API Fall Meeting Final Regulations 43 CFR Part 3170 October 19, 2016 - - PowerPoint PPT Presentation

API Fall Meeting

Final Regulations 43 CFR Part 3170

October 19, 2016

BLM Presentation 10/19/2016

Legal Disclaimer

This presentation is not an official statement of policy by the Bureau of Land Management (BLM). This summary presentation was prepared for informational purposes only and does not in any way limit or modify the regulations described

• herein. Interested parties should not rely on the

contents of this presentation and should take care to review the official text of the regulations at 43 C.F.R. subparts 3170, 3173, 3174, and 3175.

BLM Presentation 10/19/2016

A Readers Guide…

Subpart 3174 (Onshore Order 4): Oil Measurement Subpart 3175 (Onshore Order 5, Statewide NTLs for electronic flow computers): Gas Measurement Subpart 3173 (Onshore Order 3): Site security, FMP, Commingling, Off-lease measurement Subpart 3170: Definitions, recordkeeping, bypass and tampering, variances, appeals, enforcement

BLM Presentation 10/19/2016

43 CFR Part 3170

Subpart 3174 (Onshore Order 4): Oil Measurement Subpart 3175 (Onshore Order 5, Statewide NTLs for electronic flow computers): Gas Measurement Subpart 3173 (Onshore Order 3): Site security, FMP, Commingling, Off-lease measurement Subpart 3170: Definitions, recordkeeping, bypass and tampering, variances, appeals, enforcement

BLM Presentation 10/19/2016

Regulation Preamble Procedural Matters

43 CFR subpart 3175

BLM Presentation 10/19/2016

1 2 3 FMP #s (Existing meters)

>10,000 Mcf/month, >100 bbl/month 1,500 – 10,000 Mcf/month, 10 – 100 bbl/month <1,500 Mcf/month, <10 bbl/month >100 bbl/month 10 – 100 bbl/month <10 bbl/month

3174 Compliance (Existing FMPs)

High and Very High Low Very Low

3175 Compliance (Existing FMPs) GARVS

All gas FMPs

Approved Equipment (PMT)

All FMPs

3173/74/75 Compliance (New FMPs) FR Publication Years

Implementation Time Frames

Effective Date Lease, CA, or PA basis Lease, CA, or PA basis FMP basis

BLM Presentation 10/19/2016

3170 - Recordkeeping

Proposed rule

• Records would have to be retained for 7 years on

Federal leases; 6 years on Indian leases

• Applies to purchasers and transporters
• All records would have required the FMP number

Final rule

• No change to the records retention requirements
• Still applies to purchasers and transporters
• FMP number is no longer required - lease, CA, or

unit PA number and unique meter ID

BLM Presentation 10/19/2016

3170 – Production Measurement Team (PMT)

Proposed rule

• Would establish a PMT to review new technology

and procedures

Final rule

• No changes
• Delay implementation for 2 years

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3170 - Appeals

Proposed rule

• Referenced standard appeals process (State Director

Review and IBLA)

Final rule

• Adds special appeal process for decisions made

based on PMT review

BLM Presentation 10/19/2016

Subpart 3173: Site Security, FMP,

Commingling, Off-lease Measurement

BLM Presentation 10/19/2016

3173 - Commingling

Proposed rule

• The BLM would approve commingling only if:
• No royalty impacts from allocation method
• Properties are “low volume”
• Overriding considerations such as environmental

impacts and maximum ultimate recovery

• All existing commingling approvals would be

reviewed for compliance with new requirements and modified/terminated if they were not in compliance

BLM Presentation 10/19/2016

3173 - Commingling

Final rule (new commingling requests)

The BLM will approve commingling if the request:

• Has no royalty impacts from the allocation method
• Involves properties that are “marginally economic”
• Includes Indian leases that have been authorized for

commingling by tribal law;

• For surface commingling, includes properties that have

production rates less than 100 bbl/mo or 1,000 Mcf/mo;

• For downhole commingling, includes properties that are in

basins where the BLM has determined commingling is necessary for maximum economic recovery or resource conservation;

• Has overriding considerations such as environmental impacts

and maximum ultimate recovery

BLM Presentation 10/19/2016

3173 - Commingling

Final rule (existing commingling requests)

