OIL AND GAS

Interior Could Do 

More to Account for 

and Manage Natural 

Gas Emissions

Report to Congressional Requesters

July 2016

GAO-16-607

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-607, a report to 

congressional requesters

July 2016

OIL AND GAS

Interior Could Do More to Account for and Manage 

Natural Gas Emissions

What GAO Found

The Department of the Interior’s (Interior) guidance to oil and gas operators on 

its reporting requirements has limitations that may hinder the extent to which it 

can account for natural gas emissions on onshore federal lands (leases). Interior 

is required to ensure that oil and gas operations are conducted in a manner that 

minimizes waste. As part of its oversight activities, Interior requires operators to 

submit monthly Oil and Gas Operations Reports (OGOR). Interior uses these 

reports to track volumes of oil and gas produced on federal lands, including gas 

that may be exempt from royalties, such as gas released into the air (vented), 

burned (flared), or used to power equipment on the lease (lease use). 

Historically, Interior’s focus has been on collecting data from royalty-bearing oil 

and gas production, and thus it has provided limited guidance on how operators 

are to report natural gas emissions. 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 OGOR categories to use when reporting 

flared gas emissions, which results in inconsistent reporting; and

• does not specify which natural gas emissions activities should be reported, 

resulting in operators not reporting some emissions (e.g., from storage 

tanks). 

As a result of these limitations, Interior 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. 

The Bureau of Land Management’s (BLM) field offices have not consistently 

followed BLM’s existing guidance in managing operators’ venting or flaring 

requests. GAO found that BLM field offices have approved venting or flaring 

requests that did not include the documentation BLM’s guidance requires. 

Specifically, in fiscal year 2014, GAO found that BLM received 1,281 venting or 

flaring requests from operators. GAO reviewed the documentation for a random

sample of 100 of those requests and, based on this sample, estimates that 90 

percent (+/-8) of the requests to BLM did not provide the documentation required 

by BLM guidance. GAO also estimates that BLM approved 70 percent (+/-9) of 

these venting or flaring requests and, for nearly half of the approvals, allowed 

operators to flare gas royalty-free. Further, GAO found that selected BLM field 

offices have applied BLM guidance differently to venting or flaring requests. For 

example, officials in two BLM field offices GAO 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. The other three field offices GAO 

reviewed have interpreted BLM guidance as allowing all venting or flaring 

requests in their regions to be approved royalty-free. BLM’s proposed update to 

its regulations, if finalized, would clarify how BLM will manage future venting or 

flaring requests. 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. 

View GAO-16-607. For more information, 

contact Frank Rusco at (202) 512-3841 or 

ruscof@gao.gov.

Why GAO Did This Study

Interior’s BLM oversees and accounts 

for onshore oil and gas production on 

federal lands. Interior generally collects 

royalties for this oil and gas, but its 

guidance, which was issued over 30 

years ago, may exempt gas that is 

vented, flared, or used to operate 

equipment on the lease. Increased oil 

production in recent years 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. BLM has proposed 

updating its venting and flaring 

regulations to clarify how such 

emissions are to be managed.

GAO was asked to review Interior’s 

management of natural gas emissions 

onshore. This report examines (1) the 

extent to which Interior can account for 

these emissions and (2) how BLM field 

offices have managed requests to vent 

or flare. GAO analyzed Interior data, 

including a simple random sample of 

venting or flaring requests from fiscal 

year 2014, the most recent year for 

which data were available; reviewed 

Interior documents; and interviewed 

officials from a nongeneralizable 

sample of six BLM field offices 

selected based on increased natural 

gas emissions in recent years. GAO 

also interviewed operators with leases 

managed by two BLM field offices.

What GAO Recommends

GAO is making four recommendations

to Interior, including providing

additional guidance on how operators 

are to report natural gas emissions. 

Interior generally concurred with these 

recommendations.
Page i GAO-16-607 Natural Gas Emissions on Federal Lands

Letter 1

Background 5

Interior’s Guidance to Operators on Reporting Requirements Has 

Limitations That May Hinder the Extent to Which It Can Account 

for Natural Gas Emissions 12

BLM Has Not Consistently Followed Its Existing Guidance in 

Managing Operators’ Venting or Flaring Requests 18

Conclusions 27

Recommendations for Executive Action 28

Agency Comments and Our Evaluation 28

Appendix I Regulatory Actions to Reduce Natural Gas Emissions in Selected 

States 30

Appendix II Objectives, Scope, and Methodology 33

Appendix III Comments from the Department of the Interior 37

Appendix IV GAO Contact and Staff Acknowledgments 40

Figures

Figure 1: Illustrative Example of Onshore Production and 

Associated Sources of Vented or Flared Gas 6

Figure 2: Volumes of Flared Natural Gas from Oil Wells on 

Federal Lands in 2013 8

Figure 3: Illustration of the Department of the Interior’s Process for 

Approving and Collecting Data on Venting or Flaring 11

Figure 4: Requests to Vent or Flare Natural Gas Submitted to 

Bureau of Land Management (BLM) Field Offices, Fiscal 

Year 2014 20

Figure 5: Reasons Cited by Operators to Vent or Flare by 

Estimated Percentage of Requests to Vent or Flare, 

Fiscal Year 2014 21

Contents
Page ii GAO-16-607 Natural Gas Emissions on Federal Lands

Figure 6: Documentation Provided in Requests to Vent or Flare by 

Estimated Percentage of Requests to Vent or Flare, 

Fiscal Year 2014 22

Figure 7: BLM’s Approvals by Estimated Percentage of Requests 

to Vent or Flare with Royalty Determinations of Approved 

Requests, Fiscal Year 2014 23

Abbreviations

BLM Bureau of Land Management

EPA Environmental Protection Agency

Interior Department of the Interior

NTL-4A Notice to Lessees and Operators of Onshore Federal and

Indian Oil and Gas Leases

OGOR Oil and Gas Operations Report

ONRR Office of Natural Resources Revenue

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-16-607 Natural Gas Emissions on Federal Lands

441 G St. N.W.

Washington, DC 20548

July 7, 2016

The Honorable Alan Lowenthal

Ranking Member

Subcommittee on Energy and Mineral Resources

Committee on Natural Resources

House of Representatives

The Honorable Diana DeGette

Ranking Member

Subcommittee on Oversight and Investigations

Committee on Energy and Commerce

House of Representatives

The Honorable Peter A. DeFazio

House of Representatives

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 on federal lands managed by the Department 

of the Interior’s (Interior) Bureau of Land Management (BLM), according 

to data provided by Interior. BLM is responsible for managing and 

accounting for approximately 700 million subsurface onshore acres and 

production from nearly 100,000 federal onshore oil and gas wells. 

