, under section 3162.3-3(j)(1), the operator would submit an
affidavit similar to the one required by regulations in the State of
Colorado. If the affidavit is complete, it is possible that the
operator may not be asked to submit any additional information
regarding the claimed trade secrets. The BLM would have the discretion
to require the operator to submit the undisclosed information for the
BLM's review. Also, the BLM retains the discretion to adjudicate
whether the undisclosed chemicals are exempt from public disclosure. If
the BLM requested the information and determined that the information
is exempt from disclosure, it would be kept confidential to the extent
allowed by law.
Comments On Information Claimed To Be Exempt From Public Disclosure
Some commenters addressed the BLM's management of information about
chemicals used in hydraulic fracturing operations. The proposed
regulation would have required operators to provide information
identifying all of the chemicals used in hydraulic fracturing fluids.
For information that operators believed to be exempt from public
disclosure under Federal law (referred to here as ``trade secrets''),
the proposed regulation would have required operators to submit that
information to the BLM, mark that information as a trade secret and
provide a justification for not releasing that information to the
public. A commenter noted that not all States
[[Page 31660]]
with oil and gas operations require public disclosure of the chemicals
used in hydraulic fracturing fluids and that those that do require
public disclosure are not uniform in their requirements. Some
commenters wanted the BLM to provide for disclosure of trade secrets to
the public, either upon demand of health officials or first responders
or at the request of any member of the public. Other commenters wanted
additional assurances that trade secrets would be kept confidential, or
objected to providing trade secret information to the BLM, and some
stated that uncertainty in protection of trade secrets could stifle
innovation.
The Federal Trade Secrets Act makes it a crime for any Federal
employee to make an unauthorized disclosure of a trade secret. See 18
U.S.C. 1905. The BLM lacks statutory authority to exclude hydraulic
fracturing chemicals by regulation from the scope of the Trade Secrets
Act. A commenter argued that the general rulemaking authority of the
Secretary found in FLPMA, the Mineral Leasing Act, and the Indian
mineral leasing statutes is sufficient for the BLM to require public
disclosure of all chemicals without regard to the Federal Trade Secrets
Act. The judicial opinions cited by that commenter, though, are
distinguishable because the statutes at issue in those cases clearly
contemplated public disclosure, and thus provided the necessary legal
authorization for disclosure. The commenter's assertion that more
information provided to the public would assist the BLM in its
statutory duties does not render disclosure of operators' trade secrets
``authorized by law.''
Some States that require submission of trade secret information
about hydraulic fracturing chemicals have laws which allow disclosure
under certain circumstances to medical providers, public health
officials, land owners, or first responders. The Federal Trade Secrets
Act, however, does not provide for such exceptions.
The BLM believes that the initial proposed rule requiring operators
to disclose trade secret information with justification for protecting
each piece of information and requiring the BLM to maintain the
confidentiality of all trade secret chemicals would not be the best
solution. It would increase paperwork burdens on operators, and
custodial requirements for the BLM. Because the BLM could not reveal
trade secret information, the benefits of requiring operators to submit
all such information would be limited. Revised section 3162.3-3(j)
would instead instruct operators not to submit trade secret information
with their disclosure of non-trade secret chemical information. Rather,
operators claiming that some chemical information is a trade secret
would withhold the information and submit an affidavit, modeled on the
one used by the State of Colorado, to affirm that the undisclosed
information is entitled to protection from public disclosure. The
original affidavit may be submitted to the BLM with the subsequent
report sundry notice within 30 days of completion of hydraulic
fracturing operations, or an electronic version acceptable to the BLM
field office may be submitted within that time. The electronic version
would have the same legal effect as an original affidavit.
The operators would keep the undisclosed information for 6 years,
under existing 43 CFR 3162.4-1(d). The BLM would have the discretion to
require any operator to provide the withheld information. The BLM might
demand withheld chemical information for reasons that could include the
need to assist in tracing the origin of chemicals in a possible
contamination event or to assure that operators are not claiming trade
secret protection without justification.
Some commenters asserted that various engineering and construction
features of oil and gas wells may be deserving of trade secret
protection. For information, other than that required in revised
proposed section 3162.3-3(i)(1), believed to be protected from public
disclosure, the submitter must comply with the existing regulations at
43 CFR 3100.4. The procedure in revised proposed section 3162.3-3(j)
applies only to the information required in revised proposed section
3162.3-3(i)(1).
Some commenters directed the BLM's attention to statutes such as
the Occupational Safety and Health Act and the Emergency Response and
Community Right to Know Act, and to regulations promulgated by other
Federal agencies under the authority of such Acts. Those statutes,
though, do not authorize the BLM to regulate the information required
under those programs or to authorize disclosure of trade secrets. The
revised proposed rule, however, would not interfere with other Federal
agencies administering their programs, and would not preempt applicable
State, local, or tribal laws that might require operators or other
agencies to make chemical information available.
Other commenters asserted that operators should not be responsible
for asserting and justifying trade secret protection for chemicals
selected by service contractors. On the contrary, operators are
responsible for all operations on their well sites and for compliance
with all of the BLM's operating and reporting regulations. Some
commenters believed that 10 days notice of a decision by the BLM before
information would be released to the public was not sufficient to
obtain temporary relief from a court. However, ten days is the notice
for such decisions under the Department's FOIA regulations at 43 CFR
4.23(g). Some commenters suggested that trade secret issues should be
centrally coordinated within the agency rather than be subject to field
office case-by-case determinations. Trade secret issues are inherently
specific to technologies, well locations, fracture zones, and times.
The BLM will address trade secret issues at the most appropriate level
of its organization, but that does not need to be specified in
regulation.
Section Discussion
Under new section 3162.3-3(j)(4), information that the operator
claimed to be exempt from disclosure would be required to be maintained
in the operator's records for 6 years after the completion of the
hydraulic fracturing operations, by referring to existing regulations
at 43 CFR 3162.4-1(d). That time period will assure that records are
available, but should not be unduly burdensome for operators. Section
3162.3-3(j)(4) has been added because the revised proposed rule has
eliminated the requirement that operators routinely report information
on trade secret chemicals to the BLM. In order for the BLM to have
access to the withheld information, the rule needs a mandatory
retention requirement. Existing section 3162.4-1(a) requires retention
of ``accurate and complete records with respect to all lease
operations,'' and subsection (d) of that section requires those records
be retained for 6 years from the date they were generated. The
reference to section 3162.4-1(d) is to provide consistency for
operators. The BLM, however, is interested in comments with
environmental and economic information that would show that another
time period would be more appropriate.
Section 3162.3-3(k) would provide the operator with a process for
requesting a variance from the minimum standards of this regulation.
Variances apply only to operational activities, including monitoring
and testing technologies, and do not apply to the actual approval
process. The revised proposed rule adds a provision allowing the BLM to
designate a variance applicable to all wells in a field, a basin,
[[Page 31661]]
a State, or within Indian lands. Such a variance would be based on the
BLM's determination that the variance will meet or exceed the
effectiveness of the regulation and would allow the BLM to adapt the
regulatory requirements to the unique geology of an area. It would also
be another way that the BLM could defer to a standard, technology, or
process required or allowed by State or tribal law that meets or
exceeds the effectiveness of the revised proposed rule. Under section
3162.3-3(k)(1) a request for a variance would be required to
specifically identify the regulatory provision of this section for
which the variance is being requested, explain the reason the variance
is needed, and demonstrate how the operator will satisfy the objectives
of the regulation for which the variance is being requested.
Section 3162.3-3(k)(2) states that the BLM must make a
determination that the variance request meets or exceeds the objectives
of the regulation. For example, an operator could request a variance
from the requirement to monitor pressure in the annulus between any
intermediate casing string and the production string because the last
intermediate string was run as a liner and did not extend to the
surface. The BLM could grant a variance in this situation because
monitoring the annulus between the production casing and an
intermediate string that did extend to the surface meets the objective
of ensuring mechanical integrity is maintained during the hydraulic
fracturing operation. This variance provision is consistent with
existing BLM regulations such as Onshore Order Number 1 (see Section X.
of Onshore Order No. 1).
Section 3162.3-3(k)(3) would state that a variance under this
section does not constitute a variance to provisions of other
regulations, laws, or orders.
Section 3162.3-3(k)(4) makes clear that the BLM has the right to
rescind a variance or modify any condition of approval due to changes
in Federal law, technology, regulation, field operations,
noncompliance, or other reasons. The BLM would intend for an operator
to rely on a variance, and thus would not expect to rescind it. When
BLM finds that rescinding a variance is necessary, ordinarily, the
BLM's rescission of a variance would be effective only prospectively.
Conceivably, an operator might obtain a variance through such
misrepresentations that it must not continue to benefit from the
variance, or a variance is issued in violation of a statute or causes
such significant harm that it must be rescinded retroactively, but such
situations should rarely occur.
Section 3162.5-2(d) would remove the references to fresh water and
removes the phrase ``containing 5,000 ppm or less of dissolved
solids.'' This rule would require the operator to isolate all usable
water and other mineral bearing formations and protect them from
contamination. This language does not set a new standard in the BLM's
regulations and does not create new compliance requirements for those
operating on public and Indian lands. Since 1988, Onshore Order No. 2,
Section II.Y., has defined usable water and at Section III.B. has
required the operator to ``protect and/or isolate all usable water
zones.'' Revised proposed section 3162.5-2(d) brings these regulations
into conformity with Onshore Order No. 2, and provides the appropriate
standard for control of wells, including hydraulic fracturing
operations. Properly constructed and cemented production casing, and
where appropriate, intermediate casing, will in most cases provide
effective isolation of usable water and other mineral-bearing
formations below the surface casing.
IV. Procedural Matters
Federal and Indian Oil and Gas Leasing Activity
To understand the context of the costs and benefits of this rule,
BLM includes background information concerning the BLM's leasing of
Federal oil and gas, and management of Federal and Indian leases. This
analysis explains the basis for the conclusions related to the
procedural matters sections that follow. The BLM Oil and Gas Management
program is one of the largest mineral leasing programs in the Federal
Government. At the end of fiscal year (FY) 2012, there were 48,699
Federal oil and gas leases covering 37,792,212 acres. For FY 2012,
there were 92,583 producible and service drill holes and 99,015
producible and service completions on Federal leases. In FY 2012,
onshore Federal oil and gas leases produced about 118 million barrels
(Bbl) of oil, 2.81 billion Mcf (thousand cubic feet) of natural gas,
and 2.84 billion gallons (Gal) of natural gas liquids, with a
production value of almost $23 billion and generating royalties of
almost $2.6 billion. Oil and gas production from Indian leases was
almost 29 million barrels of oil, 256 million Mcf of natural gas, and
155 million gallons of natural gas liquids, with a production value of
$3.4 billion and generating royalties of $561 million.
Table 2--Federal and Indian Oil and Gas Production and Royalties, Fiscal Year 2012
----------------------------------------------------------------------------------------------------------------
Sales value ($ Royalty ($
Sales volume million) million)
----------------------------------------------------------------------------------------------------------------
Federal Leases:
Oil (Bbl).......................................... 118,142,826 $10,442 $1,275
Gas (Mcf).......................................... 2,806,572,692 9,258 976
NGL (Gal).......................................... 2,839,924,280 2,947 298
--------------------------------------------------------
Subtotal....................................... ................. 22,648 2,550
========================================================
Indian Leases:
Oil (Bbl).......................................... 28,989,309 2,441 424
Gas (Mcf).......................................... 256,176,345 762 116
NGL (Gal).......................................... 155,313,421 183 21
--------------------------------------------------------
Subtotal....................................... ................. 3,386 561
----------------------------------------------------------------------------------------------------------------
Source: Office of Natural Resource Revenue, Federal Onshore Reported Royalty Revenue, Fiscal Year 2012 and
American Indian Reported Royalty Revenue, Fiscal Year 2012.
[[Page 31662]]
Estimating Benefits and Costs
This analysis estimates the potential costs and benefits that would
occur as a result of the rule. Therefore, this analysis measures the
impacts in relation to the current operating environment (or the
baseline).
In analyzing the costs and benefits of the rule, it is important to
differentiate between the activities that operators currently conduct
and those additional activities that the rule would compel. This change
in behavior provides the basis of the cost and benefit estimates.