The BLM will grandfather commingling if the approval:

• Is for surface commingling, and the properties have

production rates less than 100 bbl/mo or 1,000 Mcf/mo;

• Involves downhole commingling

If the existing approval is not eligible for grandfathering:

• The approval will be renewed if it meets the requirements

for a new approval

• The approval will be rescinded or modified if the existing

approval does not meet the requirements for a new approval

BLM Presentation 10/19/2016

3173 - Commingling

Proposed 3173

• “Low-volume property” meant that the capital necessary to

achieve non-commingled production would yield less than a 10% ROR before taxes, or

• Cost of achieving non-commingled measurement exceeded

the NPV of royalty

Final 3173

• “Economically marginal” means that the capital necessary to

achieve non-commingled production would yield less than an 18-month payout after taxes

• Cost of achieving non-commingled measurement exceeded

the NPV of royalty

BLM Presentation 10/19/2016

3173 - FMPs

Proposed 3173

• Operators would have to submit FMP applications over a 27-

month period, based on average monthly flow rate.

• FMP application would have required equipment serial numbers

and manufacturer’s specifications

Final 3173

• FMP application period extended to 36-months; operators can

continue to produce as long as application was submitted

• Serial numbers and manufacturer specification no longer

required

• For properties that have not produced in the past 12 months
• perator must submit FMP application prior to producing

BLM Presentation 10/19/2016

3173 – Site Facility Diagrams

Proposed 3173

• Would have required updated site facility diagrams within 30

days of getting an FMP number

• Would have required equipment serial numbers and

manufacturer specifications

• Operators would have to sign/certify site facility diagrams

Final 3173

• Only need updated site facility diagrams if a facility is

modified or there is a change in ownership

• Reduces informational requirements –serial numbers and

specifications are not required

• Signed certification statements are not required

BLM Presentation 10/19/2016

3173 – End-of-Month Inventories

Proposed 3173

• Would have required operators to measure and record

inventories at the end of every month

Final 3173

• Inventories may be done within 3 days of the end of the

month through measurement or by estimation based on production and sales data

• Explicitly allows the use of automatic tank gauging

BLM Presentation 10/19/2016

Subpart 3174: Oil Measurement

BLM Presentation 10/19/2016

3174 – Prescriptiveness

Proposed 3174

• Included detailed procedures

Final 3174

• References API standards where appropriate

BLM Presentation 10/19/2016

If the monthly volume averaged

• ver the previous 12 months or

the life of the FMP, whichever is shorter, is: The overall volume measurement uncertainty must be within: ≥ 10,000 bbl/month ±0.35 percent > 100 bbl/month and < 10,000 bbl/month ±1.0 percent < 100 bbl/month ±2.5 percent

3174 - Proposed Uncertainty Requirements

BLM Presentation 10/19/2016

If the monthly volume averaged

• ver the averaging period is:

The overall volume measurement uncertainty must be within: ≥ 30,000 bbl/month ±0.50 percent < 30,000 bbl/month ±1.5 percent

3174 - Final Uncertainty Requirements

BLM Presentation 10/19/2016

3174 - Final Uncertainty Requirements

Averaging Period means the previous 12 months or the life of the meter, whichever is shorter. For FMPs that measure production from a newly drilled well, the averaging period excludes production from that well that occurred in or before the first full month of

• production. (For example, if an oil FMP and a gas FMP

were installed to measure only the production from a new well that first produced on April 10, the averaging period for this FMP would not include the production that occurred in April and May of that year.) Note: This definition applies to both 3174 and 3175