According to Interior, production from these wells accounts for 11 percent 

of the nation’s natural gas supply and 5 percent of its oil supply. Under 

the Minerals Leasing Act of 1920, BLM is required to ensure that firms 

producing oil and gas use all reasonable precautions to prevent waste of 

oil or gas developed on these lands.1 The act also authorizes Interior to 

collect royalties on oil and gas produced on federal lands.2 Interior’s 

Office of Natural Resources Revenue (ONRR) collects these royalties, 

which its data show totaled nearly $2.2 billion in fiscal year 2015.

 1

30 U.S.C. § 225.

2

30 U.S.C. §§ 226(b)(1)(A) and (c)(1); 30 U.S.C. § 352.

Letter
Page 2 GAO-16-607 Natural Gas Emissions on Federal Lands

Interior requires monthly Oil and Gas Operations Reports (OGOR) from 

oil and gas companies (operators), which track and account for volumes 

of oil and gas produced on all federal lands. While most of the natural gas 

produced on leased federal lands and waters is sold, some is lost during 

production for various reasons, including leaks and releases for ongoing 

operational or safety procedures. This natural gas is either released 

directly into the atmosphere (vented) or burned (flared).3 In addition to 

gas that is lost during production, some natural gas may be used to 

operate equipment on the lease (lease use). When we refer to vented, 

flared, and lease use gas collectively, we use the term natural gas 

emissions. Until recently, Interior has generally exempted operators from 

paying royalties on reported natural gas emissions.

Natural gas emissions, as estimated by Interior and other sources, make 

up a relatively small but uncertain percentage of total natural gas 

production on public lands. However, flaring has generally increased in 

recent years as technological advances, such as horizontal drilling and 

hydraulic fracturing in shale formations,4 have led to the rapid 

development of oil and gas resources. These resources are often in 

remote areas where the infrastructure to transport or process the gas 

associated with oil deposits has not kept pace with rapid increases in oil 

production.5 Interior data show a substantial increase in flaring in recent 

years in New Mexico and North Dakota.

 3

For the purposes of this report, we use “natural gas” to mean the mixture of gas resulting 

from oil and gas production activities. This natural gas will vary in content but, on average, 

is approximately 80 percent methane, with the remaining 20 percent a mix of other 

hydrocarbons and nonhydrocarbons, such as carbon dioxide and nitrogen. 

4

Shale is a sedimentary rock that is predominantly composed of consolidated clay-sized 

particles. Hydraulic fracturing (also known as hydrofracking, fracking, or fracing) is 

commonly defined as an oil or gas well completion process that directs pressurized fluids 

typically containing any combination of water, proppant, and any added chemicals to 

penetrate tight rock formations, such as shale or coal formations, in order to stimulate the 

oil or gas residing in the formation, and that subsequently requires high-rate, extended 

flowback to expel fracture fluids and solids. 

5

Although most natural gas production involves extracting gas from wells drilled into 

underground gas reservoirs, some natural gas is generated as a by-product of oil 

production. Gas produced during oil production is called associated natural gas.
Page 3 GAO-16-607 Natural Gas Emissions on Federal Lands

In an October 2010 report, we found that natural gas emissions have both 

economic and environmental implications.6 On federal oil and gas leases, 

natural gas that is vented, flared, or used on the lease instead of captured 

for sale represents a loss of royalty revenue for the federal government. 

For example, in our October 2010 report, we found that the 

Environmental Protection Agency’s (EPA) estimate of 126 billion cubic 

feet of natural gas vented or flared from onshore federal leases in 2008 

represented approximately $58 million in federal royalty payments.7

Vented, flared, and lease use gas are also sources of greenhouse gas 

emissions—primarily methane and carbon dioxide.8 Natural gas consists 

primarily of methane, and methane (released through venting) is 34 times 

more potent by weight than carbon dioxide (released through flaring) in its 

ability to warm the atmosphere over a 100-year period, and 86 times 

more potent over a 20-year period, according to the Intergovernmental 

Panel on Climate Change.9 Overall, EPA has found that oil and natural 

gas systems are the nation’s second largest stationary source of 

greenhouse gases—accounting for 236 million metric tons of carbon 

dioxide equivalent in 2014.10

 6

GAO, Federal Oil and Gas Leases: Opportunities Exist to Capture Vented and Flared 

Natural Gas, Which Would Increase Royalty Payments and Reduce Greenhouse Gases, 

GAO-11-34 (Washington, D.C.: Oct. 29, 2010).

7

GAO-11-34.

8

While venting releases methane and flaring releases carbon dioxide, lease use gas may 

release either methane or carbon dioxide. For example, gas that is used on lease to run 

generators or heaters releases carbon dioxide, and gas that is vented through use of 

pneumatic devices, such as pumps or valves, on lease releases methane. 

9

The Intergovernmental Panel on Climate Change, established by the United Nations 

Environment Programme and the World Meteorological Organization, assesses climate 

change to provide a scientific view on the current state of climate change and its potential 

environmental and socio-economic consequences. Myhre, G., D. Shindell, F.-M. Bréon, 

W. Collins, J. Fuglestvedt, J. Huang, D. Koch, J.-F. Lamarque, D. Lee, B. Mendoza, T. 

Nakajima, A. Robock, G. Stephens, T. Takemura and H. Zhang, 2013: Anthropogenic and 

Natural Radiative Forcing. In: Climate Change 2013: The Physical Science Basis. 

Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental 

Panel on Climate Change [Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. 

Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University 

Press, Cambridge, United Kingdom and New York, NY, USA.

