The Bureau of Land Management’s (BLM) recent update of regulations governing the measurement, reporting and recordkeeping of oil and gas production from federal and Indian leases could cause a decline in U.S. oil and gas production due to slow permitting and excess government red tape, two energy industry groups said Monday.
Both the Independent Petroleum Association of America (IPAA) and the American Petroleum Institute (API) said they would review the new regulations in more detail. But both groups expressed serious concerns over the impact these new regulations would have on production.
“We believe that the collective costs that these three regulations will impose on America’s small businesses and job-creators have not accurately been taken into consideration,” said said Dan Naatz, the group’s senior vice president of government relations and political affairs, in an Oct. 17 press statement.
IPAA is also displeased that three BLM regulations are essentially going into effect at the exact same time, Naatz added. He said IPAA understands the need to modernize some of these rules, but called the federal government’s rulemaking approach as inherently prescriptive. The rules would lock in costly technologies that will likely become obsolete in a few years, while the industry continues to advance and technology improves.
“In conjunction with the imminent Venting and Flaring rule that is expected before the end of the year, these added rules stand to harm consumers, lower revenue to the government, weaken our national security and cause job losses,” API Upstream Director Erik Milito told Rigzone in an email statement.
IPAA called on the federal government to immediately retract the regulations and conduct further reviews of them.
BLM finalized the updates that would replace Onshore Oil and Gas Orders 3, 4 and 5, representing the first comprehensive update of its measurement rules since they were issued 25 years ago, BLM said in an Oct. 17 press statement.
The rule to replace Order 3 governs oil and gas handling and is designed to ensure that production is properly accounted for to prevent theft and loss. Orders 4 and 5 establish minimum standards for the accurate measurement of oil and gas, BLM said in the release.
The new rules incorporate the latest industry standards, measurement technology and practices and establish a one-stop, national process for the review and approval of new measurement standards for the accurate measurement of oil and gas, BLM said. The final rules will also contribute to oilfield safety by expressly recognizing automatic tank gauging as a permissible means to measure oil and prepare end-of-the-month inventories.
“This change gives 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,” BLM commented.
The seven-year effort to finalize the new rules sought to address concerns raised by the Government Accountability Office, the Department of the Interior’s Office of the Inspector General and the Secretary’s Royalty Policy Committee, BLM stated. All three agencies had raised questions about the adequacy of BLM’s previous measurement rules.
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