Resolution of Water Vapor Adjustments to Volume and Heating Value during a Production Audit

IM 2018-068
Instruction Memorandum

United States Department of the Interior

BUREAU OF LAND MANAGEMENT

Washington, D.C.  20240

https://www.blm.gov

                                                                                                                                                                          May 31, 2018

 

In Reply Refer To:

3170 (310) P  

EMS TRANSMISSION 07/03/2018

Instruction Memorandum No. 2018-068                   

Expires: 9/30/2021

To:                   All Field Office Officials

From:               Assistant Director, Energy, Minerals and Realty Management

Subject:           Resolution of Water Vapor Adjustments to Volume and Heating Value during a Production Audit                                                                   

Program Area:  Oil and Gas Exploration and Operations.

Purpose:  This Instruction Memorandum (IM) outlines the Bureau of Land Management (BLM) policy and procedures for resolving instances where operators deduct assumed water vapor content from measured gas volumes or heating values.  This IM modifies the guidance in IM 2009-186, Policy for Verifying Heating Value of Gas Produced from Federal and Indian Leases.

Administrative or Mission Related:  Mission Related.

Policy/Action:

  1. For reporting months prior to February 2017, IM 2009-186 is modified as follows: Operators may include assumed water vapor content in the gas analysis report and report the heating value on Oil and Gas Operator Report, Part B (OGOR B) based on this assumed water vapor content.  If an operator chooses to make this adjustment, then the Authorized Officer should accept the report where the operator has done the following:
    1. Calculate the mole percent of assumed water vapor under the Institute of Gas Technology (IGT) Bulletin No. 8 (1955), using the average flowing pressure (psia) and flowing temperature from the quantity transaction record (QTR, also known as a volume statement) corresponding to the reporting month.
    2. Add the assumed mole percent of water vapor to the list of components identified in the gas analysis report(s) that is/are in effect during the reporting month and annotate the water vapor content as an assumed value based on IGT Bulletin No. 8.
    3. Re-normalize the concentrations of the other components so that the total mole percent adds up to 100.
    4. Calculate and report the new heating value based on the revised gas composition.  The new heating value must be calculated at the following conditions: “real”, “gross”, 14.73 psia, and 60°F.
    5. Maintain copies of the original and revised gas analyses and submit them to the BLM on request.
    6. An additional step the operator may take is to modify the volume statement based on the new relative density calculated from gas analysis that includes water vapor. 

Further guidance on how to determine and enforce the allowable deduction of assumed water vapor content from heating value is given in Attachment 1, “Implementation of Allowable Water Vapor Deduction Guidance.”

  1. For reporting months of February 2017 and later, operators must report heating value under 43 CFR 3175.126(a).
  2. Field offices should take the following action if operators report the heating value on OGOR B on a “wet” basis (as defined in the Background section):
    1. For reporting months prior to February 2017:  Use the procedures described in IM 2009-186 to obtain amended reports.
    2. For reporting months of February 2017 and later:  Issue a notice of violation for failure to comply with 43 CFR 3175.126(a) and require amended reports.
  3. If operators adjust the measured volume for assumed concentrations of water vapor, require amended reports and issue a notice of violation using the following references:
    1. For reporting months prior to February 2017: Onshore Order No. 5, III.C.21 (when mechanical recorders are used) or the applicable statewide NTL for Electronic Flow Computers, paragraph 3 (when electronic flow computers are used)
    2. For reporting months of February 2017 and later: 43 CFR 3175.126(b)(1).

Timeframe:  This IM is effective upon issuance. 

Budget Impact:  There is an increased workload associated with implementing this policy.  Additional staff time may be necessary to verify that heating value is properly reported, which may affect other workload.

Background:  Because water vapor is not typically measured as part of a gas analysis, operators must make an assumption regarding water vapor content.  The three most common assumptions are:

  • “Dry”:  there is no water vapor in the gas
  • “Wet”: the gas is saturated with water vapor at 14.73 psia and 60°F
  • “As delivered”:  the gas is saturated with water vapor at meter pressure and temperature

To address the different reporting methodologies, the BLM developed IM 2009-186 which directed field offices to verify that the heating value shown on OGOR B is reported on a “dry” basis, unless the water vapor was physically measured.  The IM acknowledged that the BLM cannot directly enforce the reporting of “dry” heating value and referenced ONRR regulations (30 CFR 1202.152(a)(i)(i)) as a mechanism for enforcement.

In July 2017, Anadarko submitted a letter objecting to a BLM audit finding by the Rawlins Field Office which determined Anadarko had deducted assumed water vapor content from the measured volume.  The Rawlins Field Office required Anadarko to remove the water vapor deduction from the volume and amend all reports.

In the letter, Anadarko stated that AGA Report No. 3 (1985), which is incorporated by reference in Onshore Order 5, allows for water vapor adjustments.  Therefore, according to Anadarko, Onshore Order 5 also allows for water vapor adjustments.

Upon analysis (see Attachment 2), the BLM agreed with some of the points made by Anadarko.  Primarily, the BLM agrees that AGA Report No. 3 (1985) allows for water vapor adjustment of heating value and neither the BLM nor ONRR can take enforcement action as long as the volume and heating value are based on the “same degree of water saturation.”  However, the BLM believes that AGA Report No. 3 (1985) explicitly refers, in the recommendation to adjust for assumed levels of water vapor, to the gas analysis and not to an adjustment of the gas volume.  There is no provision or implication in AGA Report No. 3 (1985) that allows for a volume adjustment based on assumed water vapor content.  Onshore Order 5 III.C.21 states: “Volumes of gas delivered shall be determined according to the flow equations specified in AGA Committee Report No. 3.”  Therefore, volume adjustments for assumed water vapor content are in violation of Onshore Order 5. 

Based on our analysis, this IM changes the policy of IM 2009-186 that required operators to report only “dry” heating value unless they physically measured water vapor. Operators may now deduct assumed water vapor content from the heating value under the provisions of the “Policy/Action” section above.

Manual/ Handbook Sections Affected:  None.

Coordination:  This IM was coordinated with the Department of the Interior, Office of the Solicitor, the BLM Washington Office Division of Fluid Minerals, and the BLM State and Field Offices. 

Contact:  State Directors my direct any questions to me at 202-208-4201.  Staff may contact Sheila Mallory, Acting Division Chief Fluid Minerals (WO-310) at 202-912-7145 and smallory@blm.gov; or Rich Estabrook, Petroleum Engineer (WO-310) at 707-468-4052 and restabro@blm.gov. 

 

Signed by:                                                       Authenticated by:

Timothy R. Spisak                                          Robert M. Williams

Acting, Assistant Director                              Division of IT Policy and Planning

Energy, Minerals, and Realty

    Management

 

2 Attachments

  1. Implementation of Allowable Water Vapor Deduction Guidance (8 pp)
  2. BLM Analysis of Anadarko Letter (6 pp)

Attachments

Fiscal Year

2018