10EPA’s Greenhouse Gas Reporting Program.
Page 4 GAO-16-607 Natural Gas Emissions on Federal Lands

According to Interior officials, BLM has been updating its regulations on 

natural gas emissions for a number of years, but it can take years to 

propose and finalize such regulations. On January 22, 2016, BLM 

announced its proposed methane and waste reduction regulations that 

would update its existing guidance on venting, flaring, and lease use 

gas.11 Among other things, the proposed regulations would clarify when 

gas lost through venting, flaring, or leaks is subject to royalties, and when 

oil and gas used on site would be royalty-free. Interior officials we 

interviewed told us that BLM plans to finalize these regulations by the end 

of calendar year 2016. BLM’s proposed regulations are part of an 

interagency effort known as the President’s Climate Action Plan’s 

Strategy to Reduce Methane Emissions—which sets a goal to cut 

methane emissions from the oil and gas sector by 40 to 45 percent from 

2012 levels by 2025 and calls upon BLM to “lead by example” on public 

lands. Some state agencies—such as air quality and oil conservation 

offices—have also taken actions that have addressed natural gas 

emissions, including those from oil and gas produced on leased federal 

land within those states.

In light of these actions, you asked us to review Interior’s management of 

natural gas emissions on onshore federal oil and gas leases. This report 

examines (1) the extent to which Interior can account for natural gas 

emissions from onshore federal leases and (2) how selected BLM field 

offices have managed requests to vent or flare natural gas on onshore 

leases.

To conduct this work, we interviewed Interior officials and operators about 

reported natural gas emissions and factors that affect how Interior 

accounts for them.12 We also reviewed BLM regulations and documents 

and interviewed officials from six BLM field offices in Carlsbad, New 

Mexico; Casper, Wyoming; Dickinson, North Dakota; Farmington, New 

Mexico; Miles City, Montana; and Vernal, Utah. We selected these six 

offices based on the high volumes of natural gas that are vented, flared, 

 11Waste Prevention, Production Subject to Royalties, and Resource Conservation, 81 

Fed. Reg. 6616 (2016) (to be codified at new 43 C.F.R. subparts 3178 and 3179) 

(proposed Jan. 22, 2016).

12For comparison purposes, we also reviewed and discussed with EPA officials how they 

collect national emissions data from operators for EPA’s national greenhouse gas 

inventory and other EPA databases. 
Page 5 GAO-16-607 Natural Gas Emissions on Federal Lands

and used on leases managed by these offices and their overall oil and 

gas production volumes. We also reviewed BLM’s proposed new 

regulations that were announced in January 2016.13

In addition, we interviewed oil and gas and air quality regulatory officials 

from five states with high natural gas production—Colorado, New Mexico, 

North Dakota, Utah, and Wyoming—on actions these states have taken 

to address natural gas emissions from oil and gas leases in these states 

(see app. I). Because these six BLM field offices and five states were 

nonprobability samples, our findings cannot be generalized to other BLM 

field offices or states, but they can provide insights into oil and gas 

operations for key producing regions in the United States. In addition, we 

analyzed a simple random sample of 100 of the 1,281 fiscal year 2014 

venting or flaring requests to assess the extent to which field office 

supervisors approved these and followed BLM’s guidance for doing so. 

These findings can be generalized to all BLM field offices.14 To assess 

the reliability of BLM’s venting and flaring request data, we compared our 

data set with other published data and interviewed knowledgeable agency 

officials, including officials in the field responsible for data entry. We found 

these data sufficiently reliable for assessing BLM field office compliance 

with BLM’s venting and flaring guidance.

We conducted this performance audit from January 2015 to July 2016 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

This section provides an overview of (1) the oil and gas production 

process and release of natural gas emissions, (2) the recent oil 

 13Waste Prevention, Production Subject to Royalties, and Resource Conservation, 81 

Fed. Reg. 6616 (2016) (to be codified at new 43 C.F.R. subparts 3178 and 3179) 

(proposed Jan. 22, 2016).

14Estimates based on a probability sample are subject to sampling error. Fiscal year 2014 

was the most recent year for which data were considered complete by BLM at the time of 

our review. See app. II for more information about our objectives, scope, and 

methodology. 

Background
Page 6 GAO-16-607 Natural Gas Emissions on Federal Lands

production boom and associated natural gas, and (3) Interior’s reporting 

requirements on natural gas emissions.

The oil and gas production process on federal leases involves several 

stages, including the drilling, development, and initial production of these 

hydrocarbons along with routine operation and maintenance activities 

throughout the life of a field. Throughout these stages, operators typically 

vent or flare some natural gas, often intermittently (see fig. 1).15 Venting is 

the direct release of natural gas into the atmosphere, and flaring is the 

release of natural gas to a flare stack where it can be safely combusted. 

Although gas may be vented or flared throughout these stages, where 

feasible, flaring is generally preferable to venting because it can prevent 

accidental fires or explosions and it reduces the climate impact of oil and 

gas production.16 Leaks, or “fugitive” emissions, may occur at any stage 

of the production process.

Figure 1: Illustrative Example of Onshore Production and Associated Sources of Vented or Flared Gas

 15For purposes of this report, we examine venting and flaring during the production 

process only.

16This is because the combustion process converts methane, primarily a component of 

natural gas, into carbon dioxide and water vapor. 

The Oil and Gas 

Production Process and 

Release of Natural Gas 

Emissions
Page 7 GAO-16-607 Natural Gas Emissions on Federal Lands

The combination of advances in horizontal drilling techniques and 

hydraulic fracturing along with relatively high oil prices in the past few 

years have allowed the development of oil and natural gas from 

unconventional reservoirs, such as shale formations that were previously 

uneconomical to develop, and have led to historically high production 

levels. In a September 2012 report, we found that from 2007 to 2011 

shale oil production increased more than fivefold, and shale gas 

production increased more than fourfold—driving increases in U.S. oil and 

gas production.17 Oil and natural gas are often found together in the same 

reservoir but may vary in relative amounts. In areas where the primary 

purpose of drilling is to produce oil, operators may flare associated 

natural gas because no local market exists for the gas and transporting it 

to a distant market may not be economically feasible. For onshore oil and 

gas production on federal lands, rapid development occurred in states 

such as New Mexico and North Dakota, and the bulk of the flaring took 

place in areas overseen by a handful of BLM offices in those two states. 

