Fiscal Year 2021 Oil and Gas Inspection and Enforcement Strategy Matrices Instructions and Strategy Goals

IM 2021-006

Instruction Memorandum

December 1, 2020

In Reply Refer To:
3160 (HQ-310) P
Supersedes IM 2019-043

EMS TRANSMISSION 12/03/2020
Instruction Memorandum No. 2021-006
Expires: 09/30/2024

To: All Field Office Officials

From: Assistant Director, Energy, Minerals, and Realty Management

Subject: Fiscal Year 2021 Oil and Gas Inspection and Enforcement Strategy Matrices Instructions and Strategy Goals

DDs: 11/16/2020; 12/10/2020; 09/23/2021; and 10/15/2021

Program Area: Fluid Minerals, Inspection and Enforcement.

Purpose: This Instruction Memorandum (IM) provides the Bureau of Land Management (BLM) Field Offices (FO) with oil and gas inspection and enforcement (I&E) strategy inspection plan matrices, instructions, and goals for conducting oil and gas I&E activities in Fiscal Year (FY) 2021.

Administrative or Mission Related: Mission.

Policy/Action: For FY 2021, all offices are to complete 100 percent of the high-priority inspections and to share resources across FO boundaries to accomplish this goal. The BLM will continue the risk-based strategy for production inspections, Records Analysis (RA) and Records Verification Review (RV) inspections, and idle well inspections. The BLM will follow the instructions for drilling inspection prioritization in Attachment 1. For prioritization of abandonment, environmental, and workover inspections, the BLM will continue to follow the guidance in BLM Handbook (H-3160-5), Inspection and Enforcement Documentation and Strategy Development Handbook.

The BLM’s goal is to have the entire I&E strategy be risk-based and in the Automated Fluid Minerals Support System (AFMSS). The BLM has automated the risk ratings for the production inspection and the idle well inspection portions of the strategy in AFMSS. The risk rating factors are on a scale of 1 to 10, with 1 being the lowest and 10 representing the highest risk. The AFMSS also applies a weighting factor for each of the risk rating factors based on the relative importance of the risk. Using the resulting weighted factors, AFMSS determines an overall risk rating for the identified type of inspection (production or idle). Attachment 2 details the risk rating and weighting factors for the idle well and production inspections.

The AFMSS carries the risk information forward to a matrix in the AFMSS database for the FOs to plan their technical field inspections (e.g., drilling, abandonment, production) based on their available workforce and workload. The BLM has not yet automated the RA and RV inspections or the environmental inspection portions of the strategy and therefore, for FY 2021, the FOs must plan these inspections manually using the attached spreadsheet (Attachment 3).

For FY 2021, the risk rating and weighting factors remain the same as FY 2020; the minimum high-risk factor is 4.0 for both production and idle well inspections. The BLM stabilized the factors at the FY 2014 level allowing for more consistent reporting from year-to-year and for more reliable planning for future years. In 2019, the Government Accountability Office (GAO) identified the Department of the Interior (DOI)’s management of federal oil and gas resources as high-risk. In response, the BLM established a goal to inspect all (100 percent) of high-priority cases (overall production inspection risk of 4.0 and above) and at least one-third of the cases with overall rating factors lower than 4.0. For idle well inspections in FY 2021, the goal is to have each FO inspect 20 percent of the high-risk wells (overall risk rating of 4.0 and above). For RA and RV inspections, the goal is to complete an RA on 10 percent of the cases with a production inspection overall rating of 4.0 or higher and to complete an RV inspection on 10 percent of the remainder of the production inspection cases. The cases selected for review are to be a mix of various operators and geographic locations. For drilling, abandonment, and environmental inspections, the goal is to inspect all wells/facilities rated as high priority.