OMB Circular A-4 recognizes that not all benefits and costs can be
described in monetary or even in quantitative terms. In such cases, the
circular directs agencies to present any relevant quantitative
information along with a description of the unquantifiable effects.
Measuring the Incremental Change
Many of the provisions in the rule are conducted voluntarily by
operators as a matter of company practice or standard industry
practice. Operators have a vested interest in ensuring that wells are
constructed properly to avoid problems that might jeopardize their
investment. As a matter of industry practice, operators typically
perform the following tasks:
Develop a plan for the hydraulic fracturing operation;
Monitor the cementing processes;
Cement the casing to protect water zones;
Conduct pressure tests on casing strings during the
drilling process or before hydraulic fracturing operations;
Maintain drill logs identifying usable water zones;
Run CBLs and/or other evaluation logs on the production
casing and sometimes on the intermediate casing, if formations of
interest that are above the producing zone or to maintain compliance
with State regulations, State permit requirements, or Federal permit
requirements;
Monitor annulus pressures during the hydraulic fracturing
operation; and
Manage the flowback of fluids.
Some practices required in the rule are already conducted by
operators in order to comply with existing applicable State regulations
or requirements. Such State regulations often dictate how an operator
cements a well, what tests or logs it conducts, how it handles
flowback, or whether it must disclose the chemical contents of the
hydraulic fracturing fluid. In addition to regulations, states may
place requirements in the drilling permits as conditions of approval.
Some of the provisions in the rule repeat existing Federal
requirements. Operators on Federal and Indian lands are already in
compliance with those provisions, and therefore the rule does not pose
an additional burden. For example, the BLM has casing and cementing
requirements to protect and/or isolate usable water zones, found in
Onshore Order No. 2, that are consistent with the final rule. Operators
on Federal and Indian leases who are drilling in compliance with
Onshore Order No. 2 would also be in compliance with this rule;
accordingly the rule poses no additional burden for drilling and
cementing operations, but does require testing and reporting to assure
that usable water zones are isolated. Like State regulatory
authorities, the BLM or a tribe may also place requirements on
operators as a condition of approval for the drilling permit. Where
appropriate and possible, the analysis does not consider impacts in
areas where operators already adhere to the rule's provisions as a
matter of voluntary practice or regulatory compliance with existing
Federal, tribal or State regulations or requirements in conditions of
approval.
Costs Framework
To examine the costs of the rule, the analysis considers the number
of hydraulic fracturing operations that would be subject to the various
requirements and the costs of the various requirements. While the rule
would apply to all hydraulic fracturing operations on Federal and
Indian lands, specific provisions in the rule may apply only to a
subset of those operations. For example, the rule requires Subsequent
Report (SR) Sundry submissions for all hydraulic fracturing operations.
However, the number of required NOI Sundry requests and the CELs
conducted would be fewer.
The three key components to the cost formulation are the estimated
number of hydraulic fracturing operations, the applicability of
provisions to those operations, and the compliance costs to satisfy the
provisions. Lower estimates in either of these areas would lead to
lower estimates of the total costs of the rule. Likewise, higher
estimates would lead to higher estimated total costs.
Protecting usable water: The BLM already requires casing and
cementing to protect usable water zones that are consistent with the
final rule. Therefore, the rule does not pose an additional burden to
operators.
Pressure Testing Requirement: The pressure testing requirement is
consistent with standard industry practice, State regulations, and BLM
regulations. The requirement does not pose an additional burden to
operators.
Pit liner or storage tank requirement: The requirement to manage
flowback in lined pits or storage tanks is consistent with almost all
existing State regulations in States where new oil and gas activity is
occurring on BLM-managed lands. The requirement would pose an
additional burden to operators only on Federal and Indian leaseholds in
States or on Indian lands without existing requirements and for those
operators that do not voluntarily comply.
Disposal of flowback: The revised proposed rule would require that
operators comply with applicable laws and is consistent with Onshore
Order No. 7 disposal requirements for produced water. We do not expect
that these provisions will pose additional burdens to operators.
Cement evaluation logs on casing strings that protect usable water:
The rule has a provision to conduct CELs on the casing strings that
protect usable water. The applicable casing strings include the surface
casing and sometimes the intermediate casing. Operators do not
typically run CELs to evaluate the cement behind the surface casing, so
the rule would require an additional step and cost in the drilling
process. Not all wells require intermediate casing, and wells that
require intermediate casing may do so for reasons other than to protect
usable water. In addition to requiring a CEL on the surface casing of
type wells and wells not associated with a type-well development
proposal, the rule would compel CELs on intermediate casing that
protects usable water, and further, is deemed to compel CELs only on
those intermediate casings where the operator would not otherwise
conduct a CEL in compliance with State regulations or conditions of
approval or do so voluntarily.
Subsequent wells under a type well approval: Under the revised
proposed rule, not all wells would be subject to the CEL requirement.
The subject activity should reflect the number of CELs on single wells
and on type wells, but not for the subsequently drilled wells under a
type well approval.
Requiring a CEL when there is an indication of inadequate
cementing: Under the rule, operators on all wells (single wells, type
wells, and subsequent wells to a type well) are required to run a CEL
when there is an indication of inadequate cementing of a casing string
that protects usable water. The BLM and many State regulations and
requirements have established protocols for remedial actions in the
event of inadequate cementing. Those protocols require operators to
remediate
[[Page 31663]]
to the authorized officer's satisfaction and where the regulatory
authority may request results from a CEL. For example, Onshore Order 2
requires that operators perform remedial cementing if cement is not
circulated back to the surface for the surface casing (Section
III.B.1.c). Onshore Order 2 also requires an additional pressure test
or remedial action as specified by the authorized officer if a pressure
test indicates that casing strings do not meet minimum standards
(Section III.B.1.h). Onshore Order 2 lists other minimum standards and
corrective actions, including some that require logging or testing,
remedial cementing, and actions specified by the authorized officer.
Measuring the costs of a CEL: The rule introduces a new step (or
steps) to the drilling process, depending on the well. This new step
potentially poses an additional cost burden to operators for the costs
of the CEL and the costs to maintain idle drilling equipment if the
drilling process is delayed.
After cementing the casing, operators must wait for a period of
time for the cement to harden before conducting any well tests and
drilling the plug. The BLM requires operators to wait until the cement
at the casing shoe reaches a compressive strength of 500 psi. States
generally have compressive strength standards similar to the BLM's. For
example, the State of Montana requires operators to wait 8 hours and
New Mexico requires operators to wait anywhere from 8 to 18 hours.
While waiting for the cement behind the surface casing to set,
operators will install other required equipment on the well, including
blowout preventers. After the cement has hardened sufficiently and the
operator has satisfied Federal or State requirements, operators would
normally conduct a pressure test on the surface casing, drill through
the plug, drill for an additional interval into the formation, and then
test the shoe. After a successful shoe test, operators then drill the
intermediate hole. The process is generally the same for the
intermediate casing; however, operators may also run a log on the
intermediate casing depending on the circumstances described before.
We received some comments on the proposed rule suggesting that, by
requiring CBLs, the rule would force all operators to maintain idle
drilling equipment while the cement reached additional compressive
strength sufficient for a CBL to show meaningful results. At issue is
the idea that an operator would need to wait an additional amount of
time before pressure testing the casing or drilling through the plug.
An operator does not have to stand idle at this point in time. For
example, an operator may pressure test the surface casing, drill out
the plug, test the shoe, and then drill the intermediate hole. An
operator may then perform a CEL at any point in time before setting the
intermediate casing, i.e., while replacing a drill bit. In any of these
scenarios, however, ancillary delays associated with the availability
of the logging company and the time required to run the log could still
result.
Operators drilling multiple wells on a pad should also be able to
run a CEL and avoid potential drilling delays. When drilling multiple
wells on a pad, an operator may use a smaller drilling rig (known
throughout the industry as a ``double'' rig) to sequentially drill a
casing hole, set casing, and cement casing of each well, one by one.
After the surface holes have all been sequentially drilled, cased, and
cemented, the operator will remove the small drilling rig from the pad,
and bring in a large drilling rig to drill the subsequent sections of
each well. If an operator is drilling multiple wells in this fashion,
then it may continue the drilling process while the cement sets on the
first well, and log that well at the operator's convenience. In these
situations, the operator would incur no additional costs associated
with maintaining idle drilling equipment.
Benefits Framework
While the potential benefits of the rule are more challenging to
monetize than the costs, they are significant. The rule is designed to
reduce the environmental and health risk posed by hydraulic fracturing
operations, particularly in its treatment of flowback fluids, well
construction, and hydraulic fracture design. Stronger field operations
with sound resource protections provide improved efficiency for the BLM
to administer the program management for oil and gas with fewer
protests, fewer compliance problems, fewer FOIAs, and other activities
that divert limited available staff.
The primary challenge in monetizing benefits lies in the
quantification of a risk that is largely unknown. Risk is the product
of the likelihood of an incident occurring and the impact that would
result. In this context, risk is the probability of an incident
occurring from hydraulic fracturing times the cost of the damage. The
monetized benefit of this rule would be the reduction in risk
attributed to the rule, which also represents the avoided costs of
remediating damage.
Though operators are required to remediate damage when it occurs,
there may be uncertainty about the true cost or extent of the damage or
limitations in connecting an incident with an operation. Even if the
damage is internalized, the overall benefit to society would be less
than if the incident was avoided (if the compliance costs are less than
the damage costs), since resources would have been unnecessarily
dedicated to the remediation.
Operators are required to notify the BLM when undesirable events
occur. Undesirable events may include accidents, or accidental spills
or releases of hydrocarbon fluids, produced water, hydraulic fracturing
flowback fluids, or other substances. These events have the potential
to adversely affect public lands and other important resources; reduce
the value of the minerals and lands; plus add expensive costs to the
BLM inspection and enforcement by diverting limited staff.
There are limitations in using the BLM data on undesirable events
for this analysis. First, the data do not specify whether the
undesirable events occurred as a result of any of the drilling or
completion activities associated with the hydraulic fracturing
operations. In addition, the available data cannot be readily matched
with particular provisions in the rule. The data provides figures for
the incidence of spills, accidents, injuries, and other impacts on a
well, but the pit liner information is generally not specified in the
incident reports for spills or leaks. As such, there is difficulty in
quantifying the level of risk reduction that would be attributed to the
regulations, even though the regulations would most certainly reduce
risk.
Damage, in general, is unknown, particularly when attempting to
generalize damage costs which may vary by expected magnitude and
reversibility of effects. Also, the valuation of the damage may also
take many and highly variable forms. For example, an undesirable
incident occurring during hydraulic fracturing might require the
remediation of surface or subsurface areas. The incident might also
require that the operator shut-in temporarily or plug the well before
it may produce all of the mineral resources. In this case, the operator
would lose revenue and society would not benefit from the produced
resources. Such would be the same for spills.
Discounted Present Value
There is a time dimension to estimates of potential costs and
benefits. The potential events described, if they occur at all, may be
in the distant future.
[[Page 31664]]
The further in the future the benefits and costs are expected to occur,
the smaller the present value associated with the stream of costs and
benefits. As such, future costs and benefits must be discounted.\1\ The
discount factor is then used to convert the stream of costs and
benefits into ``present discounted values.'' When the estimated
benefits and costs have been discounted, they can be added to determine
the overall value of net benefits.
---------------------------------------------------------------------------
\1\ Discount factor = 1/(1+ r)\t\ where r is the discount rate
and t is time measured in years during which benefits and costs are
expected to occur.
---------------------------------------------------------------------------
The OMB's basic guidance on the appropriate discount rate to use is
provided in OMB Circular A-94. The OMB's Circular A-94 states that a
real discount rate of 7 percent should be used as a base-case for
regulatory analysis. The OMB considers the 7 percent rate as an
estimate of the average before-tax rate of return to private capital in
the U.S. economy. It is a broad measure that reflects the returns to
real estate and small business capital as well as corporate capital. It
approximates the opportunity cost of capital, and it is the appropriate
discount rate whenever the main effect of a regulation is to displace
or alter the use of capital in the private sector.