As shown in figure 2, of the 33 BLM field offices that manage oil and gas 

production, most of the flaring reported on federal lands that occurred in 

calendar year 2013 occurred in North Dakota, New Mexico, and South 

Dakota, managed primarily by BLM field offices in Carlsbad, New Mexico, 

and Dickinson, North Dakota.18

 17GAO, Oil and Gas: Information on Shale Resources, Development, and Environmental 

and Public Health Risks, GAO-12-732 (Washington, D.C.: Sept. 5, 2012).

18As discussed above, according to Interior, only 11 percent of natural gas and 5 percent 

of oil is produced on onshore federal lands. 

The Recent Oil Production 

Boom and Associated 

Natural Gas
Page 8 GAO-16-607 Natural Gas Emissions on Federal Lands

Figure 2: Volumes of Flared Natural Gas from Oil Wells on Federal Lands in 2013

Several federal regulations apply to Interior’s management of natural gas 

emissions and operators’ responsibilities to report these emissions.

Interior’s Reporting 

Requirements on Natural 

Gas Emissions
Page 9 GAO-16-607 Natural Gas Emissions on Federal Lands

First, federal regulations require an authorizing officer at Interior to 

oversee and enforce regulations related to the development of and 

operations on federal oil and gas leases (see fig. 3).19 Authorizing officers 

or “supervisors” are typically BLM field office officials who approve 

venting or flaring requests. Venting, flaring, and other royalty-free uses of 

oil and natural gas on BLM-administered leases are currently governed 

by BLM guidance known as Notice to Lessees and Operators of Onshore 

Federal and Indian Oil and Gas Leases (NTL-4A), which the U.S. 

Geological Survey issued in 1979, before BLM assumed oversight 

responsibility for onshore oil and gas development and production.20 NTL4A generally prohibits venting or flaring of gas, but provides for a number 

of exemptions to this prohibition, both for short-term or emergency 

venting or flaring and for venting or flaring for longer periods (i.e., longterm), if operators obtain supervisory approval in advance.

Second, federal regulations call for royalties to be computed based on the 

quantity and quality of produced, unprocessed gas at a measurement 

point approved by BLM.21 Losses of gas (i.e., those from natural gas 

emissions) are generally not subject to royalties provided that such losses 

meet BLM requirements. However, BLM field office supervisors apply 

criteria set in NTL-4A to determine whether approved gas lost through 

venting or flaring is “unavoidably lost,” and therefore royalty-free, or 

“avoidably lost,” and therefore subject to royalties. For example, under 

NTL-4A, venting or flaring gas vapors released from storage tanks or low 

pressure production vessels is generally considered to be unavoidably 

lost, and no royalties are due. However, BLM supervisors may determine 

that vented or flared gas is avoidably lost if (1) the losses are due to 

negligence on the part of the lessee or operator; (2) the losses are due to 

the failure of the lessee or operator to take all reasonable measures to 

prevent or to control the losses; or (3) the losses are due to the failure of 

the lessee or operator to comply fully with the applicable lease terms and 

regulations, appropriate provisions of the approved operating plan, or the 

prior written orders of the supervisor. Generally, operators are to submit 

venting or flaring requests to a supervisor at their local BLM field office in 

 1943 C.F.R. § 3161.2.

2044 Fed. Reg. 76600 (Dec. 27, 1979).

2130 C.F.R. § 1206.154. 
Page 10 GAO-16-607 Natural Gas Emissions on Federal Lands

advance to obtain an approval and determination of whether losses are 

unavoidable or avoidable.22 BLM field office officials we spoke with told 

us, however, that because of backlogs in the venting or flaring requests 

submitted to BLM, operators may sometimes seek and obtain verbal 

approval to vent or flare, and then later submit a written request once 

venting or flaring is under way. In addition, NTL-4A provides that no 

royalty obligation shall accrue on any produced gas that is used on the 

same lease for beneficial purposes (i.e., lease use). This royalty 

exception is sometimes referred to as the beneficial use or lease use 

exception.

Third, federal regulations require operators to report monthly oil and gas 

production to Interior on the OGOR.23 Moreover, NTL-4A provides that 

the volume of oil or gas produced, whether sold, avoidably or unavoidably 

lost, vented or flared, or used on lease, must be reported. To assist 

operators in fulfilling Interior’s reporting requirements for oil and gas 

produced on federal leases, ONRR’s Minerals Production Reporter 

Handbook provides instructions on how to complete the OGOR, including 

a description of various reporting categories.24 The handbook includes 

several categories for natural gas emissions that are royalty-free, 

including categories for vented gas associated with oil wells, vented gas 

associated with gas wells, flared gas associated with oil wells, flared gas 

associated with gas wells, lease use gas, gas that is “spilled and/or lost”

unavoidably, and gas lost to evaporation or shrinkage. The handbook 

also includes categories for natural gas emissions that are royaltybearing, specifically for gas that is spilled and/or lost avoidably.

 22Supervisory approval is not required during the initial production period of up to 30 days 

or 50 million cubic feet of gas. Lessees are also authorized to vent or flare gas on a shortterm basis without incurring a royalty obligation for emergencies and certain well tests, not 

to exceed 24 hours.

2330 C.F.R. Part 1210.

24The handbook refers to these categories as disposition codes.
Page 11 GAO-16-607 Natural Gas Emissions on Federal Lands

Figure 3: Illustration of the Department of the Interior’s Process for Approving and Collecting Data on Venting or Flaring

a

Other than authorized short-term flaring, which is royalty-free, any volumes that operators vent or 

flare without BLM approval are subject to royalties.

b

Certain types of short-term flaring, such as routine or special well tests, require BLM approval. 

Although it is not specifically required by the guidance, operators may also sometimes seek BLM 

approval to flare in short-term emergency situations.
Page 12 GAO-16-607 Natural Gas Emissions on Federal Lands

Interior’s limited guidance to operators on how to report natural gas 

emissions on the OGOR may hinder the extent to which it can account for 

such emissions. Interior officials told us that their focus has historically 

been on collecting data on royalty-bearing oil and gas production rather 

than on natural gas emissions, which until recently have generally been 

royalty-free. Thus, the guidance Interior has provided to operators on how 

to report natural gas emissions has not ensured that these data are 

consistent and complete. Without such data, Interior cannot ensure that 

operators are minimizing waste on federal oil and gas leases and 

collecting all royalties that are owed.