Creating the Inspection Strategy Matrices

For FY 2021, the FOs are to create the I&E strategy using a combination of AFMSS and spreadsheets (Attachment 3). For the technical field inspections (e.g., drilling, abandonment, production), the FOs will use the matrix in AFMSS (IEP.13S screen). Attachment 4 provides the instructions for running the risk-based reports for production inspections and idle well inspections, along with instructions for completing the matrix in AFMSS. The AFMSS database automatically created the FY 2021 priorities on October 1, 2020, which allows the FOs to run the risk-based reports and create their strategy matrices anytime thereafter. Offices need to be aware that the AFMSS database is dynamic and that changes to data, such as a change of operator, can change the production inspection case ranking. Therefore, the production inspection goals within the matrix may change until the FO saves an official version of the strategy. After the FO saves an official version of the strategy, the production inspection goal remains constant throughout the FY.

For the RA/RV and environmental inspection portions of the strategy, the FOs will use the spreadsheet provided in Attachment 3. Attachment 5 provides the instructions for completing the Attachment 3 spreadsheet. For the FOs with Indian Trust responsibility, the FOs must complete two separate Attachment 3 spreadsheets (i.e. one for Federal data and one for Indian Trust data).

In addition to completing the technical inspection strategy in AFMSS, the FOs must complete and return the Excel spreadsheet (Attachment 3) to the Headquarters Office Division of Fluid Minerals (HQ-310) and their State Office (SO) two weeks after issuance of this IM. Each SO should require their FOs to submit draft spreadsheets (Attachment 3) to them for review prior to the HQ-310 due date. This oversight review by the SO ensures improved consistency and awareness within the state.

Taking into consideration the number of inspection hours available to the FO annually, the FO will develop a plan to identify the number of inspections planned for completion during the year. Each FO must follow the “Inspection Workloads - Priority Order” as detailed in this IM.

Increased Inspection Time for Production Inspections

The BLM published new oil and gas measurement regulations 43 CFR Subparts 3170, 3171, 3173, 3174, and 3175 that became effective January 17, 2017. The new regulations contain additional requirements and are more complex than the previous regulations. These changes require inspectors to use additional forms and will result in increased production inspection times. Therefore, offices should increase their average field time for production inspections by 5 percent and increase their average office time for production inspections by 1.5 percent when completing the strategy matrix. Attachment 4 contains instructions for determining the increased inspection times. The change in average inspection times will result in a slight decrease in the number of planned low production inspections.

Amending the Inspection Strategy Matrices

Due to the number of inspection databases, it is difficult for the HQ-310 to know when a FO creates new versions of the matrix. Therefore, FOs must notify the HQ-310 and their SO by email of all “Official Versions” of the matrix (AFMSS or Attachment 3) created after November 16, 2020, within 7 calendar days. The first “Official Version” the FO saves sets the goals and expectations for the FY 2021, subsequent “Official Versions” do not affect the goals and expectations.

Inspection Workloads - Priority Order

In determining the number of each type of inspection, use the following priorities. Please keep in mind, however, that conducting high-priority production inspections is a top priority for the DOI and the BLM’s headquarters leadership. The FOs must take the necessary steps (e.g., sharing resources, using flexible work schedules) to conduct production inspections on 100 percent of the high-priority cases to meet this goal. However, due to the time sensitivity of drilling and abandonment inspections, and the need to ensure protection of resources and public health and safety, drilling and abandonment inspections remain the highest priorities in addition to high-risk production inspections.

For Petroleum Engineering Technicians (PET):

One-hundred percent (100%) of High-priority drilling wells.
One-hundred percent (100%) of High-priority plugging operations.
One-hundred percent (100%) of Federal and Indian production cases with an overall risk of 4.0 and above. If the FO anticipates not being able to accomplish all these cases, immediately begin to coordinate with their SO for additional resources (staff) from other FOs.
Twenty percent (20%) of high-priority idle wells with an overall risk of 4.0 and above.
Production accountability inspections, such as RA and RV.
Well production testing that may occur during or after drilling operations, but before placing the well on a producing well status (see Attachment 6 for details).
High-priority workover operations.
One-third of Federal and Indian production cases with an overall risk below 4.0. (FOs should conduct inspections in overall risk order, highest to lowest considering the location of cases to minimize travel times and cost and not randomly.)
Production inspections on cases that have had a change of operator (see Attachment 6 for details).

