[Federal Register Volume 77, Number 92 (Friday, May 11, 2012)]
[Proposed Rules]
[Pages 27691-27711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-11304]
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DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Part 3160
[WO-300-L13100000.FJ0000]
RIN 1004-AE26
Oil and Gas; Well Stimulation, Including Hydraulic Fracturing, on
Federal and Indian Lands
AGENCY: Bureau of Land Management, Interior.
ACTION: Proposed rule.
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SUMMARY: The Bureau of Land Management (BLM) is proposing a rule to
regulate hydraulic fracturing on public land and Indian land. The rule
would provide disclosure to the public of chemicals used in hydraulic
fracturing on public land and Indian land, strengthen regulations
related to well-bore integrity, and address issues related to flowback
water. This rule is necessary to provide useful information to the
public and to assure that hydraulic fracturing is conducted in a way
that adequately protects the environment.
DATES: Send your comments on this proposed rule to the BLM on or before
July 10, 2012. The BLM need not consider, or include in the
administrative record for the final rule, comments that the BLM
receives after the close of the comment period or comments delivered to
an address other than those listed below (see ADDRESSES). If you wish
to comment on the information collection requirements in this proposed
rule, please note that the Office of Management and Budget (OMB) is
required to make a decision concerning the collection of information
contained in this proposed rule between 30 to 60 days after publication
of this document in the Federal Register. Therefore, a comment to OMB
is best assured of having its full effect if OMB receives it by June
11, 2012.
ADDRESSES: Mail: U.S. Department of the Interior, Director (630),
Bureau of Land Management, Mail Stop 2134 LM, 1849 C St. NW.,
Washington, DC 20240, Attention: 1004-AE26. Personal or messenger
delivery: Bureau of Land Management, 20 M Street SE., Room 2134 LM,
Attention: Regulatory Affairs, Washington, DC 20003. Federal
eRulemaking Portal: http://www.regulations.gov. Follow the instructions
at this Web site.
Comments on the information collection requirement: Fax: Office of
Management and Budget (OMB), Office of Information and Regulatory
Affairs, Desk Officer for the Department of the Interior, fax 202-395-
5806. Electronic mail: [email protected]. Please indicate
``Attention: OMB Control Number 1004-XXXX,'' regardless of the method
used to submit comments on the information collection burdens. If you
submit comments on the information collection burdens, please provide
the BLM with a copy of your comments, at one of the addresses shown
above.
FOR FURTHER INFORMATION CONTACT: Steven Wells, Division Chief, Fluid
Minerals Division, 202-912-7143 for information regarding the substance
of the rule or information about the BLM's Fluid Minerals Program.
Persons who use a telecommunications device for the deaf (TDD) may call
the Federal Information Relay Service (FIRS) at 1-800-877-8339 to
contact the above individual during normal business hours. FIRS is
available 24 hours a day, 7 days a week to leave a message or question
with the above individual. You will receive a reply during normal
business hours.
SUPPLEMENTARY INFORMATION:
Executive Summary
``Hydraulic fracturing,'' a process used to stimulate production
from oil and gas wells, has been a growing practice in recent years.
Public awareness of fracturing has grown as new horizontal drilling
technology has allowed increased access to shale oil and gas resources
across the country, sometimes in areas that have not previously
experienced significant oil and gas development. The extension of the
practice has caused public concern about whether fracturing can allow
or cause the contamination of underground water sources, whether the
chemicals used in fracturing should be disclosed to the public, and
whether there is adequate management of well integrity and the
``flowback'' fluids that return to the surface during and after
fracturing operations.
The Bureau of Land Management (BLM) oversees approximately 700
million subsurface acres of Federal
[[Page 27692]]
mineral estate and 56 million subsurface acres of Indian mineral estate
across the United States. The BLM proposes to modernize its management
of well stimulation activities, including hydraulic fracturing, to
ensure that fracturing operations conducted on the public mineral
estate (including split estate where the Federal Government owns the
subsurface mineral estate) follow certain best practices, including:
(1) The public disclosure of chemicals used in hydraulic fracturing
operations on Federal lands; (2) confirmation that wells used in
fracturing operations meet appropriate construction standards; and (3)
a requirement that operators put in place appropriate plans for
managing flowback waters from fracturing operations.
The BLM proposes to apply the same rules and standards to Indian
lands so that these lands and communities receive the same level of
protection provided for public lands. Most of these requirements in
this rule can be satisfied by submitting additional information during
the process that the BLM currently applies to operators who are
drilling on public or Indian lands. The proposed rule would require
that disclosure of the chemicals used in the fracturing process be
provided to the BLM after the fracturing operation is completed. This
information is intended to be posted on a public web site, and the BLM
is working with the Ground Water Protection Council to determine
whether the disclosure can be integrated into the existing Web site
known as FracFocus.org.
The BLM has developed the draft with an eye toward improving public
awareness and oversight without introducing complicated new procedures
or delays in the process of developing oil and gas resources on public
and Indian lands. Some states have started requiring similar
disclosures and oversight for oil and gas drilling operations under
their own jurisdiction. This proposal seeks to create a consistent
oversight and disclosure model that will work in concert with other
regulators' requirements while protecting Federal and tribal interests
and resources.
The BLM proposes these changes to existing well stimulation
oversight partly in response to recommendations put forward by the
Secretary of Energy's Energy Advisory Board in 2011. Also, current BLM
regulations governing hydraulic fracturing operations on public lands
are more than 30 years old and were not written to address modern
hydraulic fracturing activities. In preparing this proposed rule, the
BLM has received input from members of the public and stakeholders, and
has initiated consultation with tribal representatives. The BLM is
looking forward to obtaining additional public input and to ongoing
tribal consultations regarding the specific proposed provisions that
are set forth herein.
The BLM has analyzed the costs and the benefits of this proposed
action in an accompanying Regulatory Impact Analysis available in the
rulemaking docket. The estimated benefits range from $12 million to $50
million per year, with the range being based on the discount rate used
for the analysis, and the estimates of the underlying risk reduced, and
remediation costs avoided, by the regulation. The estimated costs range
from $37 million to $44 million per year, and do not vary based on the
uncertainty in the underlying risk reduced by the rule. Given the
assumptions made about the costs of remediating contamination and the
fact that certain benefits were not quantified, the BLM believes that
the quantified range of estimated outcomes could underestimate actual
net benefits.
I. Public Comment Procedures
II. Background
III. Discussion of the Proposed Rule
IV. Procedural Matters
I. Public Comment Procedures
If you wish to comment, you may submit your comments by any one of
several methods: Mail: You may mail comments to U.S. Department of the
Interior, Director (630), Bureau of Land Management, Mail Stop 2134LM,
1849 C Street NW., Washington, DC 20240, Attention: 1004-AE26. Personal
or messenger delivery: Bureau of Land Management, 20 M Street SE., Room
2134 LM, Attention: Regulatory Affairs, Washington, DC 20003. Federal
eRulemaking Portal: http://www.regulations.gov. Follow the instructions
at this Web site.
You may submit comments on the information collection burdens
directly to the Office of Management and Budget, Office of Information
and Regulatory Affairs, Desk Officer for the Department of the
Interior, fax 202-395-5806, or [email protected]. Please include
``Attention: OMB Control Number 1004-XXXX'' in your comments. If you
submit comments on the information collection burdens, please provide
the BLM with a copy of your comments, at one of the addresses shown
above.
Please make your comments as specific as possible by confining them
to issues directly related to the content of this proposed rule, and
explain the basis for your comments. The comments and recommendations
that will be most useful and likely to influence agency decisions are:
1. Those supported by quantitative information or studies; and
2. Those that include citations to, and analyses of, the applicable
laws and regulations.
The BLM is not obligated to consider or include in the
Administrative Record for the rule comments received after the close of
the comment period (see DATES) or comments delivered to an address
other than those listed above (see ADDRESSES).
Comments, including names and street addresses of respondents, will
be available for public review at the address listed under ADDRESSES
during regular hours (7:45 a.m. to 4:15 p.m.), Monday through Friday,
except holidays.
Before including your address, telephone number, email address, or
other personal identifying information in your comment, be advised that
your entire comment--including your personal identifying information--
may be made publicly available at any time. While you can ask in your
comment to withhold from public review your personal identifying
information, we cannot guarantee that we will be able to do so.
II. Background
Well stimulation techniques, such as hydraulic fracturing, are used
by oil and natural gas producers to increase the volumes of oil and
natural gas that can be extracted from wells. Hydraulic fracturing
techniques are particularly effective in enhancing oil and gas
production from ``shale'' gas or oil formations. Until quite recently,
shale formations rarely produced oil or gas in commercial quantities
because shale does not generally generate flow of hydrocarbons to well
bores unless mechanical changes to the properties of the rock can be
induced. The development of horizontal drilling, combined with
hydraulic fracturing, have made the production of oil and gas from
shale possible. Hydraulic fracturing involves the injection of fluid
under high pressure to create or enlarge fractures in the reservoir
rocks. The fluid that is used in hydraulic fracturing is usually
accompanied by proppants, such as particles of sand, that are carried
into the newly fractured rock and help keep the fractures open once the
pressure from the fracturing operation is released. The proppant-filled
fractures become conduits for fluid migration from the reservoir rock
to the wellbore and the fluid is subsequently brought to the surface.
In
[[Page 27693]]
addition to the water and sand (which together typically make up 98 to
99 percent of the materials pumped into a well during a fracturing
operation), chemical additives are also frequently used. These
chemicals can serve many functions in hydraulic fracturing, including
limiting the growth of bacteria and preventing corrosion of the well
casing. The exact formulation of the chemicals used varies depending on
the rock formations, the well, and the requirements of the operator.
The BLM estimates that about 90 percent (approximately 3,400 wells
per year) of wells currently drilled on Federal and Indian lands are
stimulated using hydraulic fracturing techniques. Over the past 10
years, there have been significant technological advances in horizontal
drilling, which is frequently combined with hydraulic fracturing. This
combination, together with the discovery that these techniques can
release significant quantities of oil and gas from large shale
deposits, has led to production from geologic formations in parts of
the country that previously did not produce significant oil or gas. The
resulting expansion of oil and gas drilling into new parts of the
country as a result of the availability of new horizontal drilling
technologies has significantly increased public awareness of hydraulic
fracturing and the potential impacts that it may have on water quality
and water consumption.
The BLM's existing hydraulic fracturing regulations are found at 43
CFR 3162.3-2. These regulations were established in 1982 and last
revised in 1988, long before the latest hydraulic fracturing
technologies became widely used. In response to public interest in
hydraulic fracturing and in the BLM's regulation of hydraulic
fracturing, in particular, the Department of the Interior (Department)
held a forum on hydraulic fracturing on November 30, 2010 in
Washington, DC, attended by the Secretary of the Interior and more than
130 interested parties. The BLM later hosted public forums in Bismarck,
North Dakota on April 20, 2011; Little Rock, Arkansas on April 22,
2011; and Golden, Colorado on April 25, 2011, to collect broad input on
the issues surrounding hydraulic fracturing. More than 600 members of
the public attended the April forums. Some of the comments frequently
heard during these forums included concerns about water quality, water
consumption, and a desire for improved environmental safeguards for
surface operations. Commenters also strongly encouraged the agency to
require public disclosure of the chemicals used in hydraulic fracturing
operations on Federal and Indian lands.
Around the time of the BLM's forums, at the President's direction,
the Secretary of Energy's Advisory Board convened a Natural Gas
Subcommittee (Subcommittee) to evaluate hydraulic fracturing issues.
The Subcommittee met with industry, service providers, state and
Federal regulators, academics, environmental groups, and many others
stakeholders. Initial recommendations were issued by the Subcommittee
on August 18, 2011. Among other things, the report recommended that
more information be provided to the public, including disclosure of the
chemicals used in fracturing fluids. The Subcommittee also recommended
the adoption of progressive standards for wellbore construction and
testing. The initial report was followed by a final report that was
issued on November 18, 2011. The final report recommended, among other
things, that operators engaging in hydraulic fracturing prepare cement
bond logs and undertake pressure testing to ensure the integrity of all
casings. These reports are available to the public from the Department
of Energy's Web site at http://www.shalegas.energy.gov.
The BLM's proposed rule is consistent with the American Petroleum
Institute's (API) guidelines for well construction and well integrity
(see API Guidance Document HF 1, Hydraulic Fracturing Operations--Well
Construction and Integrity Guidelines, First Edition, October 2009).
Based on the input provided from a broad array of sources,
including the individuals who spoke at the BLM's public forums and the
recommendations of the Subcommittee, the BLM is proposing to make
critical improvements to its regulations for hydraulic fracturing. The
proposed regulations would be applied to all wells administered by the
BLM, including those on Federal, tribal, and individual Indian trust
lands.
Tribal consultation is a critical part of this effort, and the
Department is committed to making sure tribal leaders play a
significant role as we work together to develop resources on public and
Indian lands in a safe and responsible way. The BLM has initiated
government-to-government consultation with tribes on this proposal and
has offered to hold follow-up consultation meetings with any tribe that
desires to have an individual meeting. The BLM held four tribal
consultation meetings, to which over 175 tribal entities were invited.
These initial consultations were held in Tulsa, Oklahoma on January 10,
2012; in Billings, Montana on January 12, 2012; in Salt Lake City, Utah
on January 17, 2012; and in Farmington, New Mexico on January 19, 2012.