We identified several key limitations with Interior’s guidance for operators 

OGOR reporting that may hinder Interior’s ability to accurately account for 

natural gas emissions and potentially collect royalties when appropriate.25

First, Interior’s guidance does not provide specific instructions on how to 

estimate natural gas emissions on the OGOR. Second, Interior provides 

limited guidance on which OGOR reporting categories operators are to 

use to report flared volumes. Third, Interior’s guidance does not specify 

which activities are to be reported under OGOR categories for natural gas 

emissions. In addition, Interior does not require operators to differentiate 

between types of lease use volumes reported on the OGOR, which, going 

forward, could help Interior track progress toward its new goals for 

methane reduction. If finalized, BLM’s recently proposed methane and 

waste reduction regulations could clarify and alter BLM’s policies on 

natural gas emissions, but these proposed regulations do not address the 

key limitations in reporting and accounting for emissions that we 

identified.

Interior does not provide specific instructions on how to estimate natural 

gas emissions on the OGOR. Interior’s guidance to operators for 

reporting natural gas emissions on the OGOR does not specify how they 

are to estimate reported natural gas emissions that have occurred without 

measurement.26 Instead, BLM’s guidance on natural gas emissions, NTL-

 25Other factors—such as operator error or negligence—could also affect the data reported 

on the OGOR. 

26Interior provides guidance on which venting, flaring, and lease use activities are 

permitted and where they should be reported on the OGOR in NTL-4A and its Minerals 

Production Reporter Handbook.

Interior’s Guidance to 

Operators on 

Reporting 

Requirements Has 

Limitations That May 

Hinder the Extent to 

Which It Can Account 

for Natural Gas 

Emissions
Page 13 GAO-16-607 Natural Gas Emissions on Federal Lands

4A, provides a list of eight general methods operators shall use to 

estimate emissions, which include, among others, the use of historic 

production data or estimates based on the expected production of other 

nearby wells.27 However, NTL-4A does not provide any specific detail or 

instruction on how to develop estimates of natural gas emissions based 

on these general methods. Furthermore, the guidance allows for use of 

any estimation method that is approved by a BLM supervisor. With regard 

to measurement, BLM’s Onshore Oil and Gas Order No. 5 provides 

guidance on how to measure gas production but it does not provide any 

specific guidance on estimating natural gas emissions.28 In addition, 

BLM’s proposed methane and waste reduction regulations contain 

provisions that require operators to report quantities of all vented or flared 

gas, and to meter flared volumes when gas flaring meets or exceeds 

certain thresholds, but contain no guidance on how to estimate or 

measure natural gas emissions below those thresholds.

In the absence of guidance with specific instructions on how to estimate 

natural gas emissions, we found that operators may use varying 

approaches to estimate emissions. Specifically, some BLM field office 

officials we interviewed told us that operators may meter long-term flaring 

volumes but use various techniques to estimate short-term flaring, 

venting, and lease use emissions. Some BLM field office officials that we 

spoke with also said that for short-term flaring, operators may rely on “gas 

to oil ratios” where the gas is metered temporarily to establish the ratio 

between associated gas and produced oil to estimate nonmetered flaring 

volumes.29 For venting and lease use volumes, however, BLM field office 

officials we interviewed told us that operators may use engineering 

estimates based on equipment specifications, which can vary—even for 

 27NTL-4A, section V.2.a.-h. 

28Onshore Oil and Gas Order No. 5 is currently under revision, but the revisions would not 

include guidance on estimating natural gas emissions. See Onshore Oil and Gas 

Operations; Federal and Indian Oil and Gas Leases; Measurement of Gas, 80 Fed. Reg. 

61646 (Oct. 13, 2015).

29Officials in some BLM field offices questioned the accuracy of gas to oil ratios as a 

method for estimating gas volumes. Officials in one field office told us that using this 

methodology may underestimate the amount of gas emitted, while officials at another field 

office told us that they did not believe using gas to oil ratios could help operators estimate 

total gas production. 
Page 14 GAO-16-607 Natural Gas Emissions on Federal Lands

the same piece of equipment—based on the assumptions made by 

individual operators.

Without specific instructions from BLM on how to develop estimates of 

natural gas emissions, it may also be difficult for BLM’s production 

accountability staff to determine which method operators are using to 

estimate natural gas emissions and to verify their accuracy during 

periodic records reviews.30 For example, one operator we interviewed told 

us that until 2 years ago, officials at the company used rough estimates to 

report volumes of vented, flared, or lease use gas on the OGOR, but the 

company recently changed course and adopted the estimation techniques 

EPA prescribed in its regulations for its Greenhouse Gas Reporting 

Program. In contrast, another operator we interviewed told us that it 

continues to estimate natural gas emissions based on history and 

experience in the field. In addition, in our limited analysis of five detailed 

records that BLM provided to us—which contained operators’

documentation of natural gas emissions volumes—we found that only one 

operator reported lease use gas, and for that case, we could not 

determine which method the operator used to estimate lease use 

volumes. Although some BLM field office officials we spoke with told us 

they felt that the OGOR volume estimates were fairly reliable, without 

consistent accounting, Interior does not have the information it needs to 

have reasonable assurance that it is minimizing waste on federal oil and 

gas leases.

Interior provides limited guidance on which OGOR categories operators 

are to use to report flared volumes. Interior provides limited agency-wide 

guidance to operators on which OGOR categories to use when reporting

volumes of flared gas, and only two BLM field offices we reviewed provide 

any additional instruction. As described above, under BLM’s NTL-4A, field 

office supervisors have some discretion in determining whether an 

operator’s request to vent or flare beyond the initial production phase 

should be approved and is subject to royalties. If the BLM supervisor 

 30During the records review process, BLM production accountability staff may periodically 

compare data reported on the OGOR, including volumes of natural gas emissions, with 

data reported in other sources or with the results of field-based inspections. These 

reviews, which generally take place every year for leases that are deemed “high risk” and 

every 3 to 4 years for other leases, are the primary means by which BLM can identify 

which methodology was used to estimate volumes on the OGOR and determine their 

accuracy.
Page 15 GAO-16-607 Natural Gas Emissions on Federal Lands

determines that a loss of natural gas occurs for reasons beyond the 

operator’s control, such as line failures or equipment malfunction, then 

the vented or flared volumes are deemed unavoidably lost and are 

royalty-free. If the BLM supervisor determines that the loss occurs for 

reasons such as negligence or the failure of lessee or operator to take all 

reasonable measures to prevent or control the loss of gas, then the 

vented or flared volumes are deemed avoidably lost and are royaltybearing. Operators must report both royalty-free and royalty-bearing 

vented or flared gas volumes on the OGOR.