For Production Accountability Technicians (PAT):

RA inspections.
RV inspections.

For Surface Compliance Specialists:

High-priority construction/drilling wells (surface compliance).
High-priority environmental inspections (see Attachment 6 for details).
Interim Reclamation inspections (see Attachment 6 for details).
Final Reclamation inspections.

Inspection Forms

To facilitate complete and accurate documentation of inspections, Attachment 7 lists the mandatory inspection forms and internal links to BLM forms. It is critical to always verify that the form in use is the most recent as they are updated from time-to-time. The Drilling Form 3160-10 and Abandonment Form 3160-13 currently available in AFMSS I are no longer valid; use the updated forms. Upon deployment of AFMSS II the updated forms will again become available as well as several other forms.

Closing Inspections

Once an inspection is open in AFMSS, the inspection remains “Open” until the inspection is completed. However, inspections are not to remain open while enforcement actions (Incidents of Noncompliance (INC) or Written Orders) are pending. Enter Enforcement Action dates (follow-up, extensions, etc.) for the individual INC or Written Order. Add the amount of time spent conducting follow-up inspections to the ‘Office,’ ‘Travel,’ and/or ‘Inspection’ Time(s) for the original Inspection Activity where the violation occurred. Do not change the inspection close date. In summary, close an inspection when the last inspection activity is complete; do not leave the inspection open because there is an outstanding enforcement action.

Also, do not close inspections at the end of the FY (including the end of FY 2020) and re-open after the start of the next FY in order to complete the inspection later. Keeping incomplete inspections in AFMSS at the end of the FY allows the BLM to accurately count and report the number of inspections the BLM completes each FY. Closing an incomplete inspection and re-opening it the following year, as was a past practice, led to inconsistent reporting of program accomplishments. The goal remains to close all open inspections by the end of each FY; however, there are circumstances that may prevent that from occurring.

Completing Inspection Data Entry

Offices must enter all FY 2021 completed inspections in AFMSS by September 23, 2021. This will allow State I&E coordinators and HQ-310 one week prior to the end of the FY to reconcile any anomalies. The HQ-310 will begin pulling end-of-year accomplishment reports on
October 1, 2021.

Additional Guidance

In the first half of FY 2020 there were five (5) “Verbal Warnings” representing 0.15 percent out of the total 3,404 compliance actions recorded in AFMSS. Effective immediately, “Verbal Warnings” are not allowed. An INC must always be issued within five (5) working days of discovery. Oral orders must not be used to circumvent issuing an INC for violations and must always be followed with a written order within five (5) working days.

The Notice of Incidents of Noncompliance (INC), Form 3160-9, and Notice of Written Order (Order), Form 3160-18, as appropriate, are the only methods authorized to notify operators of a violation, issue, or problem found during the following inspection types and associated activities, or a violation of regulation (43 CFR Parts 3160 and 3170), Onshore Oil and Gas Order (OOGO), or Notice to Lessee (NTL):

Beneficial Use;
Production Inspection;
RA (including orders to submit production records);
RV (including orders to submit production records);
Alleged Thief;
Drilling Well;
Environmental Surface (post approval);
Idle Well;
Plugging Operations;
Workover;
Undesirable Event;
Failure to comply with an INC (Form 3160-9) or Order (Form 3160-18 or letter); or
Failure to obtain prior approval, or other violation of regulation, OOGO, or NTL

Only individuals certified as inspectors are authorized to sign the INC Form 3160-9 or Order, Form 3160-18. The letter format/versions of an INC for failure to comply with an Order or to issue an Order are the only methods authorized to notify non-operators (i.e. purchasers, transporters, contractors, operating rights owners, Lessees of Record Title, etc.). Letter format INCs and Orders are signed by the Field Office Authorized Officer and must be entered in AFMSS within five (5) working days.

