The Department of the Interior, through the Bureau of Land Management (BLM) proposed new rules to curb flaring, venting and leaking of natural gas in order to reduce waste on federal and Indian oil and gas leases. The proposed regulation would replace the current rules established under the 1979 Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases: Royalty or Compensation for Oil and Gas Lost (NTL-4A). Previous attempts to update NTL-4A, most recently through a rescinded 2016 rule, have been met with strong pushback from the industry.
The proposal contains the following elements:
- The establishment of a general rule that “operators must use all reasonable precautions to prevent the waste of oil or gas developed from the lease.” This rule may be the basis for specific waste reduction measures required for permit approval.
- The requirement that operators submit a waste minimisation plan as part of the permit application process that includes information on anticipated associated waste production and the capacity of the operator to capture and utilise the gas.
- The clarification that "unavoidably lost" waste gas will not be subjected to royalties. Unavoidable loss may occur during specified circumstances, including well completions, production testing, and emergencies.
- The inclusion of prescriptive requirements for avoiding gas waste:
- The prohibition of the use of natural-gas-activated pneumatic controllers or pneumatic diaphragm pumps with a bleed rate that exceeds 6 standard cubic feet per hour.
- The equipment of oil storage tanks with a vapor recovery system or another similar mechanism.
- The maintenance of a leak detection and repair (LDAR) program that includes regular inspections of all equipment on site.
The BLM estimates that this regulation would provide benefits of $55 million per year in recovered gas to the industry, increase royalty revenues from recovered and flared gas by $39 million per year, and provide $427 million per year in benefits to society from avoided GHG emissions.