Eighty-one tribal members representing 27 tribes attended the meetings.
In these sessions, tribal representatives were given a discussion draft
of the hydraulic fracturing rule to serve as a basis for substantive
dialogue about the hydraulic fracturing rulemaking process. The BLM
asked the tribal leaders for their views on how a hydraulic fracturing
rule proposal might affect Indian activities, practices, or beliefs if
it were to be applied to particular locations on Indian and public
lands. A variety of issues were discussed, including applicability of
tribal laws, validating water sources, inspection and enforcement,
wellbore integrity, and water management, among others. Additional
individual consultations with tribal representatives have taken place
since that time. One of the outcomes of these meetings is the proposed
requirement in this rule that operators certify that operations on
tribal lands comply with tribal laws.
The BLM has been and will continue to be proactive about tribal
consultation under the Department's newly-formalized Tribal
Consultation Policy, which emphasizes trust, respect and shared
responsibility in providing tribal governments an expanded role in
informing Federal policy that impacts Indian lands. The BLM will
continue to consult with tribal leaders throughout the rulemaking
process. Responses from tribal representatives will inform the agency's
actions in defining the scope of acceptable hydraulic fracturing rule
options. Tribal governments, tribal members, and individual Native
Americans are also invited to comment directly on this proposed rule
through the process described in the Public Comment Procedures section
of this document.
Over the past few years, in response to strong public interest,
several states--including Colorado, Wyoming, Arkansas, and Texas--have
substantially revised their state regulations related to hydraulic
fracturing. One of the BLM's key goals in updating its regulations on
hydraulic fracturing is to complement these state efforts by providing
a consistent standard across all public and Indian lands. The BLM is
also actively working to minimize any duplication between the reporting
required for state regulations and for this regulation and to make
reported information consistent and easily accessible to the public.
For instance, the BLM is working closely with the Ground Water
Protection Council and the Interstate Oil and Gas
[[Page 27694]]
Commission in an effort to integrate the disclosure called for in this
rule with the existing Web site known as FracFocus. The FracFocus.org
Web site is already well established and used by many states. This
online database includes information from oil and gas wells in roughly
12 states and includes information from over 206 companies. The BLM
understands that the database is in the process of being improved and
will in the near future have enhanced search capabilities and allow for
easier reporting of information.
The BLM recognizes the efforts of states to regulate hydraulic
fracturing and is focused on coordinating closely with individual state
governments to avoid duplicative regulatory requirements. The agency
has a long history of working cooperatively with state regulators and
the BLM often enters into memorandums of understanding or establishes
working groups to coordinate state and Federal activities, such as the
oil and gas working groups that currently exist in many of our oil and
gas states. The BLM is applying the same approach to this effort and
will work closely with individual states on the implementation of the
proposed regulation. The BLM's intent is to encourage efficiency in the
collection of data and the reporting of information. The BLM routinely
shares information on oil and gas operations with state regulatory
authorities and the BLM will continue to work with individual states to
ensure that duplication of efforts is avoided to the extent possible.
Since the BLM is looking for all opportunities to avoid duplication of
the collection of data and the reporting of information, we are
specifically asking for public comment on how best to avoid duplication
of requirements under this proposed rule with existing state
requirements.
The BLM acknowledges that some states already have in place rules
and regulations that address hydraulic fracturing and that these rules
may be either more or less stringent than the provisions in this
proposal. In keeping with longstanding practice and consistent with
relevant statutory authorities, it is the intention of the BLM to
implement on public lands whichever rules, state or Federal, are most
protective of Federal lands and resources and the environment.
III. Discussion of the Proposed Rule
The BLM proposes to revise its hydraulic fracturing regulations,
found at 43 CFR 3162.3-2, and adding a new section 3162.3-3. Existing
section 3162.3-3 would be retained and renumbered. The Federal Land
Policy and Management Act (FLPMA) directs the BLM to manage the public
lands so as to prevent unnecessary or undue degradation, and to manage
lands using the principles of multiple use and sustained yield. FLPMA
declares multiple use to mean, among other things, a combination of
balanced and diverse resource uses that takes into account long-term
needs of future generations for renewable and non-renewable resources.
FLPMA also requires that the public lands be managed in a manner that
will protect the quality of their resources, including ecological,
environmental, and water resources. The Mineral Leasing Act and the
Mineral Leasing Act for Acquired Lands authorize the Secretary to lease
Federal oil and gas resources, and to regulate oil and gas operations
on those leases, including surface-disturbing activities. The Indian
Mineral Leasing Act assigns regulatory authority to the Secretary over
Indian oil and gas leases on trust lands (except those excluded by
statute). As stewards of the public lands, and as the Secretary's
regulator for oil and gas leases on Indian lands, the BLM has evaluated
the increased use of well stimulation practices over the last decade
and determined that the existing rules for well stimulation require
updating.
The current regulations make a distinction between routine fracture
jobs and nonroutine fracture jobs. However, the terms ``routine'' and
``nonroutine'' are not defined in 43 CFR 3162.3-2 or anywhere else in
BLM regulations, making this distinction functionally difficult to
apply and confusing for both the agency and those attempting to comply
with the regulations. As previously stated, the regulations are now 30
years old and need to be updated to keep pace with the many changes in
technology and current best management practices. As discussed in the
background section of this document, the increased use of well
stimulation activities over the last decade has also generated concerns
among the public about well stimulation and about the chemicals used in
hydraulic fracturing. The proposed rule is intended to increase
transparency for the public regarding the fluids used in the hydraulic
fracturing process, in addition to providing assurances that well bore
integrity is maintained throughout the fracturing process and that the
fluids that flow back to the surface from hydraulic fracturing
operations are properly stored and disposed of or treated.
The following chart explains the major changes between the existing
regulation(s) and the proposed regulation(s).
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Proposed
Existing regulation regulation Substantive changes
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43 CFR 3160.0-5 Onshore Oil 43 CFR 3160.0-5 This proposal would
and Gas Operations: General Onshore Oil and replace the current
Definitions. Gas Operations: definition of usable
General water found in 43
Definitions. CFR 3162.5-2(d) and
define six other
terms used in the
oil and gas drilling
industry to make the
rule clearer and
easier to
understand. The
definitions would be
consistent with
those used in the
BLM's Oil and Gas
Onshore Orders and
by industry.
43 CFR 3162.3-2(a) Subsequent 43 CFR 3162.3- This proposal would
Well Operations. 2(a) Subsequent remove the phrase
Well Operations. ``performing
nonroutine
fracturing jobs.''
43 CFR 3162.3-2(b) Subsequent 43 CFR 3162.3- This proposal would
Well Operations. 2(b) Subsequent remove the phrase
Well Operations. ``routine fracturing
or acidizing jobs,
or * * * ''
No existing regulation........ 43 CFR 3162.3- This proposal would
3(a) through (j). add provisions
addressing well
stimulation
operations, would
require disclosure
of well stimulation
fluids, and would
require approval of
well stimulation
operations. The
proposed rule would
also require that
mechanical integrity
tests be conducted
before well
stimulation
activities are
conducted and would
require full
reporting of the
results of the well
stimulation activity
within thirty days
of its completion.
This proposal would
also add a section
allowing the
authorized officer
to grant a variance
to specific
conditions of these
rules if the
operator can
demonstrate that
alternative
procedures would
meet or exceed the
intent of the
minimum standards in
this rule. This
variance language is
consistent with that
found in the BLM's
Oil and Gas Onshore
Orders.
[[Page 27695]]
43 CFR 3162.5-2(d) Protection 43 CFR 3162.5- This proposal removes
of fresh water and other 2(d) Protection the definition of
minerals. of fresh water usable water from
and other this section. The
minerals. new definition of
usable water would
be placed in 43 CFR
3160.0-5.
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Section-by-Section Discussion of Proposed Changes
As an administrative matter, the proposed rule would amend the
authorities section for the BLM's oil and gas operations management
regulations at 43 CFR 3160.0-3 to include FLPMA. Section 310 of FLPMA
authorizes the Secretary of the Interior to promulgate regulations to
carry out the purposes of FLPMA and other laws applicable to the public
lands. See 43 U.S.C. 1740. This amendment would not be a major change
and would have no effect on lessees, operators, or the public.
The proposed rule would remove the terms ``nonroutine fracturing
jobs,'' ``routine fracturing jobs,'' and ``acidizing jobs'' from 43 CFR
3162.3-2(a) and 43 CFR 3162.3-2(b). It would add a new section, 43 CFR
3162.3-3, for well stimulation activities. In the proposed rule, there
would be no distinction drawn between what was previously considered
nonroutine or routine well stimulations. Prior approval would be
required for well stimulation activities, generally in connection with
the prior approval process that already is in place for general well
drilling activities through the Application for Permit to Drill (APD)
process. Operators also will be required to submit cement bond logs
before fracturing operations begin. The running of cement bond logs on
surface casing, which is currently an optional practice, would now be
required for new wells. Existing wells would require mechanical
integrity testing prior to hydraulic fracturing.
The proposed rule would include six new definitions for technical
terms used in the proposed rule. These definitions will improve
readability and clarity of the regulations.
The proposed rule intends to add the following definitions:
Annulus means the space around a pipe in a wellbore, the
outer wall of which may be the wall of either the borehole or the
casing; sometimes also called the annular space.
Bradenhead means a heavy, flanged steel fitting connected
to the first string of casing that allows suspension of intermediate
and production strings of casing, and supplies the means for the
annulus to be sealed off.
Proppant means a granular substance (most commonly sand,
sintered bauxite, or ceramic) that is carried in suspension by the
fracturing fluid and that serves to keep the cracks open when
fracturing fluid is withdrawn after a hydraulic fracture treatment.
Stimulation fluid means the liquid or gas, and any
accompanying solids, used during a treatment of oil and gas wells, such
as the water, chemicals, and proppants used in hydraulic fracturing.
Usable water means water containing up to 10,000 ppm of
total dissolved solids.
Well stimulation means those activities conducted in an
individual well bore designed to increase the flow of hydrocarbons from
the rock formation to the well bore by modifying the permeability of
the reservoir rock. Examples of well stimulation operations are
acidizing and hydraulic fracturing.
The proposed rule would delete the definition of ``fresh water.''
The BLM has maintained a definition of fresh water in its oil and gas
operating regulations since 1988. However, in its onshore orders, the
BLM has sought to protect all usable waters during drilling operations,
not just fresh water. This distinction has led to confusion in the
regulations. Usable water includes fresh water and water that is of
lower quality than fresh water. The BLM intends to be more protective
when it seeks to protect all usable water during drilling operations,
not just fresh water. Therefore, the BLM proposes to delete the
definition of fresh water.
Revised section 3162.3-2(a) would remove the phrase ``perform
nonroutine fracturing jobs'' from the current 43 CFR 3162.3-2(a). The
phrase ``routine fracturing jobs or acidizing jobs, or'' would also be
removed from existing section 3162.3-2(b). Well stimulation activities
would be addressed under the new proposed 43 CFR 3162.3-3.
Proposed section 3162.3-3(a) would make it clear that this section
applies only to well stimulation activities and that all other
injection activities must comply with section 3162.3-2. This language
is necessary to make the distinction between well stimulation
activities and other well injection activities, such as secondary and
tertiary recovery operations.
Proposed section 3162.3-3(b) would require the BLM's approval of
all well stimulation activity. For new wells, the operator has the
option of applying for the BLM's approval in its application for permit
to drill (APD). For wells permitted prior to the effective date of this
section or for wells permitted after the effective date of this
section, the operator would submit a Sundry Notice and Report on Wells
(Form 3160-5) for the well stimulation proposal for the BLM's approval
before the operator begins the stimulation activity. This section would
supersede and replace existing section 3162.3-2(b) that states that no
prior approval is required for routine fracturing. This reference in
the existing section would be deleted. Also, an operator must submit a
Sundry Notice prior to well stimulation activity if the BLM's previous
approval for well stimulation is more than five years old, or if the
operator becomes aware of significant new information about the
relevant geology, the stimulation operation or technology, or the
anticipated impacts to any resource. The five-year period is consistent
with common state practices, including those of Montana, Wyoming, and
Colorado, which require that operators reconfirm well integrity for
fracturing operations through a pressure test every five years.
The BLM understands the time sensitive nature of oil and gas
drilling and well completion activities and does not anticipate that
the submittal of additional well stimulation-related information with
APD applications will impact the timing of the approval of drilling
permits. The BLM believes that the additional incremental information
that would be required by this rule would be reviewed in conjunction
with the APD and within the normal APD processing time frame. Also, the
BLM anticipates that requests to conduct well stimulation activities on
existing wells that have been in service more than five years will be
reviewed promptly. The BLM understands that delays in approvals of
operations can be costly to operators and the BLM intends to avoid
delays whenever possible.
Proposed section 3162.3-3(c)(1) would require a report that
includes the geological names, a geological description, and the depth
of the top and the bottom of the formation into which well stimulation
fluids would be injected. The report is needed so that the BLM may
determine the properties of the rock layers and the thickness of the
producing formation and identify
[[Page 27696]]
the confining rocks above and below the zone that would be stimulated.
Proposed section 3162.3-3(c)(2) would require the operator to
submit information in the form of a cement bond log, which will help
the BLM in its efforts to make sure that water resources are protected.
A cement bond log is a tool used to gauge the extent to which water
bearing formations are isolated from the casing string. The log is a
document that reports the data from a probe of the wellbore that uses
sonic technology to detect gaps or voids in the cement and the casing.