OMB Circular A-4 also states that a 3 percent discount rate should
be used for regulatory analyses and provides an explanation of the use
of the discount rate as follows: ``The effects of regulation do not
always fall exclusively or primarily on the allocation of capital. When
regulation primarily and directly affects private consumption (e.g.,
through higher consumer prices for goods and services), a lower
discount rate is appropriate. The alternative most often used is
sometimes called the `social rate of time preference.' This simply
means the rate at which `society' discounts future consumption flows to
their present value.''
The analysis also examines potential costs and benefits using 10
and 12 percent discount rates. The consideration of higher discount
rates are appropriate for this analysis, since the rule imposes costs
on the oil and gas industry and the opportunity cost of not having that
available capital is generally higher than 3 and 7 percent. The higher
rates also serve as a sensitivity test.
Uncertainty
The costs and benefits provided in this analysis are estimates and
come with uncertainty. We describe the primary sources of uncertainty
below:
Type well applicability: The estimates for the rule rely
largely on the concept of the type well. In terms of cost calculations,
the uncertainty lies in an average number of wells that would be
covered under a type well approval. While the BLM is confident that the
average number of wells that an operator completes in a field is a good
measure with which to base the estimate, the measure is positively
skewed by a fewer number of firms with a high number of wells. This
does not suggest a problem with the data, but rather that the
experiences of operators will vary, and that the likely scenario is
that the typical operator completes fewer wells than the average. In
terms of benefit calculations, there is uncertainty about the
effectiveness of the type well concept, and how reliably the CEL
results on casing strings of a type well assure adequate cementing for
subsequent wells in the same geologic area.
Length of delay time to run a CEL: A large source of
uncertainty is the amount of time that the CEL requirement might delay
drilling operations. The BLM received comments suggesting that the CEL
would delay drilling operations for up to 72 hours. The CEL on the
surface casing, in particular, poses a new step in the drilling process
for operators. A large source of uncertainty is the extent to which
operators would be subject to delays, and if so, how they will be able
to incorporate this new requirement and minimize or eliminate potential
delays through operating efficiencies.
Percent of wells encountering problems during the
cementing process: Cementing problems and downhole conditions, in
general, are not widely reported metrics. This analysis uses 3 percent
as the basis for calculating the potential costs and benefits.
Benefits of specific provisions for well integrity and NOI
Sundry submission: Further uncertainty lies in the estimation of
benefits and the cumulative effect of the rule's provisions on
mitigating the potential risks of hydraulic fracturing operations. This
rule has specific provisions that would help operators and the BLM
better identify potential issues in wellbore integrity and fracturing
design, before operations begin. However, it is difficult to attribute
benefits to one single test (for instance the CEL) when that is only
one part of the overall evaluation of wellbore integrity.
Results
Where appropriate, this analysis monetizes costs and benefits
expected to occur over the next 10 years, from 2013 to 2022. This
period of analysis was chosen because 10 years is the length of the
primary lease term on BLM-managed lands. The analysis presents a range
of expected outcomes due to uncertainty about the generalization of
costs and benefits across all hydraulic fracturing operations. In
developing the rule, the BLM considered several alternatives. The
alternatives primarily focused on two topic areas: Verification of
proper cementing behind casing strings through CELs and the management
of flowback fluids from operations. One alternative would require CELs
on casing strings protecting usable water for all wells and the use of
storage tanks to manage flowback. A second alternative would require
CELs on casing strings protecting usable water for all wells but does
not establish requirements for storage tanks or lined pits. Table 3 and
Table 4 show a summary of incremental costs and benefits, respectively,
for the rule and the alternatives examined. To annualize the
incremental costs and benefits, the analysis calculates the annualized
value (AV). Where monetized, the results are presented in 2012 dollars.
The entire results are available in the full Economic Analysis and
Regulatory Flexibility Analysis available at the address listed in the
ADDRESSES section of this rule.
Table 3--Summary of Costs
[$Million]
----------------------------------------------------------------------------------------------------------------
Revised
Annualized value proposed rule Alternative 1 Alternative 2
----------------------------------------------------------------------------------------------------------------
Undiscounted.................................................... 12-20 119-213 119-213
Discounted at 3%................................................ 12-19 118-213 118-213
[[Page 31665]]
Discounted at 7%................................................ 12-19 118-212 118-212
Discounted at 10%............................................... 12-19 117-211 117-211
Discounted at 12%............................................... 12-19 117-211 117-211
----------------------------------------------------------------------------------------------------------------
The annualized values of the costs do not vary significantly across
different discount rates. This is expected for several reasons. When
the original cost schedule is relatively constant over time (neither
front-loaded nor back-loaded) the AV will be relatively similar to the
average cost. This is expected with compliance costs related to this
rule, since the total compliance costs for the rule are expected to be
relatively similar over future years, owing to similar activity data
(i.e., the number of hydraulic fracturing operations) and that the
compliance costs for a single operation are contained within a short
timeframe.
Table 4--Summary of Non-Monetized Benefits
----------------------------------------------------------------------------------------------------------------
Rule Alternative 1 Alternative 2
Non-monetized benefits (percent) (percent) (percent)
----------------------------------------------------------------------------------------------------------------
Percent of individual hydraulic fracturing plans reviewed by the 11 100 100
BLM............................................................
Percent of hydraulic fracturing operations using unlined pits... 0 0 0.15
Percent of individual wells where wellbore integrity is 8 96 96
demonstrated with CELs on casing strings that protect usable
water..........................................................
Percent of wells where wellbore integrity is demonstrated with 100 100 100
pressure tests.................................................
Percent of hydraulic fracturing operations where chemical 100 100 100
content of fluids are disclosed................................
----------------------------------------------------------------------------------------------------------------
Estimated
Non-monetized benefits baseline Rule Alternative 1 Alternative 2
(percent)
----------------------------------------------------------------------------------------------------------------
Likelihood of Minor Incident.................... 2.70 N/A N/A N/A
Likelihood of Major Incident.................... 0.03 N/A N/A N/A
----------------------------------------------------------------------------------------------------------------
Estimated Costs of Revised Proposed Rule
Annualized costs to the industry are estimated to be between about
$12 and $20 million when undiscounted and when using discount rates of
3, 7, 10, and 12 percent. The net present value of total costs over the
10-year period are estimated to be between $102 to $166 million when
discounted at 3 percent, between $84 and $136 million when discounted
at 7 percent, between $73 and $119 million when discounted at 10
percent, and between $67 and $109 million when discounted at 12
percent.
The largest cost burden lies with the CEL requirement, which is
also the source of the greatest amount of uncertainty when developing
estimates. Drilling methods, procedures, and requirements vary across
operations, locations, and States, so it is challenging to place an
exact dollar figure on the appropriate cost.
The estimated costs for the CEL requirement are driven to a large
extent by the amount of time operators might have to maintain idle
drilling equipment on-site. The lower bound of the estimated CEL
requirement includes the annual costs of conducting CELs on the surface
casing, assuming that operators using a small rig to drill the surface
holes of wells would likely avoid the costs of maintaining idle
drilling equipment. The estimate possibly represents the lowest
possible cost; however, there is a chance it could be even lower
depending on the ability of the operators on other wells to maximize
efficiencies and reduce delays. The upper bound of the estimated CEL
requirement does not account for the potential of operators to reduce
delays below 24 hours per CEL on the surface casing and 48 hours on the
intermediate casing. While the estimate possibly represents the maximum
total cost, it may underestimate the total costs if CELs result in
delays assumed.
The BLM has assumed delay times to account for additional
compressive requirements and ancillary delays that could occur.
However, there are several ways for operators to reduce the amount of
idle time. The Economic Analysis prepared for this rule analyzed the
sensitivity of the upper bound total estimates to assumed idle times.
If operators are able to reduce the assumed delays by 25 percent, then
the upper bound costs estimates would be reduced by 19 percent. On the
other hand, if the assumptions underestimate the delay times by 25
percent, then the upper bound estimate would be increased by 19
percent.
The administrative compliance costs are non-trivial and are based
on a per submission cost of $478. It is likely that operators, over
time, will be able to gain efficiencies and reduce costs below the
estimates provided.
The costs provided are estimates of the direct costs and not the
overall costs to society. There is uncertainty about the effect that
the rule would have across all potential hydraulic fracturing
operations. The rule has a provision for type well approval of the NOI
Sundry and log requirements (unless the operator encounters problems
with improper cementing) and affords operators drilling many wells in a
geologic area greater efficiency than it does for operators drilling a
single well or few wells. If one assumes that operators cannot derive
efficiencies to avoid the costs of idle rig time, it could favor
activity in development fields over exploratory areas.
There is also flexibility in how the various BLM authorized
officers might treat applications for variances, and to what extent
that will allow operators to potentially reduce costs. There are well
[[Page 31666]]
construction methods, such as the use of a ``frac string,'' that reduce
the pressures placed on the intermediate casing and surface casing
strings during hydraulic fracturing operations. This is one potential
area where an operator might receive a variance.
Average Compliance Costs for Operators
The provisions of the rule would result in compliance costs ranging
from $3,138 to $5,110 for all hydraulic fracturing operations
differentially, for example, if the operation is for a type well versus
a subsequent well. Averaging the total compliance costs for the
industry in the first year of regulation by the number of hydraulic
fracturing operations, the BLM expects the compliance costs to range
from $3,138 to $5,110 per operation. The CEL requirements represent the
bulk of that portion, $2,591 to $4,564. Average compliance costs per
operation for each of the policy options are shown in Table 5.
Table 5--Average Compliance Costs in 2013 Across All Operations for the Rule, Alternative 1, and Alternative 2
----------------------------------------------------------------------------------------------------------------
Average across all operations
-----------------------------------------------------------------------------
Requirement Revised proposed rule Alternative 1 Alternative 2
-----------------------------------------------------------------------------
Low High Low High Low High
----------------------------------------------------------------------------------------------------------------
Count of Hydraulic Fracturing
Operations (in 2013)............. 3,566
3,566
3,566
-----------------------------------------------------------------------------
CEL on Surface Casing............. $1,980 $3,953 $24,894 $49,692 $24,894 $49,692
CEL on Intermediate Casing........ 409 409 5,140 5,140 5,140 5,140
CEL if Inadequate Cementing....... 202 202 0 0 0 0
Lining Pits....................... 9 9 9 9 0 0
NOI Sundry........................ 54 54 478 478 478 478
SR Sundry......................... 478 478 478 478 478 478
Variance Requests................. 5 5 48 48 48 48
-----------------------------------------------------------------------------
Total......................... 3,138 5,110 31,047 55,845 31,038 55,836
----------------------------------------------------------------------------------------------------------------
BLM Administrative Burden
The processing of NOI Sundry, SR Sundry, and variance requests
associated with the rule would pose additional burden to the BLM;
however, it is unclear the extent to which the BLM can meet the
additional burden with existing capacity. An additional 8.44 FTE of
workload is estimated to be required to meet the administrative burden
of the rule in the first year of implementation.
Benefits of the Revised Proposed Rule
The rule provisions, as described in the revised proposed rule,
would require an operator to conduct tests on a well before it conducts
hydraulic fracturing operations on that well. For all operators on
Federal and Indian land the revised proposed rule would compel
operators to conduct an average of 293 CELs per year on surface
casings, 14 CELs per year on intermediate casings, and 110 CELs per
year on casing strings where there is an initial indication of
inadequate cementing.
Relative to the initial proposed rule, the revised proposed rule
would not compel as many CELs. Therefore, there is a chance that the
rule would not reduce as much risk as the alternatives. The rule would
ensure that operators demonstrate wellbore integrity with pressure
tests on 100 percent of the wells and with CELs on the casing strings
that protect usable water on 8 percent of wells. The level of risk
reduction across subsequent wells relies on the replication of adequate
cementing across multiple wells in a geographic area with the same
geologic characteristics.
The rule would compel 110 CELs to demonstrate that inadequate
cementing was corrected by operators. As such, it requires a
verification of proper remedial cementing on the very wells that pose
greater risk.
Under the rule, operators would submit an average of 432 NOI Sundry
applications per year covering about 3,816 hydraulic fracturing
operations (average over the 10-year period, 2013-2022). The BLM would
receive individual hydraulic fracturing plans for an estimated 11
percent of the expected operations, and the remaining 89 percent of
operations would be for subsequent wells to a type well. The type well
provision, relative to the alternatives, reduces burden on the industry
and the BLM. The submission of NOI Sundry applications would provide
the BLM with the necessary information to make informed decisions about
the public's resources and thus improve the public welfare, and have
the same benefits for Indian resources and Indian welfare.
