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43 C.F.R. §§ 3173.14–3173.20

7 sections in range

§3173.14. Conditions for commingling and allocation approval (surface and downhole).

43 C.F.R. § 3173.14

(a)
Subject to the exceptions provided in paragraph (b) of this section, the BLM may grant a CAA only if the proposed allocation method used for any such commingled measurement does not have the potential to affect the determination of the total volume or quality of production on which royalty owed is determined for all the Federal or Indian leases, unit PAs, or CAs which are proposed for commingling, and only if the following criteria are met:
(1)
The proposed commingling includes production from more than one—
(i)
Federal lease, unit PA, or CA, where each lease, unit PA, or CA proposed for commingling has 100 percent Federal mineral interest, the same fixed royalty rate and, and the same revenue distribution;
(ii)
Indian tribal lease, unit PA, or CA, where each lease, unit PA, or CA proposed for commingling is wholly owned by the same tribe and has the same fixed royalty rate;
(iii)
Federal unit PA or CA where each unit PA or CA proposed for commingling has the same proportion of Federal interest, and which interest is subject to the same fixed royalty rate and revenue distribution. (For example, the BLM could approve a commingling request under this paragraph where an operator proposes to commingle two Federal CAs of mixed ownership and both CAs are 50 percent Federal/50 percent private, so long as the Federal interests have the same royalty rates and royalty distributions.); or
(iv)
Indian unit PA or CA where each unit PA or CA proposed for commingling has the same proportion of Indian interests, and which interest is held by the same tribe and has the same fixed royalty rate; and
(2)
The operator or operators provide a methodology acceptable to BLM for allocation among the properties from which production is to be commingled (including a method for allocating produced water), with a signed agreement if there is more than one operator;
(3)
For each of the leases, unit PAs, or CAs proposed for inclusion in the CAA, the applicant demonstrates to the AO that a lease, unit PA, or CA proposed for inclusion is producing in paying quantities (or, in the case of Federal leases, capable of production in paying quantities) pending approval of the CAA; and
(4)
The FMP(s) for the proposed CAA measure production originating only from the leases, unit PAs, or CAs in the CAA.
(b)
The BLM may also approve a CAA in instances where the proposed commingling of production involves production from Federal or Indian leases, unit PAs, or CAs that do not meet the criteria of paragraph (a)(1) of this section (e.g., the commingling of leases, unit PAs, or CAs with different royalty rates or different distributions of revenue, or where the commingling involves multiple mineral ownerships). In order to be approved, a CAA under this subparagraph must meet the requirements of paragraphs (a)(2) through (4) of this section and at least one of the following conditions:
(1)
The Federal or Indian lease, unit PA, or CA meets the definition of an economically marginal property. However, if the BLM determines that a Federal or Indian lease, unit PA, or CA included in a CAA ceases to be an economically marginal property, then this condition is no longer met;
(2)
The average monthly production over the preceding 12 months for each Federal or Indian lease, unit PA, or CA proposed for the CAA on an individual basis is less than 1,000 Mcf of gas per month, or 100 bbl of oil per month;
(3)
A CAA that includes Indian leases, unit PAs, or CAs has been authorized under tribal law or otherwise approved by a tribe;
(4)
The CAA covers the downhole commingling of production from multiple formations that are covered by separate leases, unit PAs, or CAs, where the BLM has determined that the proposed commingling from those formations is an acceptable practice for the purpose of achieving maximum ultimate economic recovery and resource conservation; or
(5)
There are overriding considerations that indicate the BLM should approve a commingling application in the public interest notwithstanding potential negative royalty impacts from the allocation method. Such considerations could include topographic or other environmental considerations that make non-commingled measurement physically impractical or undesirable, in view of where additional measurement and related equipment necessary to achieve non-commingled measurement would have to be located.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.

Source

Source: 81 FR 81421, Nov. 17, 2016, unless otherwise noted.

§3173.15. Applying for a commingling and allocation approval.