This log would be used to verify that the operator has taken the
necessary precautions to prevent migration of fluids in the annulus
from the fracture zone to the usable water horizons. The proposed
regulation would allow for the use of other evaluation tools acceptable
to the BLM in order to allow the substitution of equally effective
tools or procedures. For example, an operator could request a variance
from the requirements of proposed section 3162.3-3(c)(2) that it submit
cement bond logs to prove that the occurrences of usable water have
been isolated to protect them from contamination. The BLM could grant a
variance to allow for the use of logs other than cement bond logs
(e.g., slim array sonic tool, ultrasonic imager tool) if it was
satisfied that the alternative logs would meet or exceed the objectives
of section (c)(2). The BLM recognizes that the cement bond log would
not be available prior to drilling a well. Therefore, when the operator
takes advantage of the option to submit its well stimulation
information as part of its APD, the cement bond log would be required
after approval of the permit to drill and prior to commencing well
stimulation activities. Many operators routinely perform cement bond
logs for the zones of interest, so the BLM does not expect this step to
be a burden for operators. The best available means for the BLM to help
ensure that well stimulation activities do not contaminate aquifers is
to require cement bond logs for the cement behind the pipe along all
areas intersecting useable water, including running cement bond logs on
the surface casing.
Proposed section 3162.3-3(c)(3) would require reporting of the
measured depth to the perforations in the casing and uncased hole
intervals (open hole). This proposed section would also require the
operator to disclose specific information about the water source to be
used in the fracturing operation, including the location of the water
that would be used as the base fluid. The BLM needs this information to
determine the impacts associated with operations and the need for any
mitigation applicable to Federal and Indian lands. This section would
also require the operator to disclose the type of materials (proppants)
that would be injected into the fractures to keep them open and the
anticipated pressures to be used in the well stimulation operation.
Proposed section 3162.3-3(c)(4), consistent with protecting public
health and safety and preventing unnecessary or undue degradation to
the public lands, would require operators to certify in writing that
they have complied with all applicable Federal, tribal, state, and
local laws, rules, and regulations pertaining to proposed stimulation
fluids. The BLM will use this information to make an informed decision
on the proposed action. This section also would require the operator to
certify that it has complied with all necessary permit and notice
requirements. The BLM acknowledges that other Federal, state, tribal,
and local agencies may have regulatory requirements that would apply to
chemical handling, injecting fluids into the subsurface, and the
protection of groundwater. It remains the responsibility of the
operator to be aware of and comply with these regulatory requirements.
The BLM will rely on the operator's certification that it has complied
with all of the laws and regulations that apply to its operation.
Proposed section 3162.3-3(c)(5) would require the operator to
submit a detailed description of the well stimulation engineering
design to the BLM for approval. This information is needed in order for
the BLM to be able to verify that the proposed engineering design is
adequate for safely conducting the proposed well stimulation.
Proposed section 3162.3-3(c)(5)(i) would require the operator to
submit to the BLM an estimate of the total volume of fluid to be used
in the stimulation.
Proposed section 3162.3-3(c)(5)(ii) would require the operator to
submit to the BLM a description of the range of the surface treating
pressures anticipated for the stimulation. This information is needed
by the BLM to verify that the maximum wellbore design burst pressure
will not be exceeded at any stage of the well stimulation operation.
Proposed section 3162.3-3(c)(5)(iii) would require the operator to
submit to the BLM the proposed maximum anticipated injection pressure
for the stimulation. This information is needed by the BLM to verify
that the maximum allowable injection pressure will not be exceeded at
any stage of the well stimulation operation.
Proposed section 3162.3-3(c)(5)(iv) would require the operator to
submit to the BLM the estimated or calculated fracture length and
height anticipated as a result of the stimulation, so that the BLM can
verify that the intended effects of the well stimulation operation will
remain confined to the petroleum-bearing rock layers and will not have
unintended consequences on other rock layers, such as aquifers.
Proposed section 3162.3-3(c)(6) would require the operator to
provide information pertaining to the handling of recovered fluids that
will be used for the stimulation activities for approval. This
information is being requested so that the BLM has all necessary
information regarding chemicals being used in the event that the
information is needed to help protect health and safety or to prevent
unnecessary or undue degradation of the public lands.
Proposed section 3162.3-3(c)(6)(i) would require the operator to
submit to the BLM an estimate of the volume of fluid to be recovered
during flow back, swabbing, and recovery from production facility
vessels. This information is required to ensure that the facilities
needed to process or contain the estimated volume of fluid will be
available on location.
Proposed section 3162.3-3(c)(6)(ii) would require the operator to
submit to the BLM the proposed methods of managing the recovered
fluids. This information is needed to ensure that the handling methods
will adequately protect of public health and safety.
Proposed section 3162.3-3(c)(6)(iii) would require the operator to
submit to the BLM a description of the proposed disposal method of the
recovered fluids. This is currently required by existing BLM
regulations (i.e., Onshore Order Number 7, Disposal of Produced Water,
(58 FR 47354). This information is requested so that the BLM has all
necessary information regarding disposal of chemicals used in the event
it is needed to protect the environment and human health and safety and
to prevent unnecessary or undue degradation of the public lands. The
BLM specifically requests comments on whether the operator should be
required to submit as part of the Sundry Notice application additional
information about how it will dispose of waste streams not specifically
addressed in this proposal.
Proposed section 3162.3-3(c)(7) would require the operator to
provide, at the request of the BLM, additional information pertaining
to any facet of the well stimulation proposal. For example, the BLM may
require new or different tests or logs in cases where the
[[Page 27697]]
original information submitted was inadequate, out of date, or
incomplete. Any new information that the BLM may request will be
limited to information necessary for the BLM to ensure that operations
are consistent with applicable laws and regulation. Such information
may include, but is not limited to, tabular or graphical results of a
mechanical integrity test, the results of logs run, the results of
tests showing the total dissolved solids in water proposed to be used
as the base fluid, and the name of the contractor performing the
stimulation. This provision would allow the BLM to obtain additional
information about the proposed well stimulation activities. For
example, after initial cementing activities, an operator may be asked
to perforate the well casing and squeeze cement into the areas with
inadequate cement bonding. In this case, the BLM may ask for additional
information to show that the corrective action was successful and to
ensure that the corrective work addressed any cement bonding
deficiencies. The BLM wants to ensure that any additional information
requested under this provision is the least burdensome to operators as
possible while still accomplishing the goal of protecting the public
lands and resources; therefore, the BLM is specifically requesting
public comment on how this may be best achieved.
Proposed section 3162.3-3(d) would require the operator to perform
a successful mechanical integrity test before beginning well
stimulation operations. This requirement is necessary to help ensure
the integrity of the wellbore under anticipated maximum pressures
during well stimulation operations.
Proposed section 3162.3-3(d)(1) would require the mechanical
integrity test to emulate the pressure conditions that would be seen in
the proposed stimulation process. This test would show that the casing
is strong enough to protect water and other subsurface resources during
well stimulation activities.
The proposed section 3162.3-3(d)(2) would establish the engineering
criteria for using a fracturing string as a technique during well
stimulation. The requirement to be 100 feet below the cement top would
be imposed to ensure that the production or intermediate casing is
surrounded by a competent cement sheath as required by Onshore Order
Number 2. The 100 foot requirement is required by some state statutes
(e.g., Montana Board of Oil and Gas Conservation, section 36.22.1106,
Hydraulic Fracturing) and is a generally accepted standard in the
industry. Testing would emulate the pressure conditions that would be
seen in the proposed stimulation process in order to ensure that the
casing used in the well would be robust enough to handle the pressures.
Proposed section 3162.3-3(d)(3) would require the use of the
pressure test time requirement of holding pressure for 30 minutes with
no more than 10 percent pressure loss. This requirement is the same
standard applied in Onshore Order Number 2, Drilling, (53 FR 46790)
Section III.B.h., to confirm the mechanical integrity of the casing.
This language does not set a new standard in the BLM's regulations.
This test, together with the other proposed requirements, would
demonstrate if the casing is strong enough to protect water and other
subsurface resources during well stimulation activities. The BLM
believes that all of these tests are important to show that reasonable
precautions have been taken to ensure the protection of other resources
during well stimulation activities.
Proposed section 3162.3-3(e)(1) would require the operator to
continuously monitor and record the pressure(s) during the well
stimulation operation. The pressure during the stimulation should be
contained in the string through which the stimulation is being pumped.
Unexpected changes in the monitored and recorded pressure(s) would
provide an early indication of the possibility that well integrity has
been compromised. This information is needed by the BLM to ensure that
well stimulation activities are conducted as designed. This information
would also show that stimulation fluids are going to the formation for
which they were intended.
Proposed section 3162.3-3(e)(2) would require the operator to
orally notify the BLM as soon as possible, but no later than 24 hours
following the incident, if during the stimulation operation the annulus
pressure increases by more than 500 pounds per square inch over the
annulus pressure immediately preceding the stimulation. Within 15 days
after the occurrence, the operator must submit a Subsequent Report
Sundry Notice (Form 3160-5, Sundry Notices and Report on Wells) to the
BLM containing all details pertaining to the incident, including
corrective actions taken. This information is needed by the BLM to
ensure that stimulation fluids are going into the formation for which
they were designed. The BLM also needs to obtain reasonable assurance
that other resources are adequately protected. An increase of pressure
in the annulus of this amount could indicate that the casing had been
breached during well stimulation. Consistent with the BLM's Onshore
Order Number 2, Drilling Operations, the operator must repair the
casing should a breach occur.
Proposed section 3162.3-3(f) would require the operator to store
recovered fluids in tanks or lined pits. This provision grants
flexibility for the operator to choose using either a lined pit or a
storage tank, whichever the operator determines is the least burdensome
or costly option for the storage of flowback fluid. The BLM is
proposing this requirement because flowback fluids could contain
hydrocarbons from the formation and could also contain additives and
other components that might degrade surface and ground water if they
were to be released without treatment. This provision is consistent
with existing industry practice and American Petroleum Institute (API)
recommendations for handling completion fluids (including hydraulic
fracturing fluids) (see Section 6.1.6 of API Recommended Practice 51R,
Environmental Protection for Onshore Oil and Gas Production Operations
and Leases, First Edition, July 2009). Section 302(b) of the Federal
Land Policy and Management Act (43 U.S.C. 1732(b)) states that ``In
managing the public lands, the Secretary shall, by regulation or
otherwise, take any action necessary to prevent unnecessary or undue
degradation of the public lands.'' In addition, existing BLM
regulations at 43 CFR 3161.2 requires that ``all operations be
conducted in a manner which protects other natural resources and the
environmental quality.'' Because the use of lined pits or tanks for the
storage of recovered fluids are methods that best and reasonably
protect the public lands from spills or leaks of recovered fluids, the
BLM believes that this provision is in keeping with FLPMA's mandate to
prevent unnecessary or undue degradation of the public lands and the
BLM regulation's requirement to protect environmental quality.
Additional conditions of approval for the handling of flowback
water may be placed on the project by the BLM if needed to ensure
protection of the environment and other resources. The BLM specifically
requests comments on whether this rule should impose additional
requirements that would require tanks or lined pits for drilling fluids
and any other fluids associated with well stimulation operations. The
BLM recognizes the ongoing efforts of states to regulate hydraulic
fracturing operations. In implementing this rule, the BLM intends to
avoid duplication of
[[Page 27698]]
existing state requirements and will continue to engage states in
cooperative efforts to avoid duplication. Please comment on whether
this proposed provision would be duplicative of provisions of state
rules and whether it is unnecessarily burdensome.
Proposed section 3162.3-3(g) would require the operator to submit
to the BLM the post-operation data on a Subsequent Report Sundry Notice
(Form 3160-5, Sundry Notices and Report on Wells) following the
completion of the stimulation activities. The BLM would determine if
the well stimulation operation was conducted as approved. This
information would be retained by the BLM as part of the individual well
record and would be available for use when the well has been depleted
and the plugging of the well is being designed.
Proposed section 3162.3-3(g)(1) would require reporting of the
actual measured depth to the perforations and open hole interval. This
information identifies the producing interval of the well and will be
available for use when the well has been depleted and plugging of the
well is being designed. Specific information as to the actual source of
water, including location of the water being used as the base fluid, is
required because the BLM needs the information to determine the impacts
associated with operations and the need for any mitigation applicable
to Federal and Indian lands.
Proposed section 3162.3-3(g)(2) would require the operator to
submit to the BLM the actual total volume of fluid used, including
water, proppants, chemicals, and any other fluid used in the
stimulation(s) in order for the BLM to maintain a record of the
stimulation operation as actually performed.
Proposed section 3162.3-3(g)(3) would require the operator to
submit to the BLM a report of the surface pressure at the end of each
stage pumped and the rate at which the fluid was pumped at the
completion of each stage (i.e., just prior to shutting down the pumps).
In addition to the information provided for the individual stages, the
pressure values for each flush stage must also be included. This
information is needed by the BLM for it to ensure that the maximum
allowable pressure was not exceeded at any stage of the well
stimulation operation.
Proposed sections 3162.3-3(g)(4) and (5) would require the operator
to identify to the BLM the stimulation fluid by additive trade name and
additive purpose, the Chemical Abstracts Service Registry Number, and
the percent mass of each ingredient used in the stimulation operation.