The rule is estimated to compel only six additional lined pits per
year, simply because most of the States where the BLM manages oil and
gas resources already require lined pits. For those six pits, the
requirement would immediately remove sources of harm to the environment
and the public from the contamination of the surface environment with
fracturing fluids.
The rule would compel 3,816 Sundry reports and public disclosures
of the chemical content of the hydraulic fracturing fluids. The
increase in information about additives could aid water users when they
consider the potential effects of hydraulic fracturing operations and
constituent chemicals.
Overall, the rule would potentially reduce the risks associated
with hydraulic fracturing operations. The BLM estimated the likelihood
of an incident resulting from a hydraulic fracturing operation could be
between 0.03 and 2.70 percent. Damage from an incident could cost
between $15,000 and $1 million for remediation plus any lost revenue
from unrecoverable resources, including spilled or stranded resources.
Economic Impact Analysis and Distributional Assessments Energy System
Impact Analysis
Executive Order 13211 requires that agencies prepare and submit to
the Administrator of the Office of Information and Regulatory Affairs
(OIRA), OMB, a Statement of Energy Effects for certain actions
identified as significant energy actions. Section 4(b) of Executive
Order 13211 defines a ``significant energy action'' as ``any action by
an agency (normally
[[Page 31667]]
published in the Federal Register) that promulgates or is expected to
lead to the promulgation of a final rule or regulation, including
notices of inquiry, advance notices of proposed rulemaking, and notices
of proposed rulemaking: (1)(i) That is a significant regulatory action
under Executive Order 12866 or any successor order, and (ii) is likely
to have a significant adverse effect on the supply, distribution, or
use of energy; or (2) that is designated by the Administrator of OIRA
as a significant energy action.''
The additional burden posed by this rule would vary by the type of
well proposed for hydraulic fracture. A key consideration is the extent
to which the costs of the requirements might impact investment,
production, employment, and a number of other factors. That is, to what
extent, if any, would an operator choose to invest in other areas, non-
Federal and non-Indian lands, when faced with the cost requirements of
the rule. Since the bulk of the costs would apply to hydraulic
fracturing operations on wells that are yet to be drilled (and not on
existing wells and to refracturing operations), operators will be able
to account for any cost increases up front when making investment
decisions. The BLM believes that the additional cost per hydraulic
fracturing operation is insignificant when compared with the drilling
costs in recent years, the production gains from hydraulically
fractured wells operations, and the net incomes of entities within the
oil and natural gas industries.
Table 6 shows the average compliance costs, by well type or
operation, as a percent of the total costs of drilling a well. For a
single well or a type well, the compliance costs represent about 0.4 to
1.4 percent of the costs of drilling a well. For a subsequent well to a
type well, the costs represent between 0.01 and 0.02 percent of the
total drilling costs. For existing wells and refracture operations, the
percentages are even lower, at about 0.01 to 0.03 percent. When
averaging the compliance costs across all operations, the costs
represent between 0.04 and 0.13 percent of the costs of drilling a
well.
Since the estimated compliance costs are not a substantial when
compared with the total costs of drilling a well, the BLM believes that
the rule is unlikely to have an effect on the investment decisions of
firms, and the rule is unlikely to affect the supply, distribution, or
use of energy.
Table 6--The Average Compliance Costs of the Revised Proposed Rule as a Percent of Total Drilling Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Well type fracturing operation Average across all
----------------------------------------------------------------- operations (percent)
Type well or single well Subsequent -------------------------
Activity -------------------------- well under Existing Refracture
type well well operation Low High
Low High approval (percent) (percent) (percent) (percent)
(percent) (percent) (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent of Drilling Costs for a Crude Oil, Natural Gas, and 0.7128 1.3301 0.0167 0.0243 0.0241 0.0752 0.1225
Dry Well (2007$) \1\........................................
Percent of Drilling Costs for a Crude Oil Well (2007$) \1\... 0.7434 1.3871 0.0174 0.0253 0.0251 0.0784 0.1277
Percent of Drilling Costs for a Natural Gas Well (2007$) \1\. 0.7611 1.4202 0.0178 0.0259 0.0257 0.0803 0.1308
Percent of Drilling Costs for a horizontal well in the Bakken 0.5507 1.0275 0.0129 0.0188 0.0186 0.0581 0.0946
Three Forks (reported in 2010) \2\..........................
Percent of Drilling Costs for a horizontal well in the 0.3913 0.7301 0.0092 0.0133 0.0132 0.0413 0.0672
Marcellus Shale (reported in 2011) \3\......................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\1\ Average drilling costs in 2007 range from $3.9 million to about $4.2 million. U.S. Energy Information Administration (January 31, 2012). Costs of
Crude Oil and Natural Gas Wells Drilled.
\2\ Costs of $5.4 million cited by Investopedia from Continental Resources. Investopedia (March 12, 2010). Oil Service Costs to Move Higher.
\3\ Costs of $7.6 million cited by Marcellus Drilling News from a University of Pittsburgh Study (Marcellus Drilling News (September 2011) How much does
it cost to drill a single Marcellus well? $7.6M.
Employment Impact Analysis
Executive Order 13563 reaffirms the principles established in
Executive Order 12866, but calls for additional consideration of the
regulatory impact on employment. It states, ``Our regulatory system
must protect public health, welfare, safety, and our environment while
promoting economic growth, innovation, competitiveness, and job
creation.'' An analysis of employment impacts is a standalone analysis
and the impacts should not be included in the estimation of benefits
and costs.
This proposed rule would require operators, who have not already
done so, to conduct one-time tests on a well or make a one-time
installation of a mitigation control feature. In addition, operators
would be required to perform administrative tasks related to a one-time
event.
Compliance with the operational requirements is expected to shift
resources from firms in the crude oil and natural gas extraction
industries (NAICS codes:: 211111--Crude Petroleum and Natural Gas
Extraction, 211112--Natural Gas Liquid Extraction) to firms providing
support services for drilling oil and gas wells (NAICS code: 213111--
Drilling Oil and Gas Wells). For example, the requirement for a CEL on
the surface casing represents a burden to the operator, but a benefit
to the company running the log.
Of principal interest is the extent to which the financial burden
is expected to change operators' investment decisions. If the financial
burden is not significant and all other factors are equal, then one
would expect operators to maintain existing levels of investment and
employment. The BLM believes that the proposed rule would result in an
additional cost per well stimulation that is small and will not alter
the investment or employment decisions of firms.
[[Page 31668]]
Firms in the support services for oil and gas drilling industry are
likely to benefit from the rule, since they would likely carry out the
operational requirements of the rule. Though we do not know the
incremental revenue gains from performing these services, the
operational requirements themselves are likely to require additional
capacity.
Executive Order 12866, Regulatory Planning and Review
In accordance with the criteria in Executive Order 12866, the
Office of Management and Budget has determined that this rule is a
significant regulatory action.
The rule will not have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities. However, the rule may raise novel policy
issues because of the requirement that operators provide to the BLM
information regarding hydraulic fracturing operations that they are not
currently providing to the BLM.
This rule would not create inconsistencies or otherwise interfere
with an action taken or planned by another agency. This rule would not
change the relationships of the oil and gas operations with other
agencies. These relationships are included in agreements and memoranda
of understanding that would not change with this rule. In addition,
this rule would not materially affect the budgetary impact of
entitlements, grants, loan programs, or the rights and obligations of
their recipients. Please see the discussion of the impacts of the rule
as described earlier in this section of the preamble.
Regulatory Flexibility Act
Congress enacted the Regulatory Flexibility Act of 1980 (RFA), as
amended, 5 U.S.C. 601-612, to ensure that Government regulations do not
unnecessarily or disproportionately burden small entities. The RFA
requires a regulatory flexibility analysis if a rule would have a
significant economic impact, either detrimental or beneficial, on a
substantial number of small entities. For the purposes of this
analysis, the BLM assumes that all entities (all lessees and operators)
that may be affected by this rule are small entities, even though that
is not actually the case.
The rule deals with hydraulic fracturing on all Federal and Indian
lands (except those excluded by statute). There would be some increased
costs associated with the enhanced recordkeeping requirements and some
new operational requirements. However, the BLM expects that these costs
would be minor in comparison to overall operations costs. Therefore,
the BLM has determined under the RFA that the rule would not have a
significant economic impact on a substantial number of small entities.
Please see the discussion earlier in this section of the preamble for a
discussion of the impacts of the rule.
Small Business Regulatory Enforcement Fairness Act
The Regulatory Flexibility Act as amended by the Small Business
Regulatory Enforcement Fairness Act (SBREFA) generally requires an
agency to prepare a regulatory flexibility analysis of any rule subject
to notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute, unless the agency certifies that
the rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small governmental jurisdictions, or small not-for-profit enterprises.
The BLM reviewed the Small Business Administration (SBA) size
standards for small businesses and the number of entities fitting those
size standards as reported by the U.S. Census Bureau in the 2007
Economic Census. Using the Economic Census data, the BLM concludes that
about 99 percent of the entities operating in the relevant sectors are
small businesses in that they employ fewer than 500 employees.
The BLM also examined potential impacts on small businesses that
are most likely to be impacted by the rule and, more specifically, the
requirements that would pose a burden to operators. Using Automated
Fluid Mineral Support System data for well completions, the BLM
compiled a list of firms that completed wells within the past 5 years.
The BLM expects that these firms are most likely to be financially
impacted by the CEL requirements. From that list the BLM researched
company annual report filings with the SEC to determine annual company
net incomes and employment figures. From the original list, the BLM
found 55 company filings. Of those, 33 firms were classified as small
businesses.
Using the net income data for the small businesses that filed SEC
Form 10-K, the BLM used the estimated compliance costs per well type or
fracturing operation, and the average costs across all operations to
calculate the percent of compliance costs as a portion of annual
company net incomes for 2011. Averaging results for the small
businesses that the BLM examined, the average costs of the rule are
expected to represent between 0.041 and 0.066 percent of the company
net incomes.
Therefore, after considering the economic impact of the rule on
these small entities, the screening analysis indicates that this rule
will not have a significant economic impact on a substantial number of
small entities.
Unfunded Mandates Reform Act
Under the Unfunded Mandates Act, agencies must prepare a written
statement about benefits and costs prior to issuing a proposed or final
rule that may result in aggregate expenditure by State, local, and
tribal governments, or by the private sector, of $100 million or more
in any one year.
This rule does not contain a Federal mandate that may result in
expenditures of $100 million or more for State, local, and tribal
governments, in the aggregate, or to the private sector in any one
year. Thus, the rule is also not subject to the requirements of
Sections 202 or 205 of the Unfunded Mandates Reform Act (UMRA).
This rule is also not subject to the requirements of Section 203 of
UMRA because it contains no regulatory requirements that might
significantly or uniquely affect small governments; it contains no
requirements that apply to such governments nor does it impose
obligations upon them.
Executive Order 12630, Governmental Actions and Interference With
Constitutionally Protected Property Rights (Takings)
Under Executive Order 12630, the rule would not have significant
takings implications. A takings implication assessment is not required.
This rule would establish recordkeeping requirements for hydraulic
fracturing operations and some additional operational requirements on
Federal and Indian lands. All such operations are subject to lease
terms which expressly require that subsequent lease activities be
conducted in compliance with subsequently adopted Federal laws and
regulations. The rule conforms to the terms of those Federal leases and
applicable statutes, and as such the rule is not a governmental action
capable of interfering with constitutionally protected property rights.
Therefore, the rule would not cause a taking of private property or
require further discussion of takings implications under this Executive
Order.
[[Page 31669]]
Executive Order 13352, Facilitation of Cooperative Conservation
Under Executive Order 13352, the BLM has determined that this rule
would not impede facilitating cooperative conservation and would take
appropriate account of and consider the interests of persons with
ownership or other legally recognized interests in land or other
natural resources. This rulemaking process involved Federal, State,
local and tribal governments, private for-profit and nonprofit
institutions, other nongovernmental entities and individuals in the
decision-making. The process provides that the programs, projects, and
activities are consistent with protecting public health and safety.
