The Bureau of Land Management said on Monday that updated rules for oil and gas royalties from federal leases are expected to reduce compliance costs by nearly $100 million.
The BLM said the new rules were designed to ensure “the accurate measurement, proper reporting, and accurate record keeping of oil and gas produced from Federal and Indian leases in order to ensure that the royalties due are paid.”
The new rules call for the incorporation of the “latest industry standards,” measurement technology and practices and also establish a one-stop, national process for the review and approval of new measurement technologies and practices.
The BLM hopes that the new review process will allow new measurement technologies and practices to be deployed quickly across BLM-managed leases.
The agency said that the final rules will also recognize automatic tank gauging as a permissible means to measure oil and prepare end-of-month inventories.
The BLM said that change will give operators the opportunity to deploy “a technology more broadly that protects workers and reduces the need for workers to enter storage tanks and to open hatches that may expose them to potentially lethal fumes.”
The BLM estimates that, on net, the rule changes will reduce total one-time compliance costs by nearly $100 million when compared to the proposed rules.
Ongoing annual costs are also expected to be “reduced significantly,” the agency said.
The BLM estimates that ongoing annual costs have decreased by about $32 million relative to the proposed rules.
In aggregate, the BLM estimates that the rules will cost $12,856 per operator per year for the first three years and just over $7,600 after the first three years.
“Accurate measurement and production accountability is critically important because the BLM’s oil and gas program is one of the most important mineral leasing programs in the Federal government,” the BLM said.
The total value of production from federal leases was nearly $20 billion last year, generating nearly $2 billion in royalty revenue, according to the BLM.
“These new rules also give the BLM the tools to be responsive to new technology – this change is particularly important because changing technology often provides opportunities to make oilfield operations safer and more efficient,” BLM Director Neil Kornze said.