This information is needed in order for the BLM to maintain a record of
the stimulation operation as performed. The information is being
required in a format that does not link additives (required by 3162.3-
3(g)(4)) to chemical composition of the materials (required by 3162.3-
3(g)(5)) to minimize the risk of disclosure of any formulas of
additives. This approach is similar to the one the State of Colorado
adopted in 2011 (Colorado Oil and Gas Conservation Commission Rule
205A.b2.ix-xii). The BLM intends to place this information on a public
Web site and is working with the Ground Water Protection Council in an
effort to integrate this information into the existing Web site known
as FracFocus.org. The disclosure of the fluids used in hydraulic
fracturing would only be required after the fracturing operation has
taken place.
Proposed section 3162.3-3(g)(6) would require the actual,
estimated, or calculated fracture length and height of the
stimulation(s) to be reported to the BLM so that it can verify that the
intended effects of the well stimulation operation remain confined to
the petroleum-bearing rock layers and will not have unintended
consequences on other rock layers or aquifers. This section would
require the operator to show that the well stimulation activity was
successfully implemented as designed and that the integrity of the well
was maintained during stimulation.
Proposed section 3162.3-3(g)(7) would allow the operator
flexibility to report online the information listed in proposed
sections 3162.3-3(g)(1) through 3162.3-3(g)(6) by attaching a copy of
the service company contractor's job log or report, provided the
information required is adequately addressed. The operator is
responsible for ensuring the accuracy of any information provided to
the BLM, even if originally drafted by a third party.
Proposed section 3162.3-3(g)(8), would require operators to certify
they have complied with all applicable Federal, state, tribal, and
local laws, rules, and regulations pertaining to the stimulation fluids
that were actually used during well stimulation operations. The
proposed section would also require that the operator certify that it
has complied with all necessary permit and notice requirements. This
information would be retained by the BLM as part of the well record and
be available for use when the well has been depleted and closure of the
well is being designed. The information is also needed for the BLM to
fulfill its obligation to prevent unnecessary or undue degradation of
the public land.
Proposed section 3162.3-3(g)(9) would require operators to certify
that wellbore integrity was maintained throughout the operation. This
information is needed because the BLM has a mandate to protect human
health and safety and prevent contamination of the environment.
Proposed section 3162.3-3(g)(10) would require the operator to
provide information describing the handling of the fluids used for the
stimulation activities, flow-back fluids, and produced water. The
operator must also report how it handled those fluids after operations
were completed.
Proposed section 3162.3-3(g)(10)(i) would require the operator to
report the volume of fluid recovered during flow back, swabbing, or
recovery from production facility vessels.
Proposed section 3162.3-3(g)(10)(ii) would require the operator to
report the methods of managing the recovered fluids.
Proposed section 3162.3-3(g)(10)(iii) would require the operator to
report the disposal method of the recovered fluids. This section also
makes it clear that the fluid disposal methods must be consistent with
Onshore Order Number 7, Disposal of Produced Water (58 FR 47353). This
information is needed so that the BLM can help protect human health and
safety and prevent the contamination of the environment. The BLM also
needs to confirm that the disposal methods used are those that were
approved and conform to the regulations.
Proposed section 3162.3-3(g)(11) would require the operator to
submit documentation and an explanation if the actual operations
deviated from the approved plan. Understanding the complexities of well
stimulation, the BLM expects there to be slight differences between the
proposed plan and the actual operation.
Proposed sections 3162.3-3(h) and (i) would notify the operator of
procedures it needs to follow to identify information required to be
submitted under this section that the operator believes to be exempt,
by law, from public disclosure. If the operator fails to specifically
identify information as exempt from disclosure by Federal law, the BLM
will release that information. The BLM may also release information
which the operator has marked as exempt if the BLM determines that
public release is not prohibited by Federal law after providing the
operator with no fewer than 10 business days' notice of the
determination. All other
[[Page 27699]]
information submitted by the operator will become a matter of public
record.
Proposed section 3162.3-3(j) would provide the operator with a
process for requesting a variance from the minimum standards of this
regulation. Variances apply only to operational activities and do not
apply to the actual approval process. The proposed regulation would
make clear that the BLM has the right to rescind a variance or modify
any condition of approval due to changes in Federal law, technology,
regulation, field operations, noncompliance, or other reasons. The BLM
must make a determination that the variance request meets or exceeds
the objectives of the regulation. For example, an operator could
request a variance from the requirements of proposed section 3162.3-
3(c)(2) that it submit cement bond logs to prove that the occurrences
of usable water have been isolated to protect them from contamination.
The BLM could grant a variance to allow for the use of logs other than
cement bond logs if it was satisfied that the alternative logs would
meet or exceed the objectives of section (c)(2). This variance
provision is consistent with existing BLM regulation such as Onshore
Order Number 1 (see section X. of Onshore Oil and Gas Operations;
Federal and Indian Oil and Gas Leases; Onshore Oil and Gas Order Number
1, Approval of Operations (72 FR 10308, 10337).
Revised section 3162.5-2(d) would remove the references to fresh
water and remove the phrase ``containing 5,000 ppm or less of dissolved
solids.'' This revision would require the operator to isolate all
usable water. This language does not set a new standard in the BLM's
regulations. Since 1988, Onshore Order Number 2, Drilling Operations,
(53 FR 46790) Section II.Y. has defined usable water and Onshore Order
Number 2, Drilling Operations, Section III.B. has required the operator
to ``protect and/or isolate all usable water zones.'' Section 3162.5(d)
was not revised when Onshore Order Number 2, Drilling Operations, was
promulgated, which has led to some confusion in implementing and
interpreting the regulations.
IV. Procedural Matters
Federal and Indian Oil and Gas Leasing Activity
To understand the context of costs and benefits of the proposed
rule, background information concerning the BLM's leasing of Federal
oil and gas, and management of Federal and Indian leases may be helpful
and is included here. This discussion is provided to explain the basis
for the conclusions related to the procedural matters sections that
follow. The BLM Oil and Gas Management program is one of the most
important mineral leasing programs in the Federal Government. There
were 49,173 Federal oil and gas leases covering 38,463,410 acres at the
end of fiscal year (FY) 2011. For FY 2011, there were 90,452 producible
and service drill holes and 96,606 producible and service completions
on Federal leases.\1\
---------------------------------------------------------------------------
\1\ U.S. Department of the Interior, Bureau of Land Management,
www.blm.gov, Oil and Gas Statistics.
---------------------------------------------------------------------------
For FY 2011, onshore Federal oil and gas leases produced about 98
million barrels of oil, 2.97 billion Mcf of natural gas, 2.55 billion
gallons of natural gas liquids, and approximately $2.7 billion in
royalties. The production value of the oil and gas produced from public
lands exceeded $23 billion. Oil and gas production from Indian leases
was almost 20 million barrels of oil, 255 million Mcf of natural gas,
and 143 million gallons of natural gas liquids, with a production value
of $2.7 billion and generating royalties of $433 million.
Table 1--Federal and Indian Oil and Gas Production and Royalties, Fiscal Year 2011
----------------------------------------------------------------------------------------------------------------
Sales value
Sales volume ($MM) Royalty ($MM)
----------------------------------------------------------------------------------------------------------------
Federal Leases:
Oil (bbl)................................................. 97,721,813 $8,374 $1,111
Gas (Mcf)................................................. 2,974,916,041 12,556 1,360
NGL (Gal)................................................. 2,551,994,725 2,474 254
-------------------------------------------------
Subtotal.............................................. ................ 23,404 2,725
Indian Leases:
Oil (bbl)................................................. 19,550,536 1,571 271
Gas (Mcf)................................................. 255,401,453 950 145
----------------------------------------------------------------------------------------------------------------
Source: ONRR, Federal Onshore Reported Royalty Revenue, Fiscal Year 2011 and American Indian Reported Royalty
Revenue, Fiscal Year 2011.
Estimating Benefits and Costs
This analysis attempts to capture the potential benefits and costs
that would result if the BLM implemented the proposed rule. As such,
the current operating environment is the reference point from which the
change is measured.
Current regulations require operators conducting a ``non-routine''
well stimulation operation to submit a Notice of Intent Sundry and all
operators, regardless of the type of well stimulation, to submit a
Subsequent Report Sundry. The proposed rule would require BLM approval
for all hydraulic fracturing events. For each event, operators would
obtain the BLM's approval prior to the event and submit a Subsequent
Report Sundry within 30 days of the event. The operator, if it so
chooses, may seek approval for the stimulation operation at the same
time that it submits the APD. Other information would be required if an
incident occurs during a fracturing operation or if the BLM determines
that there is a need for additional information. For example, the BLM
may require new or different information in cases where the original
information submitted in the Subsequent Report was inadequate or
incomplete.
Potential costs and benefits rely on the number of well stimulation
events estimated to occur in the future. Those estimates depend on a
number of factors, including, but not limited to, future oil and gas
prices, the number of applications to drill, the number of wells
completed, and the portion of wells that are stimulated. Expected costs
and benefits are anticipated to increase in the future because the
number of wells drilled and well stimulation activities are expected to
increase in the
[[Page 27700]]
future, considering projected commodities prices and production.
Administrative costs include only the additional burden posed by
the requirements. For operators, this burden includes the submission of
forms and supporting documentation that are not currently required. The
reporting requirements would also pose an additional burden on the BLM,
since it would review an additional number of sundry forms and
additional information per form. The efficiency of processing
applications could also be impacted if operators submit incomplete or
inadequate information, thereby requiring additional communication
between the BLM and the operators.
The proposed rule seeks to achieve benefits by making more
information available to the public about the chemicals injected in
well stimulation fluids, while protecting trade secrets and
confidential business information. The information that would be
submitted to the BLM under this section would generally be made
available to the public. The proposed rule, however, would allow an
operator to identify specific information that it believes is protected
from disclosure by Federal law, and to substantiate those claims of
exemption. Under existing law, the BLM may nonetheless make that
information available to the public, but only if it determines that the
information is not protected by Federal law, and provides not less than
10 business days notice to the operator before releasing the
information.
Furthermore, the disclosure mechanism in the proposed rule would
require a table of the additives by trade name and the purpose for
which they are included in the well stimulation fluid. It would also
require a separate table listing all the chemicals used by the Chemical
Abstracts Service Registry Number. This design will inhibit reverse-
engineering of specific additives.
Potential costs include those to perform tests or take other
actions that might not have been conducted otherwise. Operational costs
include the cost of any additional logs, tests, or other requirements
needed to prepare all documents required by the proposed rule that are
not currently required. Depending on the well and the operator, these
tests or other requirements currently may be conducted or practiced
pursuant to other permits, general well testing, etc.
New wells, where operators are conducting hydraulic fracturing
operations, should already comply with many of the standards provided
in this proposed rule, with the exception of running cement bond logs
on the surface casing. Typically, an operator will assume that the
casing is fully cemented if cement circulates to the surface during the
cementing process. However, circulation to the surface does not confirm
that there is appropriate or proper bonding. A cement bond log will
provide confirmation that there is proper bonding by providing a
graphical representation that proper bonding has occurred. Old vertical
wells that are converted to horizontal wells already require a
deepening sundry, a separate process that addresses some of the
requirements in this proposed rule.
The potential benefits of the proposed regulations include reduced
surface and subsurface contamination. The analysis assumes that, absent
this regulation, a certain number of well stimulation events may result
in contamination and pose a cost to society. The proposed rule is
designed to identify potential issues regarding wellbore integrity and
the design of the operations, thereby reducing the likelihood of
contamination events.
Estimating the benefits of the proposed regulation is uncertain and
subject to assumptions about the number of deficiencies, likelihood of
contamination if a deficiency was present, and costs of remediation.
One way to measure this benefit is by estimating the cost of
internalizing the contamination, which for a subsurface event may
include restoring a source of drinking water or remediation of an
aquifer.
There are other benefits that are difficult to quantify in monetary
terms though they exist. The disclosure requirements might encourage
operators to use fewer or safer chemicals in the hydraulic fracturing
fluid. The public would benefit from increased knowledge about the
fluids used. Increased transparency is also likely to benefit
scientists, state and Federal agencies, and other organizations that
study the potential impacts of hydraulic fracturing operations, and the
BLM would have more information with which to make resource management
decisions or respond to incidents.
Methodology
This analysis presents costs and benefits expected to occur over
the next 10 years, from 2013 to 2022. This period of analysis was
chosen because 10 years is the length of the primary lease term on BLM-
managed lands. Net benefits are discounted using 7 and 3 percent
discount rates. The analysis presents a range of expected outcomes
since the number of well stimulation events occurring in the future is
highly variable and subject to future conditions.
The proposed regulation is designed to reduce the risk that well
stimulation events may pose to the environment. Any contamination event
that occurs is expected to require remediation. Since the remediation
costs are uncertain, the analysis makes assumptions about remediation
costs which may underestimate the true costs of remediation. The
analysis assumes two scenarios: A low remediation cost--low
environmental risk scenario and a high remediation cost--high
environmental risk scenario. The benefits, while representing the value
of risk reduction, will underestimate or overestimate the true benefits
if the true risk of well stimulation operations varies from the
assumptions.