Based on interviews with BLM field office officials and our review of 

ONRR’s guidance, we found that operators use four different categories 

to report flared gas on the OGOR, and two of these categories may also 

include other types of nonflared emissions. Within the OGOR, there are 

two categories specifically dedicated to flared gas—one for gas flared 

from oil wells and one for gas flared from gas wells—both of which are for 

royalty-free volumes. However, in the absence of clear agency-wide 

guidance on how to report volumes of flared gas on the OGOR—

particularly royalty-bearing flared gas—some BLM field offices have 

allowed operators to report such volumes under two additional categories.

One of these categories is for avoidably lost oil and gas spills, which also 

includes royalty-bearing leaks and spills. Since 2011, two BLM field 

offices we reviewed have instructed operators to use this category to 

report royalty-bearing flaring since there is currently no reporting category 

on the OGOR specifically for royalty-bearing flaring. However, even with 

such instructions in place, officials at one of these offices told us that 

records reviews have shown that operators sometimes erroneously report 

royalty-bearing flaring under the two royalty-free flaring categories on the 

OGOR. The second of these additional categories that operators have 

used to report flaring is the category for unavoidably lost oil and gas 

spills, which is a royalty-free category.31 Including flared gas volumes 

under these two additional categories—which commingle flared volumes 

with other types of emissions—makes it difficult for Interior to account for 

 31Officials in one BLM field office that is considering assessing royalties on some flared 

gas told us that in the meantime they have allowed operators to choose which category to 

use to report royalty-free flared gas. Some operators have chosen to use a category for 

unavoidably lost oil and gas spills to report flared volumes rather than the categories for 

flaring.
Page 16 GAO-16-607 Natural Gas Emissions on Federal Lands

flaring on the OGOR. Moreover, because ONRR uses OGOR data to help 

validate royalty payments, Interior may not be able to reasonably ensure 

that operators are minimizing waste on federal oil and gas leases or that

all royalties actually owed on flared gas are collected.32 BLM’s proposed 

methane and waste reduction regulations do not alter OGOR categories 

operators should use to report flared gas.

Interior does not clearly specify which activities are to be reported under 

OGOR reporting categories for natural gas emissions. Interior’s guidance 

to operators does not include specific criteria for which activities should 

be reported under OGOR reporting categories for natural gas emissions, 

and operators may not be reporting some of these activities.33 For 

example, in an October 2010 report,34 we found that operators did not 

report operational sources such as venting from oil storage tanks, 

pneumatic valves, or glycol dehydrators.35

Some BLM field office officials we interviewed told us that operators still 

may not be reporting certain natural gas emissions activities on the 

OGOR. For example, officials at several BLM offices told us that 

operators generally do not report storage tank emissions. ONRR’s 

guidance does not specify which reporting category should be used to 

report such emissions, though its Minerals Production Reporter 

Handbook requires operators to report volumes from unavoidably lost 

production, which according to BLM’s guidance NTL-4A, includes gas 

vapors released from storage tanks or other low-pressure production 

vessels. In addition, officials at one BLM field office told us that while they 

believe gas emitted during well completions should be reported on the 

 32To ensure accuracy in royalty collections, ONRR compares data reported on the OGOR

with data that operators report on a different form—known as Form 2014—which tracks 

volumes measured at the royalty meter.

33In contrast, EPA’s Greenhouse Gas Reporting Program requires reporting of emissions 

based on emissions source or equipment type to cover natural gas emissions activities.

34GAO-11-34.

35Pneumatic valves are valves that control gas flows, levels, temperatures, and pressures 

in the equipment and rely on pressurized gas for operation. Glycol dehydrators are 

equipment used to remove water from gas.
Page 17 GAO-16-607 Natural Gas Emissions on Federal Lands

OGOR,36 they could not point to specific guidance instructing operators 

where to report such volumes and were not certain of the extent to which 

operators were actually reporting them.

Interior officials also told us that operators are not instructed to report—

and typically do not report—natural gas emissions from system-wide 

leaks, although there is a reporting category for unavoidably spilled 

and/or lost volumes. One operator told us that leaks are typically too 

insignificant to be reported, while another stated that if there was a gas 

leak, they would probably report that under the OGOR reporting category 

for vented emissions. Similarly, there is no guidance to operators on 

where to report emissions from newer technologies, such as vapor 

recovery units and vapor combustion units, though one operator stated 

that it reports gas collected from vapor recovery units under the OGOR 

reporting category for gas that is sold. As a result of this uncertainty with 

the data, Interior may not have a clear accounting of natural gas 

emissions, which could limit Interior’s ability to ensure that lessees pay 

royalties in the proper amounts and minimize waste of natural gas. In its 

proposed regulations, BLM has not provided additional guidance to 

operators on which activities should be included under the natural gas 

emissions reporting categories on the OGOR.

Interior does not require operators to differentiate between types of lease 

use volumes reported on the OGOR. Interior’s OGOR reporting category 

for lease use gas does not distinguish between combusted and 

noncombusted emission volumes, making it more difficult for Interior to 

accurately track progress toward reducing greenhouse gases on federal 

lands. Natural gas consists primarily of methane, which when combusted 

becomes primarily water vapor and carbon dioxide. For example, when 

natural gas is used to run equipment like generators, the methane is 

converted into carbon dioxide in the combustion process. In contrast, 

when natural gas is used to run pneumatic equipment on a lease, like 

valves to control gas flows, the gas is not combusted. Instead, some 

natural gas is released into the atmosphere, mostly in the form of 

methane. Because methane has a much greater climate impact than 

carbon dioxide, the impact of using the same amount of natural gas in a 

 36During the well completion process, operators prepare a well for production by expelling 

liquids and mud with pressurized natural gas after drilling the well.
Page 18 GAO-16-607 Natural Gas Emissions on Federal Lands

pneumatic valve compared to a generator is very different. As a result of 

current OGOR reporting requirements, combusted and noncombusted 

lease use volumes are reported in a single OGOR reporting category—

making it difficult for Interior to accurately estimate the greenhouse gas 

emissions from lease use volumes reported on the OGOR.