43 C.F.R. § 3173.15

To apply for a CAA, the operator(s) must submit the following, if applicable, to the BLM office having jurisdiction over the leases, unit PAs, or CAs from which production is proposed to be commingled:
(a)
A completed Sundry Notice for approval of commingling and allocation (if off-lease measurement is a feature of the commingling and allocation proposal, then a separate Sundry Notice under § 3173.23 is not necessary as long as the information required under § 3173.23(b) through (e) and, where applicable, § 3173.23(f) through (i) is included as part of the request for approval of commingling and allocation);
(b)
A completed Sundry Notice for approval of off-lease measurement under § 3173.23, if any of the proposed FMPs are outside the boundaries of any of the leases, units, or CAs from which production would be commingled (which may be included in the same Sundry Notice as the request for approval of commingling and allocation), except as provided in paragraph (a) of this section;
(c)
A proposed allocation agreement, including an allocation methodology (including allocation of produced water), with an example of how the methodology is applied, signed by each operator of each of the leases, unit PAs, or CAs from which production would be included in the CAA;
(d)
A list of all Federal or Indian lease, unit PA, or CA numbers in the proposed CAA, specifying the type of production (i.e., oil, gas, or both) for which commingling is requested;
(e)
A topographic map or maps of appropriate scale showing the following—
(1)
The boundaries of all the leases, units, unit PAs, or communitized areas whose production is proposed to be commingled; and
(2)
The location of existing or planned facilities and the relative location of all wellheads (including the API number) and piping included in the CAA, and existing FMPs or FMPs proposed to be installed to the extent known or anticipated;
(f)
A surface use plan of operations (which may be included in the same Sundry Notice as the request for approval of commingling and allocation) if new surface disturbance is proposed for the FMP and its associated facilities are located on BLM-managed land within the boundaries of the lease, units, and communitized areas from which production would be commingled;
(g)
A right-of-way grant application (Standard Form 299), filed under 43 CFR part 2880, if the proposed FMP is on a pipeline, or under 43 CFR part 2800, if the proposed FMP is a meter or storage tank. This requirement applies only when new surface disturbance is proposed for the FMP, and its associated facilities are located on BLM-managed land outside any of the leases, units, or communitized areas whose production would be commingled;
(h)
Written approval from the appropriate surface-management agency, if new surface disturbance is proposed for the FMP and its associated facilities are located on Federal land managed by an agency other than the BLM;
(i)
A right-of-way grant application for the proposed FMP, filed under 25 CFR part 169, with the appropriate BIA office, if any of the proposed surface facilities are on Indian land outside the lease, unit, or communitized area from which the production would be commingled;
(j)
Documentation demonstrating that each of the leases, unit PAs, or CAs proposed for inclusion in the CAA is producing in paying quantities (or, in the case of Federal leases, is capable of production in paying quantities) pending approval of the CAA; and
(k)
All gas analyses, including Btu content (if the CAA request includes gas) and all oil gravities (if the CAA request includes oil) for previous periods of production from the leases, units, unit PAs, or communitized areas proposed for inclusion in the CAA, up to 6 years before the date of the application for approval of the CAA. Gas analysis and oil gravity data is not needed if the CAA falls under § 3173.14(a)(1).
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.

Source

Source: 81 FR 81421, Nov. 17, 2016, unless otherwise noted.

§3173.16. Existing commingling and allocation approvals.

43 C.F.R. § 3173.16

Upon receipt of an operator's request for assignment of an FMP number to a facility associated with a CAA existing on January 17, 2017, the AO will review the existing CAA and take the following action:
(a)
The AO will grandfather the existing CAA and associated off-lease measurement, where applicable, if the existing CAA meets one of the following conditions:
(1)
The existing CAA involves downhole commingling that includes Federal or Indian leases, unit PAs, or CAs; or
(2)
The existing CAA is for surface commingling and the average production rate over the previous 12 months for each Federal or Indian lease, unit PA, and CA included in the CAA is:
(i)
Less than 1,000 Mcf per month for gas; or
(ii)
Less than 100 bbl per month for oil.
(b)
If the existing CAA does not meet the conditions of paragraphs (a)(1) or (a)(2) of this section, the AO will review the CAA for consistency with the minimum standards and requirements for a CAA under § 3173.14.
(1)
The AO will notify the operator in writing of any inconsistencies or deficiencies with an existing CAA. The operator must correct any inconsistencies or deficiencies that the AO identifies, provide the additional information that the AO has requested, or request an extension of time from the AO, within 20 business days after receipt of the AO's notice. When the AO is satisfied that the operator has corrected any inconsistencies or deficiencies, the AO will terminate the existing CAA and grant a new CAA based on the operator's corrections.
(2)
The AO may terminate the existing CAA and grant a new CAA with new or amended COAs to make the approval consistent with the requirements under § 3173.14 in connection with approving the requested FMP. If the operator appeals any COAs of the new CAA, the existing CAA approval will continue in effect during the pendency of the appeal.
(3)
If the existing CAA does not meet the standards and requirements of § 3173.14 and the operator does not correct the deficiencies, the AO may terminate the existing CAA under § 3173.20 and deny the request for an FMP number for the facility associated with the existing CAA.
(c)
If the AO grants a new CAA to replace an existing CAA under paragraph (b) of this section, the new CAA is effective on the first day of the month following its approval. Any new allocation percentages resulting from the new CAA will apply from the effective date of the CAA forward.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.