Discounted Present Value
There is a time dimension to estimates of potential benefits and
costs. The potential events described, if they occur at all, may be in
the distant future. The further in the future the benefits and costs
are expected to occur, the smaller the present value associated with
the stream of costs and benefits. As such, future costs and benefits
must be discounted (the discount factor equals 1/(1+r) \t\ where r is
the discount rate and t is time measured in years during which benefits
and costs are expected to occur). The discount factor is then used to
convert the stream of costs and benefits into ``present discounted
values.'' When the estimated benefits and costs have been discounted,
they can be added to determine the overall value of net benefits.
The OMB's basic guidance on the appropriate discount rate to use is
provided in OMB Circular A-94. The OMB's Circular A-94 states that a
real discount rate of 7 percent should be used as a base-case for
regulatory analysis. The OMB considers the 7 percent rate as an
estimate of the average before-tax rate of return to private capital in
the U.S. economy. It is a broad measure that reflects the returns to
real estate and small business capital as well as corporate capital. It
approximates the opportunity cost of capital, and it is the appropriate
discount rate whenever the main effect of a regulation is to displace
or alter the use of capital in the private sector. OMB Circular A-4
also states that a 3 percent discount rate should be used for
regulatory analyses and explains the use of that discount rate as
follows: ``The effects of regulation do not always fall exclusively or
primarily on the allocation of capital. When regulation primarily and
directly affects private
[[Page 27701]]
consumption (e.g., through higher consumer prices for goods and
services), a lower discount rate is appropriate. The alternative most
often used is sometimes called the `social rate of time preference.'
This simply means the rate at which ``society'' discounts future
consumption flows to their present value.''
Uncertainty
The benefits and costs provided in this analysis are indeed
estimates and come with uncertainty. Estimated costs and benefits rely
on the number of well stimulation events occurring in future years and
those estimates are uncertain. This analysis estimates the number of
future well stimulation events using regression models and future
projections of commodity prices.
Assuming the number of well stimulation events is known, though
administrative costs are more easily estimated, the operational costs
required by producers to comply with the regulations are subject to
assumptions about the number of wells that would require such
expenditures.
Further uncertainty lies in the estimation of benefits and
remediation costs. For the purposes of this analysis, a range of
assumed average costs of remediating both subsurface and surface
contaminations are used. This assumption may be too low or too high in
the real world, depending on the location, severity, consequences,
duration of the contamination, and if a causal link between the source
and contamination can be made.
This analysis does not quantify other benefits that are undoubtedly
relevant, such as the benefit that disclosing the components of
fracturing fluids will have for public health research and the
remediation of contamination events. It is also uncertain what
additional benefits, if any, would result from the disclosure
requirements, for instance, if companies find safer substitutes for the
chemicals in the fracturing fluids.
Results
The analysis estimates the effects of the proposed regulations over
a baseline scenario, where no action is taken. The BLM considered an
alternative to the proposed regulation which would remove the
requirement for operators to use lined pits if they choose to use pits
to store hydraulic fracturing fluids.
A summary of the results appears in Table 2 and Table 3, with the
entire results available in the full Economic Analysis and Initial
Regulatory Flexibility Analysis available at the address listed in the
ADDRESSES section of this rule.
Table 2--Annualized Value of Net Benefits of the Proposed Regulations and Alternatives
[7% Discount rate; $MM]
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Low remediation cost/low
environmental risk
High remediation cost/high
environmental risk
---------------------------------------------------------------------------
Proposed Regulations
Social Benefits................. 11.70 13.79 42.67 50.27
Costs........................... 37.34 43.99 37.34 43.99
---------------------------------------------------------------------------
Net Benefits................ -25.63 -30.20 5.33 6.28
Alternative 1: No Requirement for
Lined Pits
Social Benefits................. 0.01 0.02 7.60 8.95
Costs........................... 34.68 40.86 34.68 40.86
---------------------------------------------------------------------------
Net Benefits................ -34.67 -40.84 -27.08 -31.90
----------------------------------------------------------------------------------------------------------------
Estimated Number of Well Low High Low High
Stimulations
----------------------------------------------------------------------------------------------------------------
Total........................... 31,328 37,015 31,328 37,015
Annual Average.................. 3,133 3,701 3,133 3,701
----------------------------------------------------------------------------------------------------------------
Table 3--Annualized Value of Net Benefits of the Proposed Regulations and Alternatives
[3% Discount rate; $MM]
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Low remediation cost/low
environmental risk
High remediation cost/high
environmental risk
---------------------------------------------------------------------------
Proposed Regulations:
Social Benefits................. 11.74 13.85 42.79 50.27
Costs........................... 37.44 44.18 37.44 44.18
---------------------------------------------------------------------------
Net Benefits................ -25.70 -30.33 5.35 6.31
Alternative 1: No Requirement for
Lined Pits:
Social Benefits................. 0.01 0.02 7.62 8.99
Costs........................... 34.77 41.04 34.77 41.04
---------------------------------------------------------------------------
Net Benefits................ -34.76 -41.02 -27.15 -32.04
----------------------------------------------------------------------------------------------------------------
Estimated Number of Well Low High Low High
Stimulations
----------------------------------------------------------------------------------------------------------------
Total........................... 31,328 37,015 31,328 37,015
Annual Average.................. 3,133 3,701 3,133 3,701
----------------------------------------------------------------------------------------------------------------
[[Page 27702]]
Results for the Proposed Regulations (Preferred Approach)
Benefits: Under the proposed regulations, it is assumed that the
regulations would remove much of the risk associated with potential
wellbore integrity issues and unlined pits. The change in social
benefits from the baseline scenario is positive. If you assume that
there is low environmental risk posed by wellbore integrity issues and
storage of hydraulic fracturing fluids in unlined pits and the costs of
surface and subsurface remediation is low (on the range assumed), then
the change in social benefit as a result of the proposed regulation is
positive and ranges between $11.70MM and $13.79MM per year using a
discount rate of 7% and between $11.74MM and $13.85MM per year using a
discount rate of 3%. If you assume that environmental risks are high
and remediation costs are high (on the range assumed), then the social
benefits of the proposed regulation is positive and ranges between
$42.67MM and $50.27MM per year using a discount rate of 7% and between
$42.79MM and $50.49MM per year using a discount rate of 3%. Tables 7
and 8 (below) show the annual change in benefits over the baseline.
Note that the figures for the estimated benefits of the proposed
rule do not include such benefits as avoiding harm to water users that
cannot be compensated by later providing alternative water sources. The
increase in information about additives could aid water users when they
consider the potential effects of well stimulation operations and
constituent chemicals.
Costs: The costs include both costs to the industry and the BLM
under this alternative. Costs include operational tests that
demonstrate wellbore integrity and those associated with lining open
pits in the instances where operators use pits instead of storage
tanks. The change in costs over the baseline ranges between $37.34MM
and $43.99MM per year using a discount rate of 7% and between $37.44MM
and $44.18MM per year using a discount rate of 3%, assuming low
remediation costs and low environmental risks. The change in costs
ranges between $37.34MM and $43.99MM per year using a discount rate of
7% and between $37.44MM and $44.18MM per year using a discount rate of
3%, assuming high remediation costs and high environmental risks.
Tables 7 and 8 (below) show the annual change in costs over the
baseline.
Net Benefits: The change in net benefits for the proposed
regulations varies depending on the amount of environmental risk
associated with wellbore integrity issues and unlined pits and the
level of remediation costs associated with contamination events.
Assuming low remediation costs and low environmental risks, the change
in net benefits from the baseline is negative and ranges from -$25.63MM
and -$30.20MM per year using a discount rate of 7% and between -
$25.70MM and -$30.33MM per year using a discount rate of 3%. Assuming
high remediation costs and high environmental risks, the change in net
benefits is positive and ranges between $5.33MM and $6.28MM per year
using a discount rate of 7% and between $5.35MM and $6.31MM per year
using a discount rate of 3%.
Given the assumptions made and the fact that certain benefits were
not quantified, the range of estimated outcomes could underestimate the
actual net benefits, i.e., where net benefits are estimated to be
negative, the net benefits would be greater (or less negative).
This analysis also does not capture the potential benefits
associated with the disclosure of fracturing fluids. For example,
disclosure might encourage operators to use fewer or safer chemicals in
the hydraulic fracturing fluid. The public would benefit from increased
knowledge about the fluids used. This transparency is also likely to
benefit scientists, state and Federal agencies, and other organizations
that study the potential impacts of well stimulation operations. The
BLM would be able to make more informed resource decisions and respond
effectively to events where environmental resources have been
compromised.
Also, the variance language might also enable operators to reduce
costs, in which case, these estimates may overestimate the actual costs
and underestimate the change in net benefits.
It should be noted that the low cost and risk scenario results in
negative net benefits while the high cost and risk scenario results in
positive net benefits. The primary difference is not a result of the
administrative or operational costs changing between the scenarios.
Instead, the difference is due to the valuation of social benefits. If
the assumed risk of contamination is greater and the costs of
remediation are higher, then benefits of the proposed rule would be
greater and offset the compliance costs.
The annual cost per well stimulation does not vary greatly between
the cost and risk scenarios, but the benefits do. The average annual
cost per well (including administrative and operational costs) is
estimated to be about $11,833. However, the average annual benefit
ranges more widely, between $3,754 and $13,688. The uncertainty about
risk and damages causes this variability. The net benefit ranges from -
$8,079 to $1,855 on a per well stimulation basis.
Note that the figures for the estimated benefits of the proposed
rule do not include such benefits as avoiding harm to water users that
cannot be compensated by later providing alternative water sources. The
increase in information about additives could aid water users when they
consider the potential effects of well stimulation operations and
constituent chemicals.
Economic Impact Analysis and Distributional Assessments
Energy System Impact Analysis
Executive Order 13211 provides that agencies prepare and submit to
the Administrator of the Office of Information and Regulatory Affairs
(OIRA), OMB, a Statement of Energy Effects for certain actions
identified as significant energy actions. Section 4(b) of Executive
Order 13211 defines a ``significant energy action'' as ``any action by
an agency (normally published in the Federal Register) that promulgates
or is expected to lead to the promulgation of a final rule or
regulation, including notices of inquiry, advance notices of proposed
rulemaking, and notices of proposed rulemaking: (1)(i) That is a
significant regulatory action under Executive Order 12866 or any
successor order, and (ii) is likely to have a significant adverse
effect on the supply, distribution, or use of energy; or (2) that is
designated by the Administrator of OIRA as a significant energy
action.''
This analysis estimates the additional cost burden per well
stimulation event and finds that the average burden per stimulation is
about $11,833 in 2013.
The BLM believes that the additional cost per well stimulation
resulting from this proposed rule is insignificant when compared with
the drilling costs in recent years, the production gains from
hydraulically fractured well operations, and the net incomes of
entities within the oil and natural gas industries.
Table 4 presents drilling costs per well for a range of wells from
1998 to 2007. The data clearly show that drilling costs increased
during this time. Using the estimates for the average burden per well
stimulation and the average cost of drilling wells in 2007, the annual
costs of this proposed rule represent about 0.3% of the drilling cost
of a well.
[[Page 27703]]
As such, the proposed regulations are unlikely to have an effect on
the investment decisions of firms, and the rule is unlikely to affect
the supply, distribution, or use of energy.
Table 4--Per Well Costs of Crude Oil and Natural Gas Wells Drilled
----------------------------------------------------------------------------------------------------------------
Crude oil,
natural gas, Crude oil Natural gas
Year and dry wells wells drilled wells drilled
drilled (nominal $) (nominal $)
(nominal $)
----------------------------------------------------------------------------------------------------------------
1998............................................................ 769,100 566,000 815,600
1999............................................................ 856,100 783,000 798,400
2000............................................................ 754,600 593,400 756,900
2001............................................................ 943,200 729,100 896,500
2002............................................................ 1,054,200 882,800 991,900
2003............................................................ 1,199,500 1,037,300 1,106,000
2004............................................................ 1,673,100 1,441,800 1,716,400
2005............................................................ 1,720,700 1,920,400 1,497,600
2006............................................................ 2,101,700 2,238,600 1,936,200
2007............................................................ 4,171,700 4,000,400 3,906,900
----------------------------------------------------------------------------------------------------------------
Source: Energy Information Administration (2012), ``Costs of Crude Oil and Natural Gas Wells Drilled''.
Employment Impact Analysis
Executive Order 13563 reaffirms the principles established in
Executive Order 12866, but calls for additional consideration of the
regulatory impact on employment. It states, ``Our regulatory system
must protect public health, welfare, safety, and our environment while
promoting economic growth, innovation, competitiveness, and job
creation.'' An analysis of employment impacts is a standalone analysis
and the impacts should not be included in the estimation of benefits
and costs.
This analysis seeks to inform the discussion of labor demand and
job impacts by providing an estimate of the employment impacts of the
proposed regulations using labor requirements for the additional
administration and operational needs.
This proposed rule would require operators who have not already
done so to conduct one-time tests on a well or make a one-time
installation of a mitigation control feature. In addition, operators
would be required to perform administrative tasks related to a one-time
event. Compliance with the operational requirements would shift
resources within the industry from the operators to firms providing the
services or supplies. For example, the requirement for a cement bond
log represents an additional cost to the operator, but a benefit to the
company running the log.
In 2013, the BLM estimates that the labor requirements for
operators to meet additional administrative and operational needs are
estimated to be about 15 to 18 full time equivalents in each of the
next three years. According to the U.S. Census Bureau, employment in
the related sectors was 257,302 persons in 2007. Note that these
impacts are only for the regulated sector. The BLM cannot predict the
net national employment impact, i.e., whether the increased employment
in the regulated sector comes from previously unemployed workers or is
displaces workers actively employed in other sectors.