BLM Presentation 10/19/2016

3174 – Industry Standards

Proposed 3174

• References numerous industry standards published

as of August, 2015

Final 3174

• Includes new/revised standards published as of

July, 2016

BLM Presentation 10/19/2016

3174 – Gauging Accuracy

Proposed 3174

• Would have required strapping table and gauging

accuracy to ± 1/8 inch

Final 3174

• Requires strapping table and gauging accuracy to ±

¼ inch for tanks 1000 bbl and less

• Retains ± 1/8 strapping table and gauging accuracy

for tanks greater than 1000 bbl

BLM Presentation 10/19/2016

3174 – Tank Gauging

Proposed 3174

• Only allowed manual tank gauging

Final 3174

• Includes tank gauging options of manual or

automatic tank gauging equipment

• Incorporates API standards 18.2

BLM Presentation 10/19/2016

3174 – Proving

Proposed 3174

• Would have required proving every 50,000 bbls or

quarterly, whichever comes first

• No standards for master meter proving

Final 3174

• Requires proving every 75,000 bbls or quarterly,

whichever comes first, but no more frequently than

• nce per month
• Incorporates standards covering master meter

proving

BLM Presentation 10/19/2016

3174 – PMT

Proposed 3174

• The BLM would approve makes, models, and sizes
• f measurement equipment through the PMT

Final 3174

• Specifies the BLM would approve makes, models,

and sizes of measurement equipment through the PMT review of submitted test data used to develop performance specifications

• Not implemented for 2 years from the effective

date

BLM Presentation 10/19/2016

3174 – LACT

Proposed 3174

• Allowed the use of approved makes and models of

Coriolis meters for LACTs and as stand-alone meters

Final 3174

• Clearly states a LACT may utilize Positive

Displacement or Coriolis meter

• Coriolis meters may be used as stand-alone meters

BLM Presentation 10/19/2016

3174 – Measurement Tickets

Proposed 3174

• Required the name of the operator’s representative

certifying that the measurement is correct

• Required operator to notify the BLM within 7 days if
• perator does not agree with run ticket measurements

Final 3174

• Removed requirements for name of the operator’s

representative and operator notifying the BLM

BLM Presentation 10/19/2016

Subpart 3175: Gas Measurement

BLM Presentation 10/19/2016

3175 – Overall Structure

• Establishes 4 “categories” of meters based on average

flow rate:

• Very-low-volume (VL)
• Low-volume (L)
• High-volume (H)
• Very-high-volume (VH)
• For each category, there are specific performance goals

and specific “cookbook” requirements

• Following the “cookbook” requirements will achieve the

performance goals

• Deviating from the “cookbook” requirements requires

PMT review to make sure the performance goals are met

• If approved, the new technology or procedure will be

available to any operator

BLM Presentation 10/19/2016

3175 Proposed Thresholds

15 ±2% ±1% yes

• Avg. Monthly Flow, Mcf/day

100 1000 ±3% ±2% yes n/a n/a yes n/a n/a n/a yes Marginal Name Uncertainty Bias* Verif. Volume HV Low Volume High Volume Very High Volume

BLM Presentation 10/19/2016

3175 Final Thresholds

35 ±2% ±1% yes

Flow over the Averaging Period, Mcf/day

200 1000 ±3% ±2% yes n/a n/a yes n/a n/a n/a yes Very Low Volume Name Uncertainty Bias* Verif. Volume HV Low Volume High Volume Very High Volume

BLM Presentation 10/19/2016

Standards for Flange-Tapped Orifice Plates Subject Reference (API standards incorporated by reference, see § 3175.30) VL L H VH Fluid conditions API 14.3.1, Subsection 4.1 n/a x x x Orifice plate construction and condition API 14.3.2, Section 4 x x x x Orifice plate eccentricity and perpendicularity** API 14.3.2, Subsection 6.2 n/a x x x Beta ratio range § 3175.80(a) n/a x x x Minimum orifice size § 3175.80(b) n/a n/a x x New FMP orifice plate inspection* § 3175.80(c) n/a x x x Routine orifice plate inspection frequency, in months* § 3175.80(d) 12 6 3 1 Documentation of orifice plate inspection § 3175.80(e) x x x x Meter tube construction and condition** § 3175.80(f) n/a x x x Flow conditioners including 19-tube bundles § 3175.80(g) n/a x x x Basic meter tube inspection frequency, in years* § 3175.80(h) n/a 5 2 1 Detailed meter tube inspection* § 3175.80(i) n/a x x x Documentation of detailed meter tube inspection § 3175.80(j) n/a n/a x x Meter tube length** § 3175.80(k) n/a x x x Thermometer wells § 3175.80(l) n/a x x x Sample probe location § 3175.80(m) x x x x VL=Very-low-volume FMP; L=Low-volume FMP; H=High-volume FMP; VH=Very-high-volume FMP * = Immediate assessment for non-compliance under § 3175.150 of this subpart ** = Applies to all very-high-volume FMPs and meter tubes installed at low- and high-volume FMPs after [INSERT THE EFFECTIVE DATE]. See § 3175.61 for requirements pertaining to meter tubes installed at low and high volume FMPs before [INSERT THE EFFECTIVE DATE] BLM Presentation 10/19/2016