Although Interior does not require operators to report on greenhouse gas 

emission volumes on the OGOR, Interior’s OGOR database is the only 

federal database that tracks natural gas emissions on federal leases and 

therefore is the most useful source of data for Interior to use when 

tracking greenhouse gas emissions from federal lands.37 BLM’s proposed 

methane and waste reduction regulations would not require direct 

reporting on all greenhouse gas emissions, but having separate reporting 

categories for combusted and noncombusted lease use volumes could 

better position Interior to track progress against the new goals to cut 

methane emissions under the President’s Climate Action Plan’s Strategy 

to Reduce Methane Emissions.

BLM has approved operators’ requests to vent or flare gas royalty-free 

without having the documentation its guidance requires. Field offices 

have also applied BLM’s guidance differently, which has resulted in some 

field offices requiring royalty payments on flared gas while other field 

offices do not. However, BLM has recently proposed new methane and 

waste reduction regulations that may alter its management of venting or 

flaring requests in the future.

BLM officials have approved many venting or flaring requests that do not 

comply with BLM’s existing guidance, NTL-4A, which requires operators 

to provide specific documentation for requests to vent or flare beyond a 

short-term basis. Generally, venting or flaring on a short-term basis in 

temporary or emergency circumstances is described in NTL-4A as 

 37By contrast, although EPA does collect data on greenhouse gas emissions, it does not 

collect emissions data at an individual lease level or specifically for federal leases.

BLM Has Not 

Consistently Followed 

Its Existing Guidance 

in Managing 

Operators’ Venting or 

Flaring Requests

BLM Has Approved Many 

Venting or Flaring 

Requests That Do Not 

Comply with Its Guidance
Page 19 GAO-16-607 Natural Gas Emissions on Federal Lands

“authorized venting or flaring of gas.”38 Alternatively, venting or flaring 

requests that are more long term in nature—described in NTL-4A as 

“other venting or flaring” of gas—may be approved if operators submit 

documentation that consists of (1) an evaluation report providing an 

economic and a geologic justification to flare39 or (2) an action plan that 

will eliminate venting or flaring of the gas within 1 year from the date of 

application.

Requests to vent or flare gas have increased substantially in recent 

years. BLM reported that venting or flaring requests rose from 50 in 2005 

to over 600 in 2011 and to about 1,250 in 2014. Our analysis of venting or 

flaring requests for fiscal year 2014 indicates that operators submitted a 

total of 1,281 requests to vent or flare gas to 16 BLM field offices 

nationwide, with over 80 percent of these requests submitted to just two 

field offices: Carlsbad, New Mexico, and Dickinson, North Dakota. 

Officials in both of these offices told us that in recent years they have 

been short-staffed and have had to triage backlogs of over 1,000 venting 

or flaring requests against other priorities, such as processing drilling 

permits or permitting rights-of-way for gas gathering pipeline. Figure 4 

presents the number of venting or flaring requests submitted to each field 

office in fiscal year 2014.

 38NTL-4A states that venting or flaring may be authorized in the following circumstances: 

(1) during a temporary emergency situation, generally defined as lasting no more than 24 

hours per incident and for no more than 144 hours cumulatively in a month; (2) for well 

purging and evaluation tests; (3) for initial production tests for a period of up to 30 days or 

50 million cubic feet of gas, whichever occurs first; and (4) for routine or special well tests, 

if approved by the supervisor.

39The required report must demonstrate that “expenditures necessary to market or 

beneficially use such gas are not economically justified and that conservation of the gas, if 

required, would lead to the premature abandonment of recoverable oil reserves and 

ultimately to a greater loss of equivalent energy than would be recovered if the venting or 

flaring were permitted to continue.”
Page 20 GAO-16-607 Natural Gas Emissions on Federal Lands

Figure 4: Requests to Vent or Flare Natural Gas Submitted to Bureau of Land Management (BLM) Field Offices, Fiscal Year 

2014

To better understand the reasons operators submitted requests to vent or 

flare gas and the extent to which BLM approved requests, we analyzed a 

random sample of 100 requests submitted to BLM field offices in fiscal 

year 2014.40 Based on our analysis of the sample, we estimate that 99 

 40Our findings can be generalized to the full universe of 1,281 venting or flaring requests 

across the 16 BLM field offices. 
Page 21 GAO-16-607 Natural Gas Emissions on Federal Lands

percent of operator submitted requests were requests to flare (rather than 

vent).41

Based on our sample of venting or flaring requests, we found that 

operators cited a variety of reasons they needed to vent or flare. As 

shown in figure 5, the vast majority of the requests cited limitations with 

existing infrastructure as the reason the operators needed to vent or flare 

gas, such as constrained pipeline capacity or problems with receiving gas 

plants. In contrast, only an estimated 9 percent of the requests cited that 

wells were not connected to—or were waiting to be connected to—gas 

gathering infrastructure as the reason operators needed to vent or flare 

gas.

Figure 5: Reasons Cited by Operators to Vent or Flare by Estimated Percentage of 

Requests to Vent or Flare, Fiscal Year 2014

 41The 95 percent confidence interval for this estimate is (94.45, 99.97). 
Page 22 GAO-16-607 Natural Gas Emissions on Federal Lands

Based on our sample, we also found that almost all venting or flaring 

requests in fiscal year 2014 did not contain the documentation needed to 

meet the criteria described in BLM’s guidance NTL-4A for long-term 

venting or flaring or an explanation for authorized short-term venting or 

flaring. Specifically, we estimate that 90 percent of venting or flaring 

requests did not have the documentation for BLM to determine whether 

approval of long-term venting or flaring was justified or an explanation for 

authorized short-term venting or flaring.42 Figure 6 shows our estimates of 

the documentation that operators provided to BLM as a justification to 

vent or flare.