Another area of interest is the extent to which the financial
burden is expected to change operators' investment decisions. If the
financial burden is not significant and all other factors are equal,
then one would expect operators to maintain existing levels of
investment and employment. As with the results in the earlier
discussion, the BLM believes that the proposed rule would result in an
additional cost per well stimulation that is small and would not alter
the investment or employment decisions of firms. Therefore, considering
the labor requirements and those operators would not likely reduce
investment, the BLM anticipates an overall net gain in employment in
the sectors.
Executive Order 12866, Regulatory Planning and Review
In accordance with the criteria in Executive Order 12866, the
Office of Management and Budget has determined that this rule is a
significant regulatory action.
The rule will not have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or state, local, or tribal
governments or communities. However, the rule may raise novel policy
issues because of the proposed requirement that operators provide to
the BLM information regarding well stimulation activities that they are
not currently providing to the BLM.
This proposed rule would not create inconsistencies or otherwise
interfere with an action taken or planned by another agency. This
proposed rule would not change the relationships of the oil and gas
operations with other agencies. These relationships are included in
agreements and memoranda of understanding that would not change with
this rule. In addition, this proposed rule would not materially affect
the budgetary impact of entitlements, grants, loan programs, or the
rights and obligations of their recipients. Please see the discussion
of the impacts of the proposed rule as described earlier in this
section of the preamble.
Regulatory Flexibility Act
Congress enacted the Regulatory Flexibility Act of 1980 (RFA), as
amended, 5 U.S.C. 601-612, to ensure that Government regulations do not
unnecessarily or disproportionately burden small entities. The RFA
requires a regulatory flexibility analysis if a rule would have a
significant economic impact, either detrimental or beneficial, on a
substantial number of small entities. For the purposes of this
analysis, we will assume that all entities (all lessees and operators)
that may be affected by this proposed rule are small entities, even
though that is not actually the case.
The proposed rule deals with well stimulation on all Federal and
Indian lands (except those excluded by statute). There would be some
increased costs associated with the proposed enhanced
[[Page 27704]]
recordkeeping requirements and some new operational requirements.
However, the BLM expects that these costs would be minor in comparison
to overall operations costs. Therefore, the BLM has determined under
the RFA that the proposed rule would not have a significant economic
impact on a substantial number of small entities. Please see the
discussion earlier in this section of the preamble for a discussion of
the impacts of the rule.
Small Business Regulatory Enforcement Fairness Act
The Regulatory Flexibility Act as amended by the Small Business
Regulatory Enforcement Fairness Act (SBREFA) generally requires an
agency to prepare a regulatory flexibility analysis of any rule subject
to notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute, unless the agency certifies that
the rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small governmental jurisdictions, or small not-for-profit enterprises.
The BLM reviewed the Small Business Administration (SBA) size
standards for small businesses and the number of entities fitting those
size standards as reported by the U.S. Census Bureau in the 2007
Economic Census. Using the Economic Census data, the BLM concludes that
about 99% of the entities operating in the relevant sectors are small
businesses in that they employ fewer than 500 employees. Also, small
firms account for 74% of the total value of shipments and receipts for
services, 86% of the total cost of supplies, 78% of the total capital
expenditures (excluding land and mineral rights), and 67% of the paid
employees.
Small entities represent the overwhelming majority of entities
operating in the onshore crude oil and natural gas extraction industry.
As such, the proposed rule is likely to affect a significant number of
small entities. To examine the economic impact of the rule on small
entities, the BLM performed a screening analysis for impacts on a
sample of expected affected small entities by comparing compliance
costs to entity net incomes.
Under the cost and risk scenarios, the average cost per entity in
2013 is estimated to represent between 0.002% and 0.22% of the 2010 net
incomes of the sampled companies, depending on the U.S. Energy
Information Administration's Annual Energy Outlook commodity price
forecasts. The proportions do not change substantially over the outlook
period.
After considering the economic impact of the proposed rule on these
small entities, the screening analysis indicates that this proposed
rule would not have a significant economic impact on a substantial
number of small entities. Please see the discussion earlier in this
section of the preamble for a discussion of the impacts of the rule.
Unfunded Mandates Reform Act
This proposed rule does not contain a Federal mandate that may
result in expenditures of $100 million or more for state, local, and
tribal governments, in the aggregate, or to the private sector in any
one year. Thus, the proposed rule is also not subject to the
requirements of Sections 202 or 205 of the Unfunded Mandates Reform Act
(UMRA).
This proposed rule is also not subject to the requirements of
Section 203 of UMRA because it contains no regulatory requirements that
might significantly or uniquely affect small governments; it contains
no requirements that apply to such governments nor does it impose
obligations upon them.
Executive Order 12630, Governmental Actions and Interference With
Constitutionally Protected Property Rights (Takings)
Under Executive Order 12630, the proposed rule would not have
significant takings implications. A takings implication assessment is
not required. This proposed rule would establish recordkeeping
requirements for hydraulic fracturing operations and some additional
operational requirements on Federal and Indian lands. All such
operations are subject to lease terms which expressly require that
subsequent lease activities be conducted in compliance with
subsequently adopted Federal laws and regulations. The proposed rule
conforms to the terms of those Federal leases and applicable statutes,
and as such the proposed rule is not a governmental action capable of
interfering with constitutionally protected property rights. Therefore,
the proposed rule would not cause a taking of private property or
require further discussion of takings implications under this Executive
Order.
Executive Order 13352, Facilitation of Cooperative Conservation
Under Executive Order 13352, the BLM has determined that this
proposed rule would not impede facilitating cooperative conservation
and would take appropriate account of and consider the interests of
persons with ownership or other legally recognized interests in land or
other natural resources. This rulemaking process will involve Federal,
State, local and tribal governments, private for-profit and nonprofit
institutions, other nongovernmental entities and individuals in the
decision-making. The process would provide that the programs, projects,
and activities are consistent with protecting public health and safety.
Executive Order 13132, Federalism
Under Executive Order 13132, this proposed rule would not have
significant Federalism effects. A Federalism assessment is not required
because the proposed rule would not have a substantial direct effect on
the states, on the relationship between the national government and the
states, or on the distribution of power and responsibilities among the
various levels of government. The proposed rule would not have any
effect on any of the items listed. The proposed rule would affect the
relationship between operators, lessees, and the BLM, but would not
impact states. Therefore, under Executive Order 13132, the BLM has
determined that the proposed rule would not have sufficient Federalism
implications to warrant preparation of a Federalism Assessment.
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
Under Executive Order 13175, the President's memorandum of April
29, 1994, ``Government-to-Government Relations with Native American
Tribal Governments'' (59 FR 22951), and 512 Departmental Manual 2, the
BLM evaluated possible effects of the proposed rule on federally
recognized Indian tribes. The BLM approves proposed operations on all
Indian onshore oil and gas leases (except those excluded by statute).
Therefore, the proposed rule has the potential to affect Indian tribes.
In conformance with the Secretary's policy on tribal consultation, the
Bureau of Land Management held four tribal consultation meetings to
which over 175 tribal entities were invited. The consultations were
held in:
Tulsa, Oklahoma on January 10, 2012;
Billings, Montana on January 12, 2012;
Salt Lake City, Utah on January 17, 2012; and
Farmington, New Mexico on January 19, 2012.
The purpose of these meetings was to solicit initial feedback and
preliminary comments from the tribes. Comments
[[Page 27705]]
from tribes will be received and consultation will continue as this
rulemaking proceeds. To date, the tribes have expressed concerns about
the BLM's Inspection and Enforcement program's ability to enforce the
terms of this rule; previously plugged and abandoned wells being
potential conduits for contamination of ground water; and the operator
having to provide documentation that the water used for the fracturing
operation was legally acquired. The BLM will further address these
concerns during the drafting of the final rule.
Executive Order 12988, Civil Justice Reform
Under Executive Order 12988, the Office of the Solicitor has
determined that the proposed rule would not unduly burden the judicial
system and meets the requirements of Sections 3(a) and 3(b)(2) of the
Order. The Office of the Solicitor has reviewed the proposed rule to
eliminate drafting errors and ambiguity. It has been written to
minimize litigation, provide clear legal standards for affected conduct
rather than general standards, and promote simplification and avoid
unnecessary burdens.
Paperwork Reduction Act
The Paperwork Reduction Act (PRA) (44 U.S.C. 3501-3521) provides
that an agency may not conduct or sponsor, and a person is not required
to respond to, a ``collection of information,'' unless it displays a
currently valid control number. Collections of information include
requests and requirements that an individual, partnership, or
corporation obtain information, and report it to a Federal agency (44
U.S.C. 3502(3); 5 CFR 1320.3(c) and (k)).
In accordance with the PRA, the BLM is inviting public comment on
its request that OMB assign a new control number for proposed new uses
of Form 3160-5 (Sundry Notices and Reports on Wells). The BLM is
proposing that these new uses would replace certain existing uses of
Form 3160-5 for well-stimulation operations.
OMB has approved the use of Form 3160-5 under control number 1004-
0137, Onshore Oil and Gas Operations (43 CFR part 3160) to collect
information on a number of operations, including some well-stimulation
operations. Once the BLM is authorized to collect well-stimulation
information in accordance with finalized new section 3162.3-3 and a new
control number, the BLM will request revision of control number 1004-
0137 to:
Add the new well-stimulation uses and burdens of Form
3160-5 to control number 1004-0137, and
Remove the existing well-stimulation uses and burdens from
the existing approval of Form 3160-5.
The new collection of information would be required to obtain or
retain a benefit for the operators of Federal and Indian (except on the
Osage Reservation, the Crow Reservation, and certain other areas)
onshore oil and gas leases, units, or communitization agreements that
include Federal leases. The BLM has requested a 3-year term of approval
for the new control number.
The information collection request for this proposed rule has been
submitted to OMB for review under 44 U.S.C. 3504(h) of the Paperwork
Reduction Act. A copy of the request can be obtained from the BLM by
electronic mail request to Barbara Gamble at [email protected] or
by telephone request to 202-912-7148. The BLM requests comments to:
Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
Evaluate the accuracy of the agency's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used;
Enhance the quality, utility, and clarity of the
information to be collected; and
Minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submission of responses.
Comments on the information collection requirements should be sent
to both OMB and the BLM as directed in the ADDRESSES section of this
preamble. OMB is required to make a decision concerning the collection
of information contained in this proposed rule between 30 to 60 days
after publication of this document in the Federal Register. Therefore,
a comment to OMB is best assured of having its full effect if OMB
receives it by June 11, 2012.
Summary of Information Collection Requirements
The proposed rule is intended to increase transparency for the
public regarding the fluids and additives used in well stimulation. The
proposed provisions that include information collection requirements
are amendments to 43 CFR 3162.3-2 new 43 CFR 3162.3-3.
OMB has approved the use of Form 3160-5 under control number 1004-
0137 for the operations listed in existing section 3162.3-2. As
amended, section 3162.3-2 would no longer include well stimulation jobs
(i.e., nonroutine fracturing, routine fracturing, and acidizing) on the
list of operations for which prior approval and subsequent reports
would be required. Other categories of operations would remain subject
to the information collection requirements in section 3162.3-2. Once
the BLM is authorized to collect well-stimulation information under new
section 3162.3-3 and a new control number, the BLM will request
revision of control number 1004-0137 by removing the well-stimulation
burdens from the existing approval of Form 3160-5. New section 3162.3-3
would require operators to use Form 3160-5 both to seek prior BLM
approval of well stimulation operations, and to submit a report on
subsequent actual well stimulation operations. It would also encourage
operators to use Form 3160-5 if they want to request a variance from
the requirements of new section 3162.3-3.
Request for Prior Approval (i.e., Notice of Intent Sundry)
New section 3162.3-3(b) would require operators to seek and obtain
prior approval by the BLM for proposed well stimulation operations.
Submission of the information, called a Notice of Intent (NOI) Sundry
in the proposed rule, would be required at least 30 days before the
date the operator wants to begin well stimulation operations. The
information to be included in this Notice of Intent Sundry, and the
reasons for requiring it, are listed in the following table:
------------------------------------------------------------------------
Proposed regulatory
Proposed regulation 43 CFR text Rationale
------------------------------------------------------------------------
Sec. 3162.3-3(c)(1)....... The geological The BLM would use
names, a geological the information to
description, and determine the
the proposed properties of the
measured depth of rock layers and the
the top and the thickness of the
bottom of the producing
formation into formation, and
which well identify the
stimulation fluids confining rocks
are to be injected. above and below the
zone that would be
stimulated.
[[Page 27706]]
Sec. 3162.3-3(c)(2)....... The proposed The BLM would use
measured depths the information to
(both top and help protect water
bottom) of all resources.
occurrences of
usable water and
the Cement Bond
Logs (or another
log acceptable to
the authorized
officer) proving
that the
occurrences of
usable water have
been isolated to
protect them from
contamination.
Sec. 3162.3-3(c)(3)....... The proposed The BLM would use
measured depth of the information to
perforations or the determine the
open-hole interval, impacts associated
the source and with operations and
location(s) of the the need for any
water used in the mitigation
stimulation fluid applicable to
or trade name of Federal and Indian
the base fluid (if lands.
other than water),
type of proppants,
and estimated pump
pressures.
