Interior's natural gas emissions management needs an overhaul

Interior’s natural gas emissions management needs an overhaul

WASHINGTON, July 28, 2016 - The Government Accountability Office (GAO) says the Interior Department needs to update the way it oversees and accounts for onshore oil and gas production on federal lands.

Interior’s Bureau of Land Management (BLM) oversees and accounts for that production, as well as collecting royalties for this oil and gas. In fiscal year 2015, oil and gas companies produced more than 3.3 trillion cubic feet of natural gas and more than 171 million barrels of oil from onshore oil and gas leases managed by BLM. However, guidance, issued over 30 years ago, may exempt gas that is vented, flared or used to operate equipment on the lease.

In recent years, increased oil production has resulted in a rise in flared gas in certain regions where there is limited infrastructure to transport or process gas associated with oil production.

Historically, Interior’s focus has been on collecting data from royalty-bearing oil and gas production and has provided limited guidance on how operators are to report natural gas emissions. BLM has proposed updating its venting and flaring regulations to clarify how future venting or flaring requests will be managed.

Republican members of the House Natural Resources and Energy and Commerce committees asked GAO to review Interior’s management of natural gas emissions onshore. The review, which included Interior data, random samples and interviews, examined the extent to which Interior can account for these emissions and how BLM field offices have managed requests to vent or flare.

What GAO Concluded

GAO concluded that the Interior Department may not have a consistent accounting of natural gas emissions from onshore federal leases, and does not have the information it needs to reasonably ensure it is minimizing waste on these leases.

For example, Interior:

• does not provide specific instructions on how to estimate natural gas emissions, which results in operators using varying estimation methods that may be difficult to verify;
• provides limited guidance on which Oil and Gas Operations Reports (OGOR) categories to use when reporting flared gas emissions, which results in inconsistent reporting;
• does not specify which natural gas emissions activities should be reported, resulting in operators not reporting some emissions, for example, from storage tanks.

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Additionally, GAO found that BLM field offices have not consistently followed BLM’s existing guidance in managing operators’ venting or flaring requests and found that BLM has approved venting or flaring requests that did not include the documentation BLM’s guidance requires.

For example, in fiscal year 2014, GAO found that BLM received 1,281 venting or flaring requests from operators. After reviewing the documentation, based on a random sample of 100 of those requests, GAO estimates that 90 percent of the requests to BLM did not provide the documentation required by BLM guidance. GAO also estimates that BLM approved 70 percent of these venting or flaring requests and, for nearly half of the approvals, allowed operators to flare gas royalty-free.

GAO also found that selected BLM field offices have applied BLM guidance differently. For example, says GAO, officials in two BLM field offices reviewed said they used their authority under the existing guidance to charge royalties on flared gas, while a third field office was considering doing so. Other field offices GAO reviewed have interpreted BLM guidance as allowing all venting or flaring requests in their regions to be approved royalty-free.

Interior officials told GAO that they expect to finalize the proposed update to its regulations by the end of calendar year 2016 and that finalizing the regulations is an administration priority.

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