Executive Order 13132, Federalism
Under Executive Order 13132, this rule would not have significant
Federalism effects. A Federalism assessment is not required because the
rule would not have a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. The rule would not have any effect on any of the items
listed. The rule would affect the relationship between operators,
lessees, and the BLM, but would not impact States. Therefore, under
Executive Order 13132, the BLM has determined that this rule would not
have sufficient Federalism implications to warrant preparation of a
Federalism Assessment.
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
Under Executive Order 13175, the President's memorandum of April
29, 1994, ``Government-to-Government Relations with Native American
Tribal Governments'' (59 FR 22951), The Department of the Interior
Policy on Consultation with Indian Tribes (Dec. 1, 2011), and 512
Departmental Manual 2, the BLM evaluated possible effects of the rule
on federally recognized Indian tribes. The BLM approves proposed
operations on all Indian onshore oil and gas leases (except those
excluded by statute). Therefore, the rule has the potential to affect
Indian tribes. In conformance with the Department's policy on tribal
consultation, the Bureau of Land Management held four tribal
consultation meetings to which over 175 tribal entities were invited.
The consultations were held in:
Tulsa, Oklahoma on January 10, 2012;
Billings, Montana on January 12, 2012;
Salt Lake City, Utah on January 17, 2012; and
Farmington, New Mexico on January 19, 2012.
The purpose of these meetings was to solicit initial feedback and
preliminary comments from the tribes. To date, the tribes have
expressed concerns about the BLM's Inspection and Enforcement program's
ability to enforce the terms of this rule; previously plugged and
abandoned wells being potential conduits for contamination of
groundwater; and the operator having to provide documentation that the
water used for the fracturing operation was legally acquired. The BLM
considered these concerns during the drafting of the proposed rule.
After publication of the proposed rule, the BLM held another series
of meetings to obtain comments and recommendations from tribes and
tribal organizations. Those meetings were held in June 2012 in Salt
Lake City, Utah; Farmington, New Mexico; Tulsa, Oklahoma; and Billings,
Montana. The BLM also engaged in one-on-one consultations as requested
by several tribes. Some tribal representatives were concerned about
risks to the quality of their vital water supplies. Others, though,
were more concerned with the risk that increased compliance costs would
drive the industry off of Indian lands, and deprive the tribes of much-
needed revenues and economic development.
The BLM has considered and responded to the concerns expressed by
the tribal representatives both orally and in written comments, as
described above. In particular, it has made changes that will reduce
economic burdens of compliance for many operators. Several tribes
provided written and oral comments critical of the proposed rule. Other
tribes argued that the proposed rules violated tribal sovereignty. The
proposed rule, however, is not unique. Regulations promulgated by the
Bureau of Indian Affairs render the BLM's operating regulations in 43
CFR part 3160 applicable to oil and gas leases of trust and restricted
Indian lands, both tribal and individually-owned. See 25 CFR 211.4,
212.4, and 225.4.
Some tribes insist that those BIA regulations are in violation of
FLPMA, which they argue restricts the BLM's authority to Federal lands.
Section 301 of FLPMA, however, charges the Director of the BLM to carry
out functions and duties as the Secretary may prescribe with respect to
the lands and the resources under the Secretary's jurisdiction
according to the applicable provisions of FLPMA and any other
applicable law. 43 U.S.C. 1731(a). See also 43 U.S.C. 1731(b). The Act
of March 3,1909 (1909 Act) (at 25 U.S.C. 396), the Indian Minerals
Leasing Act (IMLA) (at 25 U.S.C. 396d) and the Indian Mineral
Development Act (IMDA) (at 25 U.S.C. 2107) provide the Secretary of the
Interior with authority to promulgate regulations governing oil and gas
operations and mineral agreements on certain Indian lands. As
previously cited, the Secretary, through the regulations promulgated by
the BIA, has assigned to the BLM part of the Secretary's trust
responsibilities to regulate oil and gas operations on those Indian
lands. This rule concerning Indian lands is promulgated pursuant to the
1909 Act, the IMLA, and the IMDA, and will be implemented by the BLM
under those authorities, consistent with Section 301 of FLPMA.
Some tribes have asked that the proposed rule exempt Indian lands
from its scope. Such an exemption would require the Secretary of the
Interior to conclude, among other things, that usable waters in Indian
lands, and the persons who use such waters, are less deserving of
protection than waters and water users on Federal land. The Department
of the Interior declines to reach that conclusion.
Some tribes have advocated that the proposed rule should allow
Indian tribes to decide individually whether the hydraulic fracturing
regulations would apply on their lands. The BIA's regulations, however,
apply all of the BLM's oil and gas operating regulations to Indian
lands, and do not allow the tribes to pick and select which of the
BLM's regulations apply on their lands.
The tribes, however, report that industry representatives have
threatened not to bid on Indian leases if the initial proposed rule
were promulgated. The tribes are concerned that a major source of
revenue and of economic development might leave Indian lands because of
the costs of compliance with the proposed rule. The BLM has carefully
considered the tribes' comments, along with those of the oil and gas
industry and of concerned citizens and governments. The revised
proposed rule includes several changes from the initial proposed rule
to reduce the costs and other burdens of compliance. Examples include
allowing operators to use any one of a class of CELs to verify the
adequacy of cement casings, not requiring the CEL to be submitted or
approved before fracturing operations if there is no indication of
problems with the cementing, and the ``type well'' approach allowing an
operator's approved group of wells that conform to the operator's
proven type
[[Page 31670]]
well in the same field to be hydraulically fractured without additional
CELs, unless there is a problem with the cementing. The revised
proposed rule also explicitly states that BLM will require isolation of
zones that the tribes designate for protection from oil and gas
operations, and will not require isolation of zones that tribes have
exempted from protection. (Note, though, that the revised proposed rule
would not exempt an operator from the provisions of the SDWA.)
Furthermore, the BLM could approve a variance applicable to all or
parts of Indian lands, provided the variance meets or exceeds the
effectiveness of the revised proposed rule. Such a variance could allow
an operator's compliance with a tribe's standard or procedure to be
accepted as compliance with the revised proposed rule, thus reducing
the compliance burdens for operators. Such changes should significantly
reduce compliance costs for operators while still assuring protection
of usable water resources.
The BLM is aware that the revised proposed rule would nonetheless
result in some higher costs for operators on Federal and Indian lands,
compared with compliance costs for hydraulic fracturing on non-Federal,
non-Indian lands in several States. Regulatory compliance costs,
however, are only one set in a long list of costs that operators
compare to anticipated revenues when deciding whether and how much to
bid on a Federal or Indian lease. It has not been the BLM's experience
that regulatory compliance costs have caused the industry as a whole to
avoid valuable oil and gas resources on Federal and Indian lands.
Executive Order 12988, Civil Justice Reform
Under Executive Order 12988, the Office of the Solicitor has
determined that this rule would not unduly burden the judicial system
and meets the requirements of Sections 3(a) and 3(b)(2) of the Order.
The Office of the Solicitor has reviewed the rule to eliminate drafting
errors and ambiguity. It has been written to minimize litigation,
provide clear legal standards for affected conduct rather than general
standards, and promote simplification and avoid unnecessary burdens.
Paperwork Reduction Act
The Paperwork Reduction Act (PRA) (44 U.S.C. 3501-3521) provides
that an agency may not conduct or sponsor, and a person is not required
to respond to, a ``collection of information,'' unless it displays a
currently valid control number. Collections of information include
requests and requirements that an individual, partnership, or
corporation obtain information, and report it to a Federal agency (44
U.S.C. 3502(3); 5 CFR 1320.3(c) and (k)).
The BLM included its information collection request in the proposed
rule and invited public comment. OMB did not approve or disapprove the
request at that time. The BLM has revised the information collection
that was in the proposed rule and has re-submitted its information
collection request. In accordance with the PRA, the BLM is inviting
public comment on its request that OMB approve new uses of Form 3160-5
(Sundry Notices and Reports on Wells). The BLM is proposing that these
new uses would replace certain existing uses of Form 3160-5 for
hydraulic fracturing operations.
OMB has approved the use of Form 3160-5 under control number 1004-
0137, Onshore Oil and Gas Operations (43 CFR part 3160), to collect
information on a number of operations, including some hydraulic
fracturing operations. Once the BLM is authorized to collect hydraulic
fracturing information in accordance with finalized new section 3162.3-
3 and new control number 1004-0203, the BLM will request revision of
control number 1004-0137 to:
Add the new hydraulic fracturing uses and burdens of Form
3160-5 to control number 1004-0137;
Remove the existing hydraulic fracturing uses and burdens
from the existing approval of Form 3160-5; and
Discontinue new control number 1004-0203.
The new collection of information would be required to obtain or
retain a benefit for the operators of Federal and Indian (except on the
Osage Reservation, the Crow Reservation, and certain other areas)
onshore oil and gas leases, units, or communitization agreements that
include Federal leases. The BLM has requested a 3-year term of approval
for the new control number.
The information collection request for this revised proposed rule
has been submitted to OMB for review under 44 U.S.C. 3504(h) of the
Paperwork Reduction Act. A copy of the request can be obtained from the
BLM by electronic mail request to Candice Money at cmoney@blm.gov or by
telephone request to 202-912-7144. You may also review the information
collection request online at https://www.reginfo.gov/public/do/PRAMain.
The BLM requests comments to:
Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
Evaluate the accuracy of the agency's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used;
Enhance the quality, utility, and clarity of the
information to be collected; and
Minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submission of responses.
Comments on the information collection requirements should be sent
to both OMB and the BLM as directed in the ADDRESSES section of this
preamble. OMB is required to make a decision concerning the collection
of information contained in this revised proposed rule between 30 to 60
days after publication of this document in the Federal Register.
Therefore, a comment to OMB is best assured of having its full effect
if OMB receives it by June 24, 2013.
Summary of Information Collection Requirements
The revised proposed rule is intended to increase transparency for
the public regarding the fluids and additives used in hydraulic
fracturing, and to protect Federal and Indian resources. The proposed
provisions that include information collection requirements are
amendments to 43 CFR 3162.3-2 and new 43 CFR 3162.3-3.
OMB has approved the use of Form 3160-5 under control number 1004-
0137 for the operations listed in existing section 3162.3-2. As revised
in the proposed rule, section 3162.3-2 would no longer include
hydraulic fracturing jobs (i.e., nonroutine fracturing, routine
fracturing, and acidizing) on the list of operations for which prior
approval and subsequent reports would be required. Other categories of
operations would remain subject to the information collection
requirements in section 3162.3-2. Once the BLM is authorized to collect
hydraulic fracturing information under new section 3162.3-3 and a new
control number, the BLM will request revision of control number 1004-
0137 by removing the hydraulic fracturing burdens from the existing
approval of Form 3160-5. New section 3162.3-3 would require operators
to use Form 3160-5 both to seek prior BLM approval of hydraulic
fracturing operations, and to submit a report on
[[Page 31671]]
subsequent actual hydraulic fracturing operations. It would also
encourage operators to use Form 3160-5 if they want to request a
variance from the requirements of new section 3162.3-3.
In accordance with the PRA, the BLM invited public comments on the
information collection in the initial proposed rule. One commenter
submitted comments specifically in response to this opportunity. In
addition, some commenters addressed the necessity, practical utility,
and/or estimated burdens of the proposed collections.
1. Necessity/Avoidance of Unnecessary Duplication
The PRA requires each Federal agency to certify that its
collections of information are necessary for the proper performance of
agency functions, and are not unnecessarily duplicative of information
otherwise reasonably accessible to the agency. 43 U.S.C. 3506(c)(3)(A)
and (B).
One commenter stated that the proposed collections are unnecessary,
given the existing Eight-Point Drilling Program associated with APDs
and the subsequent well completion reports. In addition, the commenter
stated that operators on Indian lands already comply with Colorado
State rules that make Federal disclosure a redundant and unnecessary
burden on operators.