Source

Source: 81 FR 81421, Nov. 17, 2016, unless otherwise noted.

§3173.17. Relationship of a commingling and allocation approval to royalty-free use of production.

43 C.F.R. § 3173.17

A CAA does not constitute approval of off-lease royalty-free use of production as fuel in facilities located at an FMP approved under the CAA.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.

Source

Source: 81 FR 81421, Nov. 17, 2016, unless otherwise noted.

§3173.18. Modification of a commingling and allocation approval.

43 C.F.R. § 3173.18

(a)
A CAA must be modified when there is:
(1)
A modification to the allocation agreement;
(2)
Inclusion of additional leases, unit PAs, or CAs are proposed in the CAA; or
(3)
Termination of or permanent production cessation from any of the leases, unit PAs, or CAs within the CAA.
(b)
To request a modification of a CAA, all operators must submit to the AO:
(1)
A completed Sundry Notice describing the modification requested;
(2)
A new allocation methodology, including an allocation methodology which includes allocation of produced water and an example of how the methodology is applied, if appropriate; and
(3)
Certification by each operator in the CAA that it agrees to the CAA modification.
(c)
A change in operator does not trigger the need to modify a CAA.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.

Source

Source: 81 FR 81421, Nov. 17, 2016, unless otherwise noted.

§3173.19. Effective date of a commingling and allocation approval.

43 C.F.R. § 3173.19

(a)
If the BLM approves a CAA, the effective date of the CAA is the first day of the month following first production through the FMPs for the CAA.
(b)
If the BLM approves a modification, the effective date is the first day of the month following approval of the modification.
(c)
A CAA does not modify any of the terms of the leases, units, or CAs covered by the CAA.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.

Source

Source: 81 FR 81421, Nov. 17, 2016, unless otherwise noted.

§3173.20. Terminating a commingling and allocation approval.

43 C.F.R. § 3173.20

(a)
The AO may terminate a CAA for any reason, including, but not limited to, the following:
(1)
Changes in technology, regulation, or BLM policy;
(2)
Operator non-compliance with the terms or COAs of the CAA or this subpart; or
(3)
The AO determines that a lease, unit, or CA subject to the CAA has terminated, or a unit PA subject to the CAA has ceased production.
(b)
If only one lease, unit PA, or CA remains subject to the CAA, the CAA terminates automatically.
(c)
An operator may terminate its participation in a CAA by submitting a Sundry Notice to the BLM. The Sundry Notice must identify the FMP(s) for the lease(s), unit PA(s), or CA(s) previously subject to the CAA. Termination by one operator does not mean the CAA terminates as to all other participating operators, so long as one of the other provisions of this subpart is met and the remaining operators submit a Sundry Notice requesting a new CAA as outlined in paragraph (e) of this section.
(d)
The AO will notify in writing all operators who are a party to the CAA of the effective date of the termination and any inconsistencies or deficiencies with their CAA approval that serve as the reason(s) for termination. The operator must correct any inconsistencies or deficiencies that the AO identifies, provide the additional information that the AO has requested, or request an extension of time from the AO, within 20 business days after receipt of the BLM's notice, or the CAA is terminated.
(e)
If a CAA is terminated, each lease, unit PA, or CA that was included in the CAA may require a new FMP number(s) or a new CAA. Operators will have 30 days to apply for a new FMP number (§ 3173.12) or CAA (§ 3173.15), if applicable. The existing FMP number may be used for production reporting until a new FMP number is assigned or CAA is approved.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.

Source

Source: 81 FR 81421, Nov. 17, 2016, unless otherwise noted.