Information
concerning water
supply, such as
rivers, creeks,
springs, lakes,
ponds, and wells,
which may be shown
by quarter-quarter
section on a map or
plat, or which may
be described in
writing. The NOI
Sundry must also
identify the
source, access
route, and
transportation
method for all
water anticipated
for use in
stimulating the
well.
Sec. 3162.3-3(c)(4)....... A certification The BLM would use
signed by the the information to
operator that the make an informed
proposed treatment decision on the
fluid complies with proposed well
all applicable stimulation.
permitting and
notice requirements
as well as all
applicable Federal,
tribal, state, and
local laws, rules,
and regulations.
Sec. 3162.3-3(c)(5)....... A detailed The information
description of the would enable the
proposed well BLM to verify that
stimulation design, the proposed
including: (i) The engineering design
estimated total is adequate for
volume of fluid to safely conducting
be used; (ii) The the proposed well
anticipated surface stimulation, that
treating pressure the maximum
range; (iii) The wellbore design
maximum injection burst pressure will
treating pressure; not be exceeded at
and (iv) the any stage of the
estimated or well stimulation
calculated fracture operations, and
length and fracture that the intended
height effects of the well
stimulation
operation will
remain confined to
the petroleum-
bearing rock layers
and will not have
unintended
consequences for
other rock layers,
such as aquifers.
Sec. 3162.3-3(c)(6)....... The following The BLM would use
information the information to
concerning the ensure that the
handling of facilities needed
recovered fluids: to process or
(i) The estimated contain the
volume of fluid to estimated volume of
be recovered during fluid will be
flow back, available on
swabbing, and location, that the
recovery from handling methods
production facility will adequately
vessels; (ii) The ensure protection
proposed methods of of public health
handling the and safety, and
recovered fluids, that the BLM has
including, but not all necessary
limited to, pit information
requirements, regarding disposal
chemical of chemicals used,
composition of the in the event it is
fluid, pipeline needed to protect
requirements, the environment and
holding pond use, human health and
re-use for other safety and to
stimulation prevent unnecessary
activities, or or undue
injection; and degradation of the
(iii) The proposed public lands.
disposal method of
the recovered
fluids, including,
but not limited to,
injection, hauling
by truck, or
transporting by
pipeline
Sec. 3162.3-3(c)(7)....... Additional The information
information, as would allow the BLM
requested by the to make an informed
authorized officer. decision about the
proposed well
stimulation if
special
circumstances
exist.
------------------------------------------------------------------------
Subsequent Report (i.e., Subsequent Report Sundry Notice)
Within 30 days after the completion of well stimulation operations,
section 3162.3-3(f) of the proposed rule would require operators to
submit a Subsequent Report Sundry Notice on Form 3160-5 (Sundry Notices
and Report on Wells). The information to be included in this Subsequent
Report, and the reasons for requiring it, are listed in the following
table.
------------------------------------------------------------------------
Proposed regulatory
Proposed regulation 43 CFR text Rationale
------------------------------------------------------------------------
Sec. 3162.3-3(e)(1)....... A continuous record The BLM would use
of the annulus the information to
pressure must be ensure that well
submitted with the stimulation
required Subsequent activities are
Report Sundry conducted as
Notice (Form 3160- designed. The
5, Sundry Notices information would
and Reports on also show that
Wells) identified stimulation fluids
in paragraph (g) of are going to the
this section. formation for which
they were intended.
[[Page 27707]]
Sec. 3162.3-3(e)(2)....... If during the The BLM would use
stimulation the the information to
annulus pressure ensure that
increases by more stimulation fluids
than 500 pounds per are going into the
square inch as formation for which
compared to the they were designed.
pressure The BLM also needs
immediately to obtain
preceding the reasonable
stimulation, the assurance that
operator must other resources are
orally notify the adequately
authorized officer protected.
as soon as
practicable, but no
later than 24 hours
following the
incident. Within 15
days after the
occurrence, the
operator must
submit a report
containing all
details pertaining
to the incident,
including
corrective actions
taken, as part of a
Subsequent Report
Sundry Notice (Form
3160-5, Sundry
Notices and Reports
on Wells).
Sec. 3162.3-3(g)(1)....... The actual measured The BLM would use
depth of the information to
perforations or the determine the
open-hole interval, impacts associated
the source and with operations and
location(s) of the the need for any
water used in the mitigation
stimulation fluid applicable to
or trade name of Federal and Indian
base fluid (if lands.
other than water),
type of proppants,
and estimated pump
pressures.
Information
concerning water
supply, such as
rivers, creeks,
springs, lakes,
ponds, and wells,
which may be shown
by quarter-quarter
section on a map or
plat, or which may
be described in
writing. It must
also identify the
source, access
route, and
transportation
method for all
water used in
stimulating the
well.
Sec. 3162.3-3(g)(2)....... The actual total The BLM would use
volume of the fluid the information to
used. maintain a record
of the stimulation
operation as
actually performed.
Sec. 3162.3-3(g)(3)....... The actual surface The BLM would use
pressure and rate the information to
at the end of each ensure that the
fluid stage, and maximum allowable
the actual flush pressure has not
volume, rate, and been exceeded at
final pump pressure. any stage of the
well stimulation
operation.
Sec. 3162.3-3(g)(4) and (4) A report (table) The BLM would use
(5). that discloses all the information to
additives of the maintain a record
actual stimulation of the stimulation
fluid, by additive operation as
trade name and performed.
purpose (such as,
but not limited to,
acid, biocide,
breaker, brine,
corrosion
inhibitor,
crosslinker,
demulsifier,
friction reducer,
gel, iron control,
oxygen scavenger,
pH adjusting agent,
proppant, scale
inhibitor, or
surfactant); and.
(5) A report (table)
that discloses the
complete chemical
makeup of all
materials used in
the actual
stimulation fluid
without regard to
original source
additive (see
paragraph (g)(4) of
this section). For
each chemical, the
operator must
provide the
Chemical Abstracts
Service Registry
Number as well as
the percentage by
mass. The percent
mass value is the
mass value for each
component (Mc)
divided by the
value of the entire
fluid mass (Mt)
times 100. (Mc/
Mt)*100 = percent
value. The percent
mass values should
be for the entire
stimulation
operation, not for
the individual
stages.
Sec. 3162.3-3(g)(6)....... The actual, The BLM would use
estimated, or the information to
calculated fracture verify that the
length and fracture intended effects of
height. the well
stimulation
operation remain
confined to the
petroleum-bearing
rock layers and
will not have
unintended
consequences on
other rock layers
or aquifers.
Sec. 3162.3-3(g)(7)....... The Subsequent This provision would
Report Sundry allow the operator
Notice (Form 3160- the flexibility to
5, Sundry Notices submit a copy of
and Reports on the service company
Wells) may be contractor's job
completed in whole log or other report
or in part, as in lieu of all or
applicable, by part of the data
attaching the described above, so
service long as the
contractor's job required
log or other information is
report, so long as complete and
the information readily apparent.
required in
paragraphs (g)(1)
through (g)(6) of
this section is
complete and
readily apparent.
Sec. 3162.3-3(g)(8)....... A certification The BLM would use
signed by the the information to
operator that the help protect public
treatment fluid health and safety
used complies with and obtain the
all applicable operator's self-
permitting and certification of
notice requirements compliance with all
as well as all necessary permits
applicable Federal, and notice
tribal, state, and requirements.
local laws, rules,
and regulations.
Sec. 3162.3-3(g)(9)....... A certification The BLM would use
signed by the the information to
operator that help protect public
wellbore integrity health and safety
was maintained and obtain the
throughout the operator's self-
operation, as certification that
required by wellbore integrity
paragraphs (d), was maintained
(e)(1), and (e)(2) throughout the
of this section. operation.
[[Page 27708]]
Sec. 3162.3-3(g)(10)...... The following The BLM would use
information the information to
concerning the help protect human
handling of health and safety
recovered fluids: and prevent the
(i) The volume of contamination of
fluid recovered the environment.
during flow back, The BLM also needs
swabbing, or to confirm that the
recovery from disposal methods
production facility used are those that
vessels; (ii) The were approved and
methods of handling conform to the
the recovered regulations.
fluids, including,
but not limited to,
pipeline
requirements,
holding pond use,
re-use for other
stimulation
activities, or
injection; and
(iii) The disposal
method of the
recovered fluids,
including, but not
limited to,
injection, hauling
by truck, or
transporting by
pipeline. The
disposal of fluids
produced during the
flow back from the
well stimulation
process must follow
the requirements
set out in Onshore
Order Number 7,
Disposal of
Produced Water,
Section III. B.
Sec. 3162.3-3(g)(11)...... If the actual The BLM would use
operations deviate the information to
from the approved maintain a record
plan, the of any deviations
deviation(s) must of the operation
be documented. from the approved
plan in the event
such information is
needed to protect
health and safety
and prevent undue
degradation of the
environment.
------------------------------------------------------------------------
Requesting a Variance
Proposed 43 CFR 3162.3-3(j) would encourage operators to use Form
3160-5 to request a variance from the requirements under proposed
section 3162.3-3. Any request for a variance, whether filed on Form
3160-5 or not, would have to specifically identify the regulatory
provision of this section for which the variance is being requested,
explain the reason the variance is needed, and demonstrate how the
operator would satisfy the objectives of the regulation for which the
variance is being requested.
Estimated Annual Hour and Cost Burdens
The estimated annual hour and costs burdens of each aspect of this
information collection are shown in the following table:
----------------------------------------------------------------------------------------------------------------
D. Total hours
A. Type of response B. Number of C. Hours per (column B x
responses response column C)
----------------------------------------------------------------------------------------------------------------
Sundry Notices and Reports on Wells/Well Stimulation/Notice of 1,700 8 13,600
Intent Sundry, (43 CFR 3162.3-3), Form 3160-5..................
Sundry Notices and Reports on Wells/Well Stimulation/Subsequent 1,700 8 13,600
Report, Sundry Notice, (43 CFR 3162.3-3, Form 3160-5...........
Sundry Notices and Reports on Wells/Well Stimulation/Variance 170 8 1,360
Request, (43 CFR 3162.3-3), Form 3160-5........................
-----------------------------------------------
Totals...................................................... 3,570 .............. 28,560
----------------------------------------------------------------------------------------------------------------
National Environmental Policy Act
The BLM has prepared an environmental assessment (EA) that
concludes that the proposed rule would not constitute a major Federal
action that may result in a significant adverse effect on the human
environment under section 102(2)(C) of the National Environmental
Policy Act (NEPA), 42 U.S.C. 4332(2)(C). A detailed statement under
NEPA would not be required if the proposed amendments were promulgated
as regulations. The BLM has placed the EA and the draft Finding of No
Significant Impact on file in the BLM Administrative Record at the
address specified in the ADDRESSES section.
Data Quality Act
In developing this rule, we did not conduct or use a study,
experiment, or survey requiring peer review under the Data Quality Act
(Pub. L. 106-554).
Executive Order 13211, Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
In accordance with Executive Order 13211, the BLM has determined
that the proposed rule will not have substantial direct effects on the
energy supply, distribution, or use, including a shortfall in supply or
price increase. Please see the discussion earlier in this section of
the preamble for a discussion of the impacts of the rule.
Clarity of the Regulations
Executive Order 12866 requires each agency to write regulations
that are simple and easy to understand. We invite your comments on how
to make these proposed regulations easier to understand, including
answers to questions such as the following:
1. Are the requirements in the proposed regulations clearly stated?
2. Do the proposed regulations contain technical language or jargon
that interferes with their clarity?
3. Does the format of the proposed regulations (grouping and order
of sections, use of headings, paragraphing, etc.) aid or reduce their
clarity?
4. Would the regulations be easier to understand if they were
divided into more (but shorter) sections?
5. Is the description of the proposed regulations in the
SUPPLEMENTARY INFORMATION section of this preamble helpful in
understanding the proposed regulations? How could this description be
more helpful in making the proposed regulations easier to understand?
Please send any comments you have on the clarity of the regulations
to the address specified in the ADDRESSES section.
[[Page 27709]]
Authors
The principal authors of this rule are: Michael Worden of the BLM
Washington Office; Nicholas Douglas of BLM Washington Office; Adrienne
Brumley of the BLM New Mexico State Office; Donato Judice of the BLM
Great Falls, Montana Oil and Gas Field Office, assisted by Ian Senio
and Joe Berry of the BLM's Division of Regulatory Affairs and the
Department of the Interior's Office of the Solicitor.
List of Subjects
43 CFR Part 3160
Administrative practice and procedure; Government contracts;
Indians--lands; Mineral royalties; Oil and gas exploration; Penalties;
Public lands--mineral resources; Reporting and recordkeeping
requirements.
43 CFR Chapter II
For the reasons stated in the preamble, and under the authorities
stated below, the Bureau of Land Management proposes to amend 43 CFR
part 3160 as follows:
PART 3160--ONSHORE OIL AND GAS OPERATIONS
1. The authorities citation for part 3160 is revised to read as
follows:
Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359 and
1751; 40 U.S.C. 4332, and 43 U.S.C. 1732(b), 1733, and 1740.
Subpart 3160--Onshore Oil and Gas Operations: General
Sec. 3160.0-3 [Amended]
2. In section 3160.0-3 add ``the Federal Land Policy and Management
Act (43 U.S.C. 1701 et seq.),'' after ``the Mineral Leasing Act for
Acquired lands, as amended (30 U.S.C. 351-359),''.