Other commenters also questioned whether the proposed collections
are necessary and avoid unnecessary duplication. For example:
One commenter stated that the proposed collection of both
pre- and post-fracturing information is a requirement to submit
basically the same information twice, and recommended that the BLM
consider requiring submission of pre-completion information and then
requiring operators to advise the BLM of any post-completion changes or
deviations;
Another commenter recommended that operators be allowed to
submit a generic or Master Plan for similar operations on a plan of
development, at the field or unit level;
One commenter stated that the proposed collection of
information about the water source to be used in hydraulic fracturing
duplicates protections afforded by the Environmental Protection Agency
and States under the Clean Water Act and the Safe Drinking Water Act;
One commenter stated that the proposed collections
duplicate State-required collections in Colorado, New Mexico, Alabama,
and Texas;
One commenter stated that the proposal to collect an
estimate of the volume of fluid to be recovered during flowback,
swabbing, and recovery from production facility vessels (43 CFR 3162.3-
3(c)(6)(i)) duplicates a requirement in Wyoming for post-fracturing
reporting as to the amounts, handling, and disposal or reuse of
hydraulic fracturing fluid; and
One commenter stated that the information in the NOI
Sundry and the Subsequent Report Sundry Notice duplicates information
required and approved by individual States, and suggested that the BLM
provide for exemptions for operators in States that have adopted
hydraulic fracturing regulations, or accept information filed under
State laws or regulations in lieu of requiring operators to submit
duplicative information to the BLM for approval.
Some commenters specifically questioned the necessity of proposed
section 3162.3-3(c)(2), which would have required the Notice of Intent
Sundry to include the ``proposed measured depths (both top and bottom)
of all occurrences of usable water and the CBLs (or another log
acceptable to the authorized officer) proving that the occurrences of
usable water have been isolated to protect them from contamination.''
Some comments included statements of support. One commenter stated
that full disclosure of chemicals involved in the hydraulic fracturing
process results in a transparent process that benefits industry,
regulatory agencies, and the public.
Some other commenters generally supported transparency and full
disclosure of pollution data. For example, one commenter stated that
the post-fracturing collection of information on the volume of water
used in the fracturing process will aid water resource managers in
planning water resources on and near Federal lands, and suggested that
the same type of information be collected on the Notice of Intent
Sundry.
Some commenters were supportive of disclosure of information
through FracFocus.org to avoid duplicating or creating another platform
for disclosure.
Response: Because hydraulic fracturing has been a growing practice
in recent years, the BLM has determined that the collections of
information in the revised proposed rule are necessary to enable the
BLM to meet its statutory obligations to regulate operations associated
with Federal and some Indian oil and gas leases; prevent unnecessary or
undue degradation; and manage public lands using the principles of
multiple use and sustained yield. The collections of information will
assist in the modernization of the BLM's management of hydraulic
fracturing operations in ways not anticipated when the existing
collection requirements approved under control number 1004-0137 were
developed, and will enable the BLM to ensure that operators are using
best practices in fracturing operations. Moreover, the information that
States, tribes, or other Federal agencies collect is not necessarily
reasonably accessible to the BLM. For these reasons, the BLM has
determined that the collections in the revised proposed rule are
necessary, and are not unnecessarily duplicative of existing Federal,
tribal, or State collection requirements. Accordingly, the BLM is not
adopting the suggestion that it provide for exemptions for operators on
Indian lands or in States that have promulgated hydraulic fracturing
regulations; or that the BLM accept information filed under State or
tribal laws or regulations in lieu of information that meets BLM
standards. However, if information submitted in accordance with State
laws or regulations meets the standards prescribed by the BLM, such
information may be submitted to the BLM in accordance with the revised
proposed rule.
In response to comments that requiring both pre- and post-
fracturing information amounts to a requirement to submit basically the
same information twice, the BLM has deleted the following pre-
fracturing collections:
Submission of a CBL for approval before commencing
fracturing operations, which was part of proposed 43 CFR 3162.3-
3(c)(2); and
Submission of a pre-fracturing certification of compliance
with all applicable permitting and notice requirements, which was
proposed as 43 CFR 3162.3-3(c)(4).
The revised proposed rule (at 43 CFR 3162.3-3(d)) also allows an
NOI Sundry to be submitted for a single well or a type well covering a
group of wells sharing substantially similar geological characteristics
within the same geologic formation. If the submission is for a group of
wells, the information should describe a ``type well,'' defined in the
revised proposed rule to mean an oil and gas well that can be used as a
model for well completion in a field where geologic characteristics are
substantially similar across the field, and operations such as
drilling, cementing, and hydraulic fracturing are likely to be
successfully replicated using the same design. This provision will give
operators an opportunity to streamline the submission of pre-fracturing
information in appropriate
[[Page 31672]]
circumstances. However, the revised proposed rule provides (at 43 CFR
3162.3-3(e)(4)) that where there are indications of problems with the
cementing of casings, the operator must submit information showing that
the problem has been corrected before commencing hydraulic fracturing
operations, and (at 43 CFR 3162.3-3(i)) that post-fracturing data for
each well is required.
The BLM has taken these actions in recognition that:
The BLM can meet its statutory responsibilities without
collecting a full complement of pre-fracturing data; but
The BLM needs more complete post-fracturing information in
order to meet its statutory responsibilities.
The BLM has not adopted the suggestions to:
Allow operators to meet their pre-fracturing information-
submission obligations by submitting a generic or master plan for
similar operations on a plan of development, at the field or unit
level;
Allow operators to meet their post-fracturing obligations
solely by advising the BLM of any post-completion changes or
deviations; or
Require data about water volume in pre-fracturing as well
as post-fracturing information collections.
Both the proposed rule and the revised proposed rule include
provisions that require more detailed data after fracturing than before
fracturing. For example, the information about water volume that is
required before fracturing is limited to a plan that includes the
estimated total volume of fluid to be used. See section 3162.3-3(d)(4)
of the revised proposed rule (proposed as 43 CFR 3162.3-3(c)(5)).
Regarding post-fracturing information, the BLM has revised proposed
section 3162.3-3(g)(1) (designated as section 3162.3-3(i)(1) of the
proposed rule) to require the total water volume used and in other
paragraphs within subsection (i) of the revised proposed rule,
operators are required to provide:
The actual surface pressure and rate at the end of each
stage of the hydraulic fracturing operation, and the actual flush
volume, rate, and final proposed pump pressure (section 3162.3-
3(i)(3)); and
The volume of fluid recovered during flowback, swabbing,
or recovery from production facility vessels (section 3162.3-3
(i)(5)(i)).
In both the initial proposed and revised proposed rule, the BLM has
identified water volume to be a necessary element of both pre- and
post-fracturing information collections. The BLM is requiring all
hydraulic fracturing and refracturing operations to isolate all usable
water and other mineral-bearing formations and protect them from
contamination. 43 CFR 3162.3-3(b) and 3162.5-2. Operators are thus on
notice that they must meet this performance standard during all
operations covered by this rule. The commenter's suggestion seems to be
to collect pre-fracturing information about water volume that is as
detailed, or similarly detailed, as that which will be collected after
fracturing. However, upon consideration of this comment, the BLM has
determined that the same amount of detail both before and after
fracturing is not necessary in order to enable the BLM to verify that
the proposed engineering design is adequate for safely conducting the
proposed hydraulic fracturing. In addition, the BLM understands that
such detail is unlikely to be available before commencing hydraulic
fracturing. The BLM, therefore, has not adopted the commenter's
suggestion. Regarding the comments about FracFocus, section 3162.3-3(i)
of the revised proposed rule allows the following required post-
fracturing information to be submitted to the BLM through FracFocus,
another data base specified by the BLM, or in a Subsequent Report
Sundry Notice:
True vertical depth of the well;
Total water volume used; and
For each chemical used (including base fluid) the trade
name, supplier, purpose, ingredients, Chemical Abstract Service Number
(CAS ), maximum ingredient concentration in additive (% by
mass), and maximum ingredient concentration in hydraulic fracturing
fluid (% by mass).
The initial proposed rule, at 43 CFR 3162.3-3(g), would have
required that this information, as well as additional information, be
included in SR Sundry Notices, and provided no other options for
submission. However, the preamble to the initial proposed rule
indicated that this information is intended to be posted on a public
Web site, and that the BLM was working with the Groundwater Protection
Council to determine whether the disclosure can be integrated into
FracFocus. Some commenters expressed concerns that this statement in
the preamble could result in duplicative submissions of information. By
clarifying the regulatory text, the BLM is preventing such unnecessary
duplication.
2. Practical Utility
The PRA requires each Federal agency to certify that its
collections of information have ``practical utility.'' 43 U.S.C.
3506(c)(3)(A). A collection has practical utility if the agency can use
the information that is collected.
Some commenters questioned whether the BLM has sufficient expertise
and staffing to use the information that is collected. One commenter
specifically stated that it has seen no indication that the BLM intends
to provide the training and education to enable its staff to use the
information.
One commenter also stated that the proposed collections could
result in submissions of inaccurate information to the BLM because the
details of a hydraulic fracturing design are typically not available to
operators until after a well has been drilled and specific details
regarding the target formation have been obtained. The commenter
suggested that a more appropriate approach would be to collect
appropriate information as it is obtained and for information purposes
only.
Response: The BLM employs many petroleum engineers and technicians,
and they are well qualified to use the information required by the
revised proposed rule, and thus disagrees with commenters that question
the BLM's ability to use the information that is required in the
revised proposed rule. The BLM also disagrees with statements to the
effect that pre-fracturing data will be inaccurate. The industry has
many years of experience collecting and enhancing the accuracy of pre-
fracturing engineering and data collection.
3. Reduction of Burdens on the Public
The PRA requires each Federal agency to certify that its
collections of information:
Reduce respondents' burdens to the extent practicable and
appropriate;
Are written using plain, coherent, and unambiguous
terminology that is understandable to those who are to respond;
Will be implemented in ways consistent and compatible, to
the maximum extent practicable, with respondents' existing reporting
and recordkeeping practices; and
To the maximum extent practicable, use information
technology to reduce burden and improve data quality, agency
efficiency, and responsiveness to the public.
43 U.S.C. 3506(c)(3)(C) through (E) and (J).
One commenter stated that the BLM underestimated the annual costs
associated with the proposed rule. Some commenters commented generally
that the BLM has underestimated burdens under the Paperwork Reduction
Act, other statutes, and various executive orders.
[[Page 31673]]
Other comments included the following:
One commenter stated that the BLM should consider ways to
minimize the submission of information by allowing operators to conduct
fracturing operations within acceptable operating ranges and allowing
operators to use standard completion reports; and
One commenter suggested that, to reduce the burdens on
operators, the BLM should allow operators to submit generic hydraulic
fracturing plans for a targeted zone in resource play areas that can be
referenced when an APD is submitted. Similarly, another commenter
requested that the rule provide for acceptance of a general Operator's
Master Fluid Management Plan that may be used consistently across a
plan of development.
Response: The BLM has revised its estimates of the burdens to
respondents, in part because of responses to comments that are
described above. Specifically, the BLM has deleted some aspects of the
pre-fracturing collection from the revised proposed rule, and has
provided in the revised proposed rule for submission of pre-fracturing
data either for each well or for a type well covering a group of wells
sharing substantially similar geological characteristics within the
same geologic formation. These revisions of the proposed rule result in
a reduction of the estimated annual number of NOI Sundries from 1,700
to 415. They also result in a reduction of the estimated number of
Variance Requests, from 170 to 41, because such requests apply to NOI
Sundries. These estimates are the average of the expected responses
over the first 3 years of implementation.
The estimated number of annual SR Sundry Notices has increased
because the revised proposed rule (at 43 CFR 3162.3-3) now requires
post-fracturing data on both fracturing and re-fracturing operations.
This revision results in an increase in the estimated annual responses,
from 1,700 to 3,657.
The following table shows the itemized estimated burdens associated
with the revised proposed rule:
----------------------------------------------------------------------------------------------------------------
C. Hours per
B. Number of response (same D. Total hours/
A. Type of response responses/ for proposed revised proposed
revised proposed and revised rule (column B x
rule proposed rule) column C)
----------------------------------------------------------------------------------------------------------------
Sundry Notices and Reports on Wells/Well Stimulation/ 415 8 3,320
Notice of Intent Sundry (43 CFR 3162.3-3) Form 3160-5....