The PAT group and Measurement Production Team (MPT) at the National Operations Center (NOC) are available to assist FOs in performing production inspections and production accountability reviews (RA and RV) and referrals based on unfamiliar or questionable measurement methods and activities. Attachment 8 provides details for requesting referrals to the PAT group for RA and RV inspections; the due date for submitting referral requests to the NOC is November 16, 2020. Attachment 9 provides a brief description of the MPTs roles, interaction with BLM FOs, and other agencies. To request assistance with measurement issues, field inspections, or for more information contact Abdelgadir Elmadani, Acting Oil and Gas Section Chief (NOC), at 303-236-9359 or aelmadani@blm.gov.

In development of the strategy matrices, the FOs must coordinate several different areas, including:

Coordination must take place with the applicable Tribes and/or the Bureau of Indian Affairs to ensure the BLM is aware of their concerns regarding the prioritization of cases.
Interdisciplinary coordination must occur within the FOs to ensure that the FO coordinates all environmental priority ratings with appropriate staff such as Natural Resource Specialists or Environmental Scientists.
Coordination between the SO and reporting FOs is essential to ensure the FOs meet all the inspection goals, particularly high-priority drilling, plugging, production, and environmental inspections.
Coordination among states must take place to enhance the sharing of resources to accomplish the nationwide goal of completing 100 percent of the high-priority production inspections.

Timeframe: This IM is effective immediately. The FOs must complete and save the technical field inspection matrix in AFMSS as “Official” by December 10, 2020. If the FOs save a new “Official” version of the matrix (AFMSS or Attachment 3) after November 2, 2020, they must notify Michael Wade (mwade@blm.gov) and William Lambert (wlambert@blm.gov) via email within seven (7) calendar days. The FOs must also submit the completed matrix spreadsheets (Attachment 3) to HQ-310 and their SO by December 10, 2020. The FOs must enter all FY 2021 completed inspections in AFMSS by September 23, 2021. The SOs must send a memorandum to HQ-310 by October 15, 2021, with the results of the drilling priority ranking review as identified in Attachment 1.

Budget Impact: All FOs should have the capacity to accomplish all the required high priority goals of the strategy. If necessary, FOs will work with their SO for supplemental resources.

Background: The BLM provides instructions for preparing the Inspection Plan matrices on an annual basis to coincide with any current updates to AFMSS and/or other policy changes that may occur on an annual basis. This guidance will help BLM meet the current Secretarial priority to “Sustainably Develop Our Energy and Natural Resources” by ensuring efficiency in the BLM operations. Additionally, the BLM will accomplish Executive Order 13783, “Promoting Energy Independence and Economic Growth,” by administering the appropriate development of all forms of energy on our Federal lands.

Manual/Handbook Sections Affected: The BLM H-3160-5 (Release 3-333, 9/18/2009) will incorporate the interim policy contained in this IM during its next revision.

Coordination: This IM was coordinated with the DOI Office of the Solicitor and BLM Headquarters Fluid Minerals Division, SO I&E Coordinators, NOC personnel, and FO personnel.

Contact: If you have any questions concerning the content of this IM, please contact Nicholas Douglas at 202-208-4201. Your staff may contact Donna Dixon, Chief, Division of Fluid Minerals, at 505-206-1808 (dbdixon@blm.gov). For questions regarding the strategy goals or strategy amendments, contact William Lambert at 406-896-5328 (wlambert@blm.gov) or Michael Wade at 303-239-3737 (mwade@blm.gov).

Signed by: Authenticated by:

Nicholas E. Douglas Robert M. Williams

Assistant Director Division of Regulatory Affairs,(HQ-630)

Energy, Minerals, and Realty Management

9 Attachments