3. Amend Sec. 3160.0-5 by adding definitions of ``annulus,''
``bradenhead,'' ``proppant,'' ``stimulation fluid,'' ``usable water,''
and ``well stimulation'' in alphabetical order and by removing the
definition of ``fresh water'':
The additions read as follows:
Sec. 3160.0-5 Definitions.
* * * * *
Annulus means the space around a pipe in a wellbore, the outer wall
of which may be the wall of either the borehole or the casing;
sometimes also called annular space.
* * * * *
Bradenhead means a heavy, flanged steel fitting connected to the
first string of casing that allows suspension of intermediate and
production strings of casing and supplies the means for the annulus to
be sealed off.
* * * * *
Proppant means a granular substance (most commonly sand, sintered
bauxite, or ceramic) that is carried in suspension by the fracturing
fluid that serves to keep the cracks open when fracturing fluid is
withdrawn after a hydraulic fracture treatment.
* * * * *
Stimulation fluid means the liquid or gas, including any associated
solids, used during a treatment of oil and gas wells, such as the
water, chemicals, and proppants used in hydraulic fracturing.
* * * * *
Usable water means generally those waters containing up to 10,000
ppm of total dissolved solids.
* * * * *
Well stimulation means those activities conducted in an individual
well bore designed to increase the flow of hydrocarbons from the rock
formation to the well bore through modifying the permeability of the
reservoir rock. Examples of well stimulation operations are acidizing
and hydraulic fracturing.
* * * * *
Subpart 3162--Requirements for Operating Rights Owners and
Operators
4. Amend Sec. 3162.3-2 by revising the first sentence of paragraph
(a) and revising paragraph (b) to read as follows:
Sec. 3162.3-2 Subsequent well operations.
(a) A proposal for further well operations shall be submitted by
the operator on Form 3160-5 for approval by the authorized officer
prior to commencing operations to redrill, deepen, perform casing
repairs, plug-back, alter casing, recomplete in a different interval,
perform water shut off, commingling production between intervals and/or
conversion to injection. * * *
(b) Unless additional surface disturbance is involved and if the
operations conform to the standard of prudent operating practice, prior
approval is not required for recompletion in the same interval;
however, a subsequent report on these operations must be filed on Form
3160-5.
* * * * *
5. Add a new Sec. 3162.3-3 to read as follows:
Sec. 3162.3-3 Subsequent well operations; Well stimulation.
(a) This section applies to well stimulation activities. All other
injection activities must comply with section 3162.3-2.
(b) When an Operator Must Submit Notification for Approval of Well
Stimulation.
A proposal for well stimulation must be submitted by the operator
and approved by BLM before commencement of operations. The proposal may
be submitted in one of the following ways:
(i) For new wells, the operator may submit with its Application for
Permit to Drill the information required in paragraph (c) of this
section, except for the cement bond log required by paragraph (c)(2).
The approved permit to drill will require submission and approval of
the cement bond log required by paragraph (c)(2) prior to conducting
well stimulation activities;
(ii) For wells permitted prior to the effective date of this
section or for wells permitted after the effective date of this
section, if the application for permit to drill a well did not include
the information required in paragraph (c) of this section, the operator
must submit a proposal for well stimulation operations on Form 3160-5
(Sundry Notices and Reports on Wells) as a Notice of Intent Sundry for
approval by the authorized officer prior to well stimulation. If there
is additional surface disturbance, the proposal must include a surface
use plan of operations; and
(iii) If an operator has received BLM approval for well stimulation
activities, it must submit a new Notice of Intent Sundry if either: (A)
Well stimulation activities have not commenced within five years after
the effective date of approval of the well stimulation activity; or (B)
The operator has significant new information about the geology of the
area, the stimulation operation or technology to be used, or the
anticipated impacts of the stimulation activity to any resource.
(c) What the Notice of Intent Sundry Must Include. The authorized
officer may prescribe that each proposal contain all or a portion of
the information set forth in Sec. 3162.3-1 of this title. The Notice
of Intent Sundry must include the following:
(1) The geological names, a geological description, and the
proposed measured depth of the top and the bottom of the formation into
which well stimulation fluids are to be injected;
(2) The proposed measured depths (both top and bottom) of all
occurrences of usable water and the cement bond logs (or another log
acceptable to the authorized officer) proving that the occurrences of
usable water have been isolated to protect them from contamination;
[[Page 27710]]
(3) The proposed measured depth of perforations or the open-hole
interval, the source and location(s) of the water used in the
stimulation fluid or trade name of the base fluid (if other than
water), type of proppants, and estimated pump pressures. Information
concerning water supply, such as rivers, creeks, springs, lakes, ponds,
and wells, which may be shown by quarter-quarter section on a map or
plat, or which may be described in writing. It must also identify the
source, access route, and transportation method for all water
anticipated for use in stimulating the well;
(4) A certification signed by the operator that the proposed
treatment fluid complies with all applicable permitting and notice
requirements as well as all applicable Federal, tribal, state, and
local laws, rules, and regulations;
(5) A detailed description of the proposed well stimulation design,
including:
(i) The estimated total volume of fluid to be used;
(ii) The anticipated surface treating pressure range;
(iii) The maximum injection treating pressure; and
(iv) The estimated or calculated fracture length and fracture
height;
(6) The following information concerning the handling of recovered
fluids:
(i) The estimated volume of fluid to be recovered during flow back,
swabbing, and recovery from production facility vessels;
(ii) The proposed methods of handling the recovered fluids,
including, but not limited to, pit requirements, chemical composition
of the fluid, pipeline requirements, holding pond use, re-use for other
stimulation activities, or injection; and
(iii) The proposed disposal method of the recovered fluids,
including, but not limited to, injection, hauling by truck, or
transporting by pipeline.
(7) The authorized officer may request additional information under
this subsection prior to the approval of the Notice of Intent Sundry.
(d) Mechanical Integrity Testing Prior to Well Stimulation. Prior
to the well stimulation, the operator must perform a successful
mechanical integrity test (MIT) of the casing.
(1) If well stimulation through the casing is proposed, the casing
must be tested to not less than the maximum anticipated treating
pressure.
(2) If well stimulation through a fracturing string is proposed,
the fracturing string must be inserted into a liner or run on a packer-
set not less than 100 feet below the cement top of the production or
intermediate casing. The fracturing string must be tested to not less
than the maximum anticipated treating pressure minus the annulus
pressure applied between the fracturing string and the production or
intermediate casing.
(3) The MIT will be considered successful if the pressure applied
holds for 30 minutes with no more than a 10 percent pressure loss.
(e)(1) Monitoring and Recording During Well Stimulation. During the
well stimulation operation, the operator must continuously monitor and
record the annulus pressure at the bradenhead. If an intermediate
casing has been set on the well that is being stimulated, the pressure
in the annulus between the intermediate casing and the production
casing must also be continuously monitored and recorded. A continuous
record of the annulus pressure during the well stimulation must be
submitted with the required Subsequent Report Sundry Notice (Form 3160-
5, Sundry Notices and Reports on Wells) identified in paragraph (f) of
this section.
(e)(2) If during the stimulation the annulus pressure increases by
more than 500 pounds per square inch as compared to the pressure
immediately preceding the stimulation, the operator must orally notify
the authorized officer as soon as practicable, but no later than 24
hours following the incident. Within 15 days after the occurrence, the
operator must submit a report containing all details pertaining to the
incident, including corrective actions taken, as part of a Subsequent
Report Sundry Notice (Form 3160-5, Sundry Notices and Reports on
Wells).
(f) Storage of all recovered fluids must be in either tanks or
lined pits. The authorized officer may require additional measures to
protect the mineral resources, other natural resources, and
environmental quality from the release of recovered fluids.
(g) Information that Must be Provided to the Authorized Officer
After Completed Operations. The following information must be provided
to the authorized officer in the required Subsequent Report Sundry
Notice (Form 3160-5, Sundry Notices and Reports on Wells) within 30
days after the operations are completed (see subpart 3160.0-9(c)(1)):
(1) The actual measured depth of perforations or the open-hole
interval, the source and location(s) of the water used in the
stimulation fluid or trade name of base fluid (if other than water),
type of proppants, and actual pump pressures. Information concerning
water supply, such as rivers, creeks, springs, lakes, ponds, and wells,
which may be shown by quarter-quarter section on a map or plat, or
which may be described in writing. It must also identify the source,
access route, and transportation method for all water used in
stimulating the well;
(2) The actual total volume of the fluid used;
(3) The actual surface pressure and rate at the end of each fluid
stage, and the actual flush volume, rate, and final pump pressure;
(4) A report (table) that discloses all additives of the actual
stimulation fluid, by additive trade name and purpose (such as, but not
limited to, acid, biocide, breaker, brine, corrosion inhibitor,
crosslinker, demulsifier, friction reducer, gel, iron control, oxygen
scavenger, pH adjusting agent, proppant, scale inhibitor, or
surfactant);
(5) A report (table) that discloses the complete chemical makeup of
all materials used in the actual stimulation fluid without regard to
original source additive (see paragraph (f)(4) of this section). For
each chemical, the operator must provide the Chemical Abstracts Service
Registry Number as well as the percentage by mass. The percent mass
value is the mass value for each component (Mc) divided by the value of
the entire fluid mass (Mt) times 100. (Mc/Mt) * 100 = percent value.
The percent mass values should be for the entire stimulation operation,
not for the individual stages.
(6) The actual, estimated, or calculated fracture length and
fracture height;
(7) The Subsequent Report Sundry Notice (Form 3160-5, Sundry
Notices and Reports on Wells) may be completed in whole or in part, as
applicable, by attaching the service contractor's job log or other
report, so long as the information required in paragraphs (g)(1)
through (g)(6) of this section is complete and readily apparent;
(8) A certification signed by the operator that the treatment fluid
used complied with all applicable permitting and notice requirements as
well as all applicable Federal, tribal, state, and local laws, rules,
and regulations;
(9) A certification signed by the operator that wellbore integrity
was maintained throughout the operation, as required by paragraphs (d),
(e)(1), and (e)(2) of this section;
(10) The following information concerning the handling of recovered
fluids:
(i) The volume of fluid recovered during flow back, swabbing, or
recovery from production facility vessels;
[[Page 27711]]
(ii) The methods of handling the recovered fluids, including, but
not limited to, pipeline requirements, holding pond use, re-use for
other stimulation activities, or injection; and
(iii) The disposal method of the recovered fluids, including, but
not limited to, injection, hauling by truck, or transporting by
pipeline. The disposal of fluids produced during the flow back from the
well stimulation process must follow the requirements set out in
Onshore Order Number 7, Disposal of Produced Water, Section III.B.
(October 8, 1993, 58 FR 47354).
(11) If the actual operations deviate from the approved plan, the
deviation(s) must be documented and explained.
(h) Identifying Information Claimed to be Exempt from Public
Disclosure. At the time of submission of any information required under
this section, operators must:
(1) Specifically identify particular information claimed to be
exempted from public disclosure by a Federal statute or regulation;
(2) Identify the Federal statute or regulation that prohibits the
public disclosure of each piece of particular information, and explain
in detail why the information is subject to the prohibition of the
identified Federal statute or regulation; and
(3) Inform the BLM whether the particular information is available
to the public through other means, such as disclosures required by
state law.
(i) Any information that is provided in accordance with this
section for which the operator does not substantiate a reason for
withholding under paragraph (h) of this section shall be deemed not to
be protected by the Trade Secrets Act or other Federal law and shall be
released to the public. If an operator identifies information as exempt
from disclosure, the BLM may nonetheless release that information if it
determines that the information is not prohibited from disclosure by
Federal law, after providing the operator with no fewer than 10
business days notice of the BLM's determination.
(j) Requesting a Variance from the Requirements of this Section.
The operator may make a written request to the authorized officer to
request a variance from the requirements under this section. The BLM
encourages submission using a Sundry Notice (Form 3160-5, Sundry
Notices and Reports on Wells).
(1) A request for a variance must specifically identify the
regulatory provision of this section for which the variance is being
requested, explain the reason the variance is needed, and demonstrate
how the operator will satisfy the objectives of the regulation for
which the variance is being requested.
(2) The authorized officer, after considering all relevant factors,
may approve the variance, or approve it with one or more conditions of
approval, only if the BLM determines that the proposed alternative
meets or exceeds the objectives of the regulation for which the
variance is being requested. The decision whether to grant or deny the
variance request is entirely within the BLM's discretion.
(3) A variance under this section does not constitute a variance to
provisions of other regulations, laws, or orders.
(4) Due to changes in Federal law, technology, regulation, BLM
policy, field operations, noncompliance, or other reasons, the BLM
reserves the right to rescind a variance or modify any conditions of
approval. The authorized officer must provide a written justification
if a variance is rescinded or a condition of approval is modified.
6. Amend Sec. 3162.5-2 by revising the first sentence of paragraph
(d) to read as follows:
Sec. 3162.5-2 Control of wells.
* * * * *
(d) Protection of usable water and other minerals. The operator
shall isolate all usable water and other mineral-bearing formations and
protect them from contamination. Tests and surveys of the effectiveness
of such measures shall be conducted by the operator using procedures
and practices approved or prescribed by the authorized officer. * * *
Dated: May 4, 2012.
Marcilynn Burke,
Acting Assistant Secretary, Land and Minerals Management.
[FR Doc. 2012-11304 Filed 5-10-12; 8:45 am]
BILLING CODE P