Sundry Notices and Reports on Wells/Well Stimulation/ 3,657 8 29,256
Subsequent Report Sundry Notice (43 CFR 3162.3-3) Form
3160-5...................................................
Sundry Notices and Reports on Wells/Well Stimulation/ 41 8 328
Variance Request (43 CFR 3162.3-3) Form 3160-5...........
-----------------------------------------------------
Totals................................................ 4,113 ................ 32,904
----------------------------------------------------------------------------------------------------------------
The general comments about the BLM's analysis under the Paperwork
Reduction Act, other statutes, and various executive orders did not
address the specific information collection associated with the
proposed rule. Therefore, the BLM has not changed the collection in
response to these comments. However, the BLM invites further comments
on the revised collection in this revised proposed rule.
The BLM has not adopted the suggestions to allow operators to
conduct fracturing operations within acceptable operating ranges, to
allow operators to use standard completion reports, or to allow
operators to submit Fluid Management Plans or generic hydraulic
fracturing plans for a targeted zone in resource play areas that can be
referenced when an APD is submitted. Such provisions would not enable
the BLM to meet its statutory responsibilities.
National Environmental Policy Act
The BLM has prepared an environmental assessment (EA) that
concludes that this rule would not constitute a major Federal action
that may result in a significant adverse effect on the human
environment under section 102(2)(C) of the National Environmental
Policy Act (NEPA), 42 U.S.C. 4332(2)(C). The EA and the draft Finding
of No Significant Impact are available for review and on file in the
BLM Administrative Record at the address specified in the ADDRESSES
section.
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).
Executive Order 13211, Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
Under Executive Order 13211, agencies are required to prepare and
submit to OMB a Statement of Energy Effects for significant energy
actions. This Statement is to include a detailed statement of ``any
adverse effects of energy supply, distribution, or use (including a
shortfall in supply, price increases, and increase use of foreign
supplies)'' for the action and reasonable alternatives and their
effects.
Section 4(b) of Executive Order 13211 defines a ``significant
energy action'' as ``any action by an agency (normally published in the
Federal Register) that promulgates or is expected to lead to the
promulgation of a final rule or regulation, including notices of
inquiry, advance notices of proposed rulemaking, and notices of
proposed rulemaking: (1)(i) That is a significant regulatory action
under Executive Order 12866 or any successor order, and (ii) is likely
to have a significant adverse effect on the supply, distribution, or
use of energy; or (2) that is designated by the Administrator of OIRA
as a significant energy action.
The BLM believes that the additional cost per hydraulic fracturing
operation is insignificant when compared with the drilling costs in
recent years, the production gains from hydraulically fractured wells
operations, and the net incomes of entities within the oil and natural
gas industries. For a single well or a type well, the compliance costs
represent about 0.4 to 1.5 percent of the costs of drilling a well. For
a well subsequent to a type well, the costs represent between 0.04 and
0.08 percent of the total drilling costs. For existing wells and
refracture operations, the percentages are even lower, at about 0.01 to
0.03 percent. When averaging the compliance costs across all
operations, the costs represent between
[[Page 31674]]
0.04 and 0.13 percent of the costs of drilling a well.
Since the estimated compliance costs are not a substantial when
compared with the total costs of drilling a well, the BLM believes that
the rule is unlikely to have an effect on the investment decisions of
firms, and the rule is unlikely to affect the supply, distribution, or
use of energy. As such, the rule is not a ``significant energy action''
as defined in Executive Order 13211.
Clarity of the Regulations
Executive Order 12866 requires each agency to write regulations
that are simple and easy to understand. We invite your comments on how
to make these proposed regulations easier to understand, including
answers to questions such as the following:
1. Are the requirements in the proposed regulations clearly stated?
2. Do the proposed regulations contain technical language or jargon
that interferes with their clarity?
3. Does the format of the proposed regulations (grouping and order
of sections, use of headings, paragraphing, etc.) aid or reduce their
clarity?
4. Would the regulations be easier to understand if they were
divided into more (but shorter) sections?
5. Is the description of the proposed regulations in the
SUPPLEMENTARY INFORMATION section of this preamble helpful in
understanding the proposed regulations? How could this description be
more helpful in making the proposed regulations easier to understand?
Please send any comments you have on the clarity of the regulations
to the address specified in the ADDRESSES section.
Authors
The principal authors of this rule are: Subijoy Dutta of the BLM
Washington Office; Donato Judice of the BLM Great Falls, Montana Oil
and Gas Field Office, assisted by the BLM's Division of Regulatory
Affairs and the Department of the Interior's Office of the Solicitor.
List of Subjects 43 CFR Part 3160
Administrative practice and procedure; Government contracts;
Indians--lands; Mineral royalties; Oil and gas exploration; Penalties;
Public lands--mineral resources; Reporting and recordkeeping
requirements.
43 CFR Chapter II
For the reasons stated in the preamble, and under the authorities
stated below, the Bureau of Land Management amends 43 CFR part 3160 as
follows:
PART 3160--ONSHORE OIL AND GAS OPERATIONS
0
1. The authorities citation for part 3160 is revised to read as
follows:
Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and
1751; and 43 U.S.C. 1732(b), 1733, and 1740.
Subpart 3160--Onshore Oil and Gas Operations: General
Sec. 3160.0-3 [Amended]
0
2. In Sec. 3160.0-3 add ``the Federal Land Policy and Management Act
(43 U.S.C. 1701 et seq.),'' after ``the Mineral Leasing Act for
Acquired lands, as amended (30 U.S.C. 351-359),''.
0
3. Amend Sec. 3160.0-5 by adding definitions of ``annulus,''
``bradenhead,'' ``hydraulic fracturing,'' ``hydraulic fracturing
fluid,'' ``proppant,'' ``refracturing,'' ``type well,'' and ``usable
water,'' in alphabetical order and by removing the definition of
``fresh water''.
The additions read as follows:
Sec. 3160.0-5 Definitions.
* * * * *
Annulus means the space around a pipe in a wellbore, the outer wall
of which may be the wall of either the borehole or the casing;
sometimes also called annular space.
* * * * *
Bradenhead means a heavy, flanged steel fitting connected to the
first string of casing that allows the suspension of intermediate and
production strings of casing and supplies the means for the annulus to
be sealed.
* * * * *
Hydraulic fracturing means those operations conducted in an
individual wellbore designed to increase the flow of hydrocarbons from
the rock formation to the wellbore through modifying the permeability
of reservoir rock by fracturing it. Hydraulic fracturing does not
include enhanced secondary recovery such as water flooding, tertiary
recovery, recovery through steam injection, or other types of well
stimulation operations such as acidizing.
* * * * *
Hydraulic fracturing fluid means the liquid or gas, and any
associated solids used in hydraulic fracturing, including constituents
such as water, chemicals, and proppants.
* * * * *
Proppant means a granular substance (most commonly sand, sintered
bauxite, or ceramic) that is carried in suspension by the fracturing
fluid that serves to keep the cracks open when fracturing fluid is
withdrawn after a hydraulic fracture operation.
* * * * *
Refracturing means a hydraulic fracturing operation subsequent to
the completion of a prior hydraulic fracturing operation in the same
well. For purposes of this definition, a hydraulic fracturing operation
is completed when a well begins producing oil or gas, or when equipment
necessary to inject the hydraulic fracturing fluid at sufficient
pressure to fracture the stratum is removed from the well pad,
whichever occurs earlier.
* * * * *
Type well means an oil and gas well that can be used as a model for
well completion in a field where geologic characteristics are
substantially similar within the same field, and where operations such
as drilling, cementing, and hydraulic fracturing are likely to be
successfully replicated using the same design.
* * * * *
Usable water means generally those waters containing up to 10,000
parts per million (ppm) of total dissolved solids. The following
geologic zones are deemed to contain usable water:
(1) Underground sources of drinking water as defined by the U.S.
Environmental Protection Agency or by State law (for Federal lands) or
tribal law (for Indian lands);
(2) Zones in use for supplying water for agricultural or industrial
purposes, regardless of the concentration of total dissolved solids,
unless the operator demonstrates that the existing agricultural or
industrial user would not be adversely affected;
(3) Zones designated by a State (for Federal lands) or a tribe (for
Indian lands) as requiring isolation or protection from oil and gas
operations; and
(4) Zones containing up to 10,000 ppm of total dissolved solids
that are not excluded by paragraphs (A), (B), or (C) of this
definition. The following geologic zones are deemed not to contain
usable water:
(A) Zones from which an operator is authorized to produce
hydrocarbons;
(B) Zones designated as exempted aquifers pursuant to the Safe
Drinking Water Act; and
(C) Zones which the State (for Federal lands) or the tribe (for
Indian lands) has designated as exempt from any requirement to be
isolated or protected from oil and gas operations.
* * * * *
[[Page 31675]]
Subpart 3162--Requirements for Operating Rights Owners and
Operators
0
4. Amend Sec. 3162.3-2 by revising the first sentence of paragraph (a)
and revising paragraph (b) to read as follows:
Sec. 3162.3-2 Subsequent well operations.
(a) A proposal for further well operations must be submitted by the
operator on Form 3160-5 for approval by the authorized officer prior to
the operator's commencing operations to redrill, deepen, perform casing
repairs, plug-back, alter casing, recomplete in a different interval,
perform water shut off, combine production between zones, and/or
convert to injection. * * *
(b) Unless additional surface disturbance is involved and if the
operations conform to the standard of prudent operating practice, prior
approval is not required for acidizing jobs or recompletion in the same
interval; however, a subsequent report on these operations must be
filed on Form 3160-5.
* * * * *
0
5. Revise Sec. 3162.3-3 to read as follows:
Sec. 3162.3-3 Subsequent well operations; Hydraulic fracturing.
(a) Activities To Which This Section Applies.
This section applies to all hydraulic fracturing operations, and
refracturing operations. All other injection activities must comply
with section 3162.3-2.
(b) Isolation of Usable Water to Prevent Contamination. All
hydraulic fracturing and refracturing operations must meet the
performance standard in section 3162.5-2(d) of this title.
(c) When an Operator Must Submit Notification for Approval of
Hydraulic Fracturing. A proposal for hydraulic fracturing or
refracturing must be submitted by the operator and approved by the BLM
before commencement of operations. The proposal may be submitted in one
of the following ways:
(1) The operator may submit with its application for permit to
drill the information required in paragraph (d) of this section;
(2) The operator may submit a proposal for hydraulic fracturing
operations on Form 3160-5 (Sundry Notices and Reports on Wells) as a
Notice of Intent Sundry for approval by the authorized officer prior to
hydraulic fracturing. If the hydraulic fracturing operation would cause
additional surface disturbance, the proposal must include a surface use
plan of operations; or
(3) If an operator has received BLM approval for hydraulic
fracturing operations, it must submit a new Notice of Intent Sundry if:
(i) Hydraulic fracturing or refracturing operations have not
commenced within 5 years after the effective date of approval of the
fracturing operation;
(ii) The operator has significant new information about the geology
of the area, the stimulation operation or technology to be used, or the
anticipated impacts of the fracturing operation to any resource; or
(iii) The operator proposes refracturing of the well. For
refracturing operations, the operator must submit any information in
this section that is required by the authorized officer, including a
mechanical integrity test.
(d) What the Notice of Intent Sundry Must Include. The authorized
officer may prescribe that each proposal contain all or a portion of
the information set forth in section 3162.3-1 of this title. The Sundry
Notice may be submitted for a single well or a group of wells within
the same geologic formation. If the submission is for a group of wells,
the information should describe a type well. If the type well has not
been completed, the cement evaluation log described in paragraph (e)(2)
of this section must be provided to BLM before drilling operations may
begin on the other wells in the group. If information submitted in
accordance with State (on Federal lands) or tribal (on Indian lands)
laws or regulations meets the standards prescribed by the BLM, such
information may be submitted to the BLM as part of the Sundry Notice.