10 20 30 40 50 60

VLV LV HV VHV

Proposed Rule Final Rule

FMP Category % of FMPs Distribution of FMP Categories: Proposed vs. Final Rule

BLM Presentation 10/19/2016

Distribution of FMP Categories in the Final Rule

VLV (52%) LV (37%) HV (10%)

VHV (1%)

BLM Presentation 10/19/2016

3175 – Transducer Testing

Proposed 3175

• Would have required testing of all makes, models, ranges
• f transducers under 3175.130
• Would require long-term stability test
• Independent test facility

Final 3175

• For makes, models, ranges of transducers in use at an

FMP as of effective date, operators or manufacturers may submit existing test data in lieu of testing

• Long-term stability is not required
• Is not required for 2 years from effective date
• In-house testing allowed if “qualified test facility”

BLM Presentation 10/19/2016

3175 – Linear Meters

Proposed 3175

• Approval on a case-by-case basis

Final 3175

• Approval on a type-testing basis – same as other

equipment

BLM Presentation 10/19/2016

3175 – Grandfathering

Proposed 3175

• No grandfathering

Final 3175

• Meter tube length and construction is grandfathered on:
• Low-volume FMPs
• High-volume FMPs; however ±0.25% added to Cd

uncertainty

• Must still comply with AGA Report No. 3 (1985)
• EGM software is grandfathered on:
• Low-volume FMPs (must still comply with API 14.3.3

(1992) and AGA Report No. 8)

• Very-low-volume FMPs (must still comply with AGA

Report No. 3 (1985) or NX-19)

BLM Presentation 10/19/2016

Category Visual Inspection Detailed Inspection

Marginal Volume (< 15 Mcf/day) n/a n/a Low Volume (15 – 100 Mcf/day) Once every 5 years If indications of problems High Volume (100 – 1000 Mcf/day) Once every 2 years Once every 10 years Very-High Volume (> 1000 Mcf/day) Once every year Once every 5 years

3175 Proposed Meter Tube Inspection Requirements

BLM Presentation 10/19/2016

Category Basic Inspection Detailed Inspection

Very-Low Volume (< 35 Mcf/day) n/a n/a Low Volume (35 – 200 Mcf/day) Once every 5 years Only if basic inspection reveals issues. Low- volume FMPs only require cleaning. High Volume (200 – 1000 Mcf/day) Once every 2 years Very-High Volume (> 1000 Mcf/day) Once every year

3175 Proposed Meter Tube Inspection Requirements

BLM Presentation 10/19/2016

3175 – Gauge Lines

Proposed 3175

• Gauge lines would have minimum inside diameter of 3/8

inch

• Gauge lines would have to be stainless steel

Final 3175

• Gauge lines must have minimum nominal diameter of 3/8

inch

• No requirement for gauge line material as long as there is

no visible sag

BLM Presentation 10/19/2016

3175 – Thermometer Wells

Proposed 3175

• Would have required thermometer wells to be exposed to

the same ambient conditions as the primary device

Final 3175

• Requires thermometer wells to sense the same flowing

gas temperature that exists at the primary device

• Allows the use of insulation to achieve this

BLM Presentation 10/19/2016

3175 – FMP Number in EGM Display

Proposed 3175

• FMP number would have been required in EGM display

Final 3175

• FMP is not required on EGM display
• Can use unique meter ID number instead of FMP number

BLM Presentation 10/19/2016

3175 – Accounting Systems

Proposed 3175

• Requirement for “original, unaltered, unprocessed, and

unedited data” would have implicitly prohibited the use

• f accounting systems

Final 3175

• Accounting systems that have been tested under

§3175.49 are approved for use

BLM Presentation 10/19/2016

3175 – Sample Probe Location

Proposed 3175

• Sample probe would have been located 1 – 2 times

dimension “DL” downstream of the orifice

• Membrane filters prohibited

Final 3175

• Sample probe per API 14.1; however:
• Must be first obstruction downstream of the orifice
• Must be at the same temperature as the orifice
• Membrane filters prohibited

