GAO report lists ways BLM could improve onshore resource oversight

Updated guidance, increased coordination, and comprehensive data could improve the US Bureau of Land Management’s oversight of federal onshore oil and gas resources, the Government Accountability Office said in a report it released on May 9.

It recommended that the US Interior Secretary direct BLM’s director to:

• Take steps to establish a documented process that will provide reasonable assurance that oil and gas rules and guidance is reviewed and periodically updated.

• Take steps to establish formal agreements with all relevant state regulatory agencies regarding oil and gas inspection activities. BLM also should make better use of states’ inspection resources to avoid duplicative inspections and other oversight activities to the extent possible, the report added.

• Ensure that all BLM field offices with responsibility for protecting federal and Indian resources have the data and direction needed to efficiently identify the location of such resources and new and existing oil and gas wells. The field office also should use the data consistently to identify situations in which federal and Indian resources are at risk of being extracted without BLM’s approval, the report said.

• Ensure communitization agreements that determine allocation of production and whether wells are properly spaced, among other things, are reviewed within required time frames. BLM is required by statute to make all allocation determinations within 120 days of a request, the report noted. In addition, the US Department of the Interior’s Interagency Standard Operating Procedures require BLM to review communitization agreements for Indian leases within 30 days of a request.

When GAO investigators asked BLM officials why the deadlines were not always met, they were told it partly was because the agency does not have enough employees to do the job, according to the congressional watchdog service’s report. “As a result of these delays, approval of a communitization agreement may lag production and delay royalty payments to the federal government, tribal nations, and individual Indian oil and gas resource owners,” it said.

GAO investigators found that BLM’s management and oversight effectiveness is hindered by its reliance on outdated rules and guidance, the report indicated. As an example, it said the agency has not followed DOI’s guidance to routinely review rules and update them consistently along with technological advances.

“As a result, some of BLM's rules and guidance governing oil and gas development have not kept pace with technological advancements, such as its guidance on well spacing which, among other things, determines how to maximize oil and gas production from a formation,” it said. “Improper spacing guidance could lead to lower levels of oil and gas production and, therefore, less revenue for the federal government and tribes.”

BLM also has not developed formal agreements to work more closely with state regulatory agencies, as called for in its internal guidance, the report said. “As a result, BLM and state agency officials told GAO that agencies conduct duplicative inspections of some wells, while leaving other wells uninspected,” it said.

In responses to a draft version of the report in late April, Tommy P. Beaudreau, DOI’s Principal Deputy Assistant Secretary for Land and Minerals, and Thomas L. Tidwell, director of the US Forest Service for which BLM also manages oil and gas resources, generally agreed with the findings.

Contact Nick Snow at nicks@pennwell.com.

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