The Notice of Intent Sundry must include the following:
(1) The geological names, a geological description, and the
proposed measured depth of the top and the bottom of the formation into
which hydraulic fracturing fluids are to be injected;
(2) The measured or estimated depths (both top and bottom) of all
occurrences of usable water by use of a drill log from the subject well
or another well in the vicinity and within the same field;
(3) The proposed measured depth of perforations or the open-hole
interval, estimated pump pressures, and information concerning the
source and location of water supply, such as reused or recycled water,
or rivers, creeks, springs, lakes, ponds, and wells, which may be shown
by quarter-quarter section on a map or plat, or which may be described
in writing. It must also identify the anticipated access route and
transportation method for all water planned for use in fracturing the
well;
(4) A plan for the proposed hydraulic fracturing design that
includes, but is not limited to, the following:
(i) The estimated total volume of fluid to be used;
(ii) The anticipated surface treating pressure range;
(iii) The maximum injection treating pressure;
(iv) The estimated or calculated fracture direction, length, and
height, including the estimated fracture propagation plotted on the
well schematics and on a map. The map must be of a scale no smaller
than 1:24,000; and
(v) The estimated vertical distance to the nearest usable water
aquifer above the fracture zone;
(5) The following information concerning the handling of recovered
fluids:
(i) The estimated volume of fluid to be recovered during flowback,
swabbing, and recovery from production facility vessels;
(ii) The proposed methods of handling the recovered fluids,
including, but not limited to, pit requirements, pipeline requirements,
holding pond use, re-use for other stimulation activities, or
injection; and
(iii) The proposed disposal method of the recovered fluids,
including, but not limited to, injection, hauling by truck, or
transporting by pipeline; and
(6) The authorized officer may request additional information prior
to the approval of the Notice of Intent Sundry.
(e) Monitoring of Cementing Operations and Cement Evaluation Log
Prior to Hydraulic Fracturing.
(1) During cementing operations the operator must monitor and
record the flow rate, density, and treating pressure and submit a
cement operation monitoring report to the authorized officer within 30
days after completion of the hydraulic fracturing operations.
(2) The operator must run a cement evaluation log or logs on each
casing that protects usable water and the operator must submit those
logs to the authorized officer within 30 days after completion of the
hydraulic fracturing operations, except as provided under (e)(3) of
this section. A cement evaluation log, is any one of a class of tools
that verify the integrity of annular cement bonding, such as, but not
limited to, a cement bond log, ultrasonic imager, variable density
logs, micro-seismograms, CBLs with directional receiver array,
ultrasonic pulse echo technique, or isolation scanner. An operator may
select the tool used to prepare the CEL, as long as it is at least as
effective in verifying the integrity of annular cement bonding as is a
cement bond log.
[[Page 31676]]
(3) An operator is not required to run a cement evaluation log on
the casings of a subsequent well where an operator:
(i) Submitted a cement evaluation log for a type well (see
paragraph (d) of this section) that shows successful cement bonding to
protect against downhole fluid cross-migration into water zones; and
(ii) Completes a subsequent well or wells with the same
specifications and geologic characteristics as the type well, and
approved in the same group sundry notice for the same field (see
paragraph (d) of this section), and the cementing operations monitoring
data parallels those of the type well.
(4) For any well, if there is an indication of an inadequate cement
job (such as, but not limited to, lost returns, cement channeling, gas
cut mud, or failure of equipment), then the operator must report that
information to the authorized officer within 24 hours, followed by a
written report within 48 hours. Prior to commencing hydraulic
fracturing operations, the operator must run a cement evaluation log
showing that the inadequate cement job has been corrected and the
occurrences of usable water have been isolated to protect them from
contamination. At least 72 hours before commencing the hydraulic
fracturing operation, the operator must submit:
(i) A signed certification indicating that the operator corrected
the inadequate cement job; and
(ii) Documentation that shows that there is adequate cement
bonding.
(5) The operator must submit the information required by paragraph
(e)(1), and (e)(2) of this section with the Subsequent Report Sundry
Notice required in paragraph (i) of this section.
(f) Mechanical Integrity Testing Prior to Hydraulic Fracturing.
Prior to hydraulic fracturing, or refracturing, the operator must
perform a successful mechanical integrity test (MIT) of the vertical
sections of the casing.
(1) If hydraulic fracturing through the casing is proposed, the
casing must be tested to not less than the maximum anticipated treating
pressure.
(2) If hydraulic fracturing through a fracturing string is
proposed, the fracturing string must be inserted into a liner or run on
a packer-set not less than 100 feet below the cement top of the
production or intermediate casing. The fracturing string must be tested
to not less than the maximum anticipated treating pressure minus the
annulus pressure applied between the fracturing string and the
production or intermediate casing.
(3) The MIT will be considered successful if the pressure applied
holds for 30 minutes with no more than a 10 percent pressure loss.
(g) Monitoring and Recording During Hydraulic Fracturing.
(1) During any hydraulic fracturing or refracturing operation, the
operator must continuously monitor and record the annulus pressure at
the bradenhead. The pressure in the annulus between any intermediate
casings and the production casing must also be continuously monitored
and recorded. A continuous record of the annulus pressure during the
fracturing operation must be submitted with the required Subsequent
Report Sundry Notice (Form 3160-5, Sundry Notices and Reports on Wells)
identified in paragraph (i) of this section.
(2) If during any hydraulic fracturing or refracturing operation
the annulus pressure increases by more than 500 pounds per square inch
as compared to the pressure immediately preceding the stimulation, the
operator must take immediate corrective action and must orally notify
the authorized officer as soon as practicable, but no later than 24
hours following the incident. Within 30 days after the hydraulic
fracturing operations are completed, the operator must submit a report
containing all details pertaining to the incident, including corrective
actions taken, as part of a Subsequent Report Sundry Notice (Form 3160-
5, Sundry Notices and Reports on Wells).
(h) Storage of all recovered fluids must be in either tanks or
lined pits. The authorized officer may require any other BLM approved
method to protect the mineral resources, other natural resources, and
environmental quality from the release of recovered fluids.
(i) Information that Must be Provided to the Authorized Officer
After Completed Operations. The information required in paragraphs
(i)(1) through (i)(8) of this section must be submitted to the
authorized officer within 30 days after the hydraulic fracturing or
refracturing operations are completed. The information is required for
each well, even if the BLM approved fracturing of a group of wells (see
Sec. 3162.3-3(d)). The information required in paragraph (i)(1) of
this section must be submitted to the authorized officer through
FracFocus, another BLM-designated database, or in a Subsequent Report
Sundry Notice (Form 3160-5, Sundry Notices and Reports on Wells). If
information is submitted through FracFocus or another designated
database, the operator must specify that the information is for a
Federal or an Indian well, certify that the information is correct, and
certify compliance with applicable law as required by paragraph
(i)(7)(ii) or (i)(7)(iii) of this section using FracFocus or the
designated database. The information required in paragraphs (i)(2)
though (i)(8) of this section must be submitted to the authorized
officer in a Subsequent Report Sundry Notice. The operator is
responsible for the information submitted by a contractor or agent, and
the information is considered to have been submitted directly from the
operator to the BLM. The operator must submit the following
information:
(1) The true vertical depth of the well, total water volume used,
and for each chemical used (including base fluid) the trade name,
supplier, purpose, ingredients, Chemical Abstract Service Number (CAS
), maximum ingredient concentration in additive (% by mass),
and maximum ingredient concentration in hydraulic fracturing fluid (%
by mass).
(2) The actual measured depth of perforations or the open-hole
interval, and actual pump pressures and the source(s) and location(s)
of the water used in the hydraulic fracturing fluid.
(3) The actual surface pressure and rate at the end of each stage
of the hydraulic fracturing operation, and the actual flush volume,
rate, and final pump pressure.
(4) The actual, estimated, or calculated fracture length, height
and direction;
(5) The following information concerning the handling of recovered
fluids:
(i) The volume of fluid recovered during flowback, swabbing, or
recovery from production facility vessels;
(ii) The methods of handling the recovered fluids, including, but
not limited to, transfer pipes and tankers, holding pond use, re-use
for other stimulation activities, or injection; and
(iii) The disposal method of the recovered fluids, including, but
not limited to, injection, hauling by truck, or transporting by
pipeline. The disposal of fluids produced during the flowback from the
hydraulic fracturing process must follow the requirements set out in
Onshore Order Number 7, Disposal of Produced Water, Section III.B.
(October 8, 1993, 58 FR 58506).
(6) If the actual operations deviate from the approved plan, the
deviation(s) must be documented and explained.
(7) A certification signed by the operator that:
(i) Wellbore integrity was maintained prior to and throughout the
hydraulic fracturing operation, as required by paragraph (b) of this
section. The operator must also certify that it complied with the
requirements in
[[Page 31677]]
paragraphs (e), (f), (g), and (h) of this section;
(ii) For Federal lands, the hydraulic fracturing fluid used
complied with all applicable permitting and notice requirements as well
as all applicable Federal, State, and local laws, rules, and
regulations; and
(iii) For Indian lands, the hydraulic fracturing fluid used
complied with all applicable permitting and notice requirements as well
as all applicable Federal and tribal laws, rules, and regulations.
(8) The operator must submit well logs and records of adequate
cement bonds including the cementing operations monitoring report, any
cement evaluation log, and the result of the mechanical integrity test
as required by paragraphs (e)(1), (e)(2), and (f) of this section.
(9) The authorized officer may require the operator to provide
documentation substantiating any information submitted under paragraph
(i) of this section.
(j) Identifying Information Claimed to be Exempt from Public
Disclosure.
(1) For the information required in paragraph (i)(1) of this
section, the operator will be deemed to have waived any right to
protect from public disclosure information submitted with a Subsequent
Report Sundry Notice or through FracFocus or another designated
database. For information required in paragraph (i)(1) of this section
that the operator claims to be exempt from public disclosure, the
operator must submit to the BLM an affidavit that:
(i) Identifies the Federal statute or regulation that allows
withholding of the information from the BLM or prohibits the BLM from
disclosing the information if it were in the BLM's possession;
(ii) Affirms that the information is not publicly available;
(iii) Affirms that the information is not required to be publicly
available under any applicable law;
(iv) Affirms that the release of the information would likely harm
the operator's competitive position; and
(v) Affirms that the information is not readily apparent through
reverse engineering.
(2) The BLM may require any operator to disclose to the BLM any
information claimed to be exempt from public disclosure, along with any
other relevant information.
(3) If the BLM determines that the information is not exempt from
disclosure, the BLM will make the information available to the public
after providing the operator with no fewer than 10 business days'
notice of the BLM's determination.
(4) The operator must maintain records of the information claimed
to be exempt from disclosure for the period of time as required by
section 3162.4-1(d) of this title.
(k) Requesting a Variance from the Requirements of this Section.
The operator may make a written request to the authorized officer for a
variance from the requirements under this section. The BLM encourages
submission using a Sundry Notice (Form 3160-5, Sundry Notices and
Reports on Wells). In cooperation with a State (for Federal lands) or a
tribe (for Indian lands), the BLM may issue a variance that would apply
to all wells within a State or within Indian lands, or to specific
fields or basins within the State or the Indian lands, if the BLM finds
that the variance meets the criteria in paragraph (k)(2) of this
section.
(1) A request for a variance must specifically identify the
regulatory provision of this section for which the variance is being
requested, explain the reason the variance is needed, and demonstrate
how the operator will satisfy the objectives of the regulation for
which the variance is being requested.
(2) The authorized officer, after considering all relevant factors,
may approve the variance, or approve it with one or more conditions of
approval, only if the BLM determines that the proposed alternative
meets or exceeds the objectives of the regulation for which the
variance is being requested. The decision whether to grant or deny the
variance request is entirely within the BLM's discretion.
(3) A variance under this section does not constitute a variance to
provisions of other regulations, laws, or orders.
(4) Due to changes in Federal law, technology, regulation, BLM
policy, field operations, noncompliance, or other reasons, the BLM
reserves the right to rescind a variance or modify any conditions of
approval. The authorized officer must provide a written justification
if a variance is rescinded or a condition of approval is modified.
0
6. Amend Sec. 3162.5-2 by revising the first sentence of paragraph (d)
to read as follows:
Sec. 3162.5-2 Control of wells.
* * * * *
(d) Protection of usable water and other minerals. The operator
must isolate all usable water and other mineral-bearing formations and
protect them from contamination.
* * * * *
Tommy P. Beaudreau,
Acting Assistant Secretary, Land and Minerals Management.
[FR Doc. 2013-12154 Filed 5-23-13; 8:45 am]
BILLING CODE 4310-84-P