BLM Presentation 10/19/2016

3175 – Sample Cylinders

Proposed 3175

• Would have required sample cylinders to be “sealed”

after cleaning

• Would have required stainless steel

Final 3175

• Operator must have documentation of cleaning per GPA

standards on-site during sampling

• Construction material per API 14.1

BLM Presentation 10/19/2016

3175 – GC Verification

Proposed 3175

• Would have required that verification gas be different

than calibration gas

• Would have required portable GCs to be verified 24 hours

before sampling

Final 3175

• Verification gas no longer has to be different than

calibration gas; however:

• Compliance with GPA standards for calibration gas,

authentication of calibration gas, and maintenance of calibration gas incorporated

• Calibration required if reproducibility standards not

met between calibration gas and GC

• Portable GC verification every 7 days (same as lab GC)

BLM Presentation 10/19/2016

3175 – GC Operation

Proposed 3175

• Would have required un-normalized mole % between 99

and 101

• Samples would have to be run until 3 consecutive

samples were within repeatability standards of GPA 2261- 00

Final 3175

• Un-normalized mole % between 97 and 103
• For portable GCs, samples must be taken until 3

consecutive heating values are within 16 Btu/scf (high- volume) or 8 Btu/scf (very-high-volume

BLM Presentation 10/19/2016

Category Sampling Frequency

Marginal Volume (< 15 Mcf/day) Once per year Low Volume (15 – 100 Mcf/day) Once every 6 months High Volume (100 – 1000 Mcf/day) Once every 3 months; achieve heating value uncertainty of ±2% Very-High Volume (> 1000 Mcf/day) Once every month; achieve heating value uncertainty of ±1%

3175 Proposed and Final Sampling Frequency

BLM Presentation 10/19/2016

3175 – Dynamic Sampling Frequency

Proposed 3175

• Would have required on-line GC or composite sampler if

uncertainty could not be achieved by weekly sampling (high- and very-high-volume FMPs)

Final 3175

• For high volume FMPs, maximum frequency of every 2

weeks

• For very-high-volume FMPs, online GC or composite

sampler required if sampling every 2 weeks cannot achieve uncertainty limits

• New sampling frequencies not implemented until there is

1 year of sampling data (very-high-volume) or two years of sampling data (high-volume)

BLM Presentation 10/19/2016

N V U HV 1 951 .

% 95

× = 12 1 % 3 951 . ± × =

HV

U % 82 . ± =

HV

U

BLM Presentation 10/19/2016

3175 – Extended Analysis

Proposed 3175

• Would have required extended analysis if mole % of C6+

exceeded 0.25% (high- and very-high-volume)

Final 3175

• Threshold raised to 0.50 mole % C6+
• Operators have the option of taking periodic extended

analyses and modifying c6+ split to eliminate bias:

• Once every 6 months for very-high-volume
• Once every year for high-volume

BLM Presentation 10/19/2016

3175 – Btu Reporting Basis

Proposed 3175

• Would have required operators to report “dry” Btus

Final 3175

• No change - requires operators to report “dry” Btus

unless water vapor measured by a method approved by the BLM

BLM Presentation 10/19/2016

3175 – GARVS

Proposed 3175

• Would have required operators to enter all gas analyses

into GARVS on effective date of the rule

Final 3175

• This requirement doesn’t start for 2 years from the

effective date

BLM Presentation 10/19/2016

1 2 3 FMP #s (Existing meters)

>10,000 Mcf/month, >100 bbl/month 1,500 – 10,000 Mcf/month, 10 – 100 bbl/month <1,500 Mcf/month, <10 bbl/month >100 bbl/month 10 – 100 bbl/month <10 bbl/month

3174 Compliance (Existing FMPs)

High and Very High Low Very Low

3175 Compliance (Existing FMPs) GARVS

All gas FMPs

Approved Equipment (PMT)

All FMPs

3173/74/75 Compliance (New FMPs) FR Publication Years

Implementation Time Frames

Effective Date Lease, CA, or PA basis Lease, CA, or PA basis FMP basis

BLM Presentation 10/19/2016