Cutting Waste: BLM Issues New Waste Prevention Rule
On March 27, the Bureau of Land Management (BLM) released a new rule aimed at reducing natural gas waste due to leaks, venting, and flaring on federal and Tribal lands. The set of regulations, known as the Waste Prevention, Production Subject to Royalties, and Resource Conservation Rule, or simply the Waste Prevention Rule, replaces existing BLM rules focusing on natural gas waste that were put in place more than 40 years ago.
The Waste Prevention Rule uses a system of royalty payments paid to federal or Tribal mineral owners for unpreventable losses, except for those that happen during an emergency, by operators that have not taken “reasonable preventive actions”. The rule is expected to generate more than $50 million in additional royalty payments and conserve billions of cubic feet of natural gas that otherwise would have been leaked, vented, or flared. The Waste Prevention Rule will go into effect 60 days after the rule is published in the Federal Register.
A Long Road: New Rule Updates Four-Decade-Old Requirements
The Waste Prevention Rule replaces BLM requirements on natural gas venting and flaring that the agency enacted more than 40 years ago as part of its land leasing operations.
BLM attempted to update these flaring and venting rules with new regulations in 2016; however, the rule was challenged in federal court and was never implemented. The Waste Prevention Rule avoids many of the aspects of the 2016 rule that led to it being challenged. The intent was to have a rule that is distinct from the EPA rule and that lets operators meet requirements while still complying with state, federal, and tribal regulations.
However, many in the oil and gas industry are taking a cautious view of the Waste Prevention Rule as there is a possibility of overlapping regulations that could increase regulatory burdens. Industry-related organizations are carefully reviewing the rule to ensure it does not stray from a focus on preventing waste or overlap other rules.
Taking Time: Requirements to Phase in Over 18 Months
The Waste Prevention Rule requires operators to undertake “reasonable measures” to avoid natural gas waste from the beginning of operations. Companies will now need to submit either a Waste Minimization Plan or self-certification statement as part of getting a permit to drill on federal or Tribal lands.
BLM estimates that total annual costs for the oil and gas industry as a whole will be around $19 million.
Once the Waste Prevention Rule is in place, oil and gas companies will have approximately 60 days after the rule becomes effective, until they are subject to new limits on flaring. The rule will then require flare measurements at six, 12, and 18 months. Operators will have 18 months to submit their leak detection and repair plans to BLM state offices.
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