Figure 6: Documentation Provided in Requests to Vent or Flare by Estimated 

Percentage of Requests to Vent or Flare, Fiscal Year 2014

 42The 95 percent confidence interval for this estimate is (82.4, 95.1).
Page 23 GAO-16-607 Natural Gas Emissions on Federal Lands

Nonetheless, we estimate that BLM approved about 70 percent of venting 

or flaring requests submitted in fiscal year 2014,43 and of the approved 

requests, roughly half were approved royalty-free (see fig. 7). We 

estimate that nearly all of the requests that BLM approved royalty-free did 

not include the documentation required for long-term venting or flaring.44

Figure 7: BLM’s Approvals by Estimated Percentage of Requests to Vent or Flare with Royalty Determinations of Approved 

Requests, Fiscal Year 2014

In discussing our sample with BLM officials, these officials said that 

Interior recognizes there are systemic shortcomings in how venting or 

flaring requests are submitted and approved. As discussed above, Interior 

officials told us that their focus has historically been on collecting data on 

royalty-bearing oil and gas production, so natural gas emissions have 

 43The 95 percent confidence interval for this estimate is (61.33, 78.67). We estimate that 

the remaining 30 percent of the requests were either returned to the operator or denied or 

we could not determine the disposition of the request. The 95 percent confidence interval 

for this estimate is (21.33, 38.67).

44Specifically, we estimate that 97 percent of the approved and royalty-free requests did 

not include the necessary documentation. The 95 percent confidence interval for this 

estimate is (84.2, 99.9).
Page 24 GAO-16-607 Natural Gas Emissions on Federal Lands

received less attention. In addition, BLM field office officials have 

described heavy workloads and a shortage of personnel that have 

hindered their ability to review and approve the high volumes of venting or 

flaring requests they have received from operators. Thus, operators have 

submitted—and received BLM’s approvals for—venting or flaring requests 

that do not contain all of the documentation required by NTL-4A. 

However, without collecting and reviewing the required documentation 

BLM supervisors cannot demonstrate that they have followed existing 

guidance or that they have the necessary information to inform their 

decisions about whether venting or flaring is needed or whether such 

volumes should be subject to royalties.

Officials in the six field offices we reviewed interpreted NTL-4A differently 

with respect to charging royalties on approved venting or flaring, which 

may have resulted in the operators seeking to vent or flare not receiving 

consistent treatment across offices. Two of the six BLM field offices we 

reviewed—the Carlsbad, New Mexico, office and the Casper, Wyoming, 

office—approved long-term flaring of some gas but also determined that 

the flared gas was avoidably lost and therefore subject to royalties. The 

BLM field office in Dickinson, North Dakota, is also considering doing so. 

The other three field offices we reviewed—in Farmington, New Mexico; 

Miles City, Montana; and Vernal, Utah—have interpreted NTL-4A to mean 

that when the authorizing official approves a request to flare, the flared 

gas will be treated as unavoidably lost gas, which is royalty-free.

Officials we spoke with in the Carlsbad office told us that they charged 

royalties on flared gas because oil production in their region boomed and 

operators made an economic choice to flare gas associated with their oil 

wells—and pay the royalties—rather than wait until gas gathering pipeline 

was available. Before deciding to charge royalties, field office officials we 

interviewed told us that they met with operators in the region to determine 

when wells could be shut in without endangering reservoir life and 

recoverable reserves in order to help them determine whether flared gas 

in the region was avoidably or unavoidably lost. As a result of these 

discussions, these officials told us they concluded that within their region 

operators could generally restrict production at their established wells 

without endangering the amount of oil that these wells could ultimately 

produce. Therefore, these officials concluded that much of the gas flared 

Selected Field Offices 

Have Applied BLM 

Guidance Differently to 

Venting or Flaring 

Requests
Page 25 GAO-16-607 Natural Gas Emissions on Federal Lands

from oil wells in the region was considered avoidably lost or “wasted gas”

and therefore royalties were due. Further, field office officials told us that 

charging royalties on flared gas could provide a small incentive for 

operators to develop infrastructure for gathering gas from oil wells.45

According to our analysis of ONRR data, royalties from flaring from 

onshore federal leases generated $4.5 million in revenue in fiscal year 

2014.46

Officials in the Casper office told us that they followed Interior’s guidance, 

which they interpreted as allowing them to charge royalties on gas flared 

from oil wells under some circumstances. Specifically, the officials we 

interviewed told us that operators citing lack of infrastructure to transport 

gas produced on oil wells could be approved to flare royalty-free if they 

could economically justify the lack of infrastructure, such as by the cost to 

connect to the nearest available pipeline. However, operators citing lack 

of pipeline capacity on existing pipelines as a justification to flare would 

be required to pay royalties. This is because the operators would have 

generally chosen to expand their production beyond the capacity of the 

existing pipeline infrastructure, knowing that capacity constraints could 

result in the need to flare on some occasions.

Officials in the Dickinson office told us that they are considering charging 

royalties on some flared gas. As a result of an increase in flaring requests 

in recent years, as well as limited staff and a concurrent increase in the 

number of applications for drilling permits, this office faced a backlog of 

2,211 flaring requests by August 2015. In that month, BLM officials in the 

Dickinson office proposed a formula for resolving 1,943 of their 2,211 

pending flaring requests—requests for flaring that has already concluded. 

The proposed formula would assign the first 6 days of flaring as 

unavoidably lost (i.e., no royalties due) gas with flaring that exceeded the

6-day threshold as avoidably lost (i.e., royalties due) gas.47 For the 

 45Officials in the Carlsbad office and its suboffice in Hobbs, New Mexico, approved all of 

the royalty-bearing venting or flaring requests that were present in our sample.

46Of this total, $4.4 million were collected from onshore federal leases in New Mexico. 

47The Dickinson office’s proposed formula resembles the definition for a short-term 

emergency situation under the “authorized venting and flaring of gas” category in NTL-4A. 

Operators seeking to flare under this provision are limited to a cumulative 144 hours in a 

month (6 days). 
Page 26 GAO-16-607 Natural Gas Emissions on Federal Lands

remaining 268 of the 2,211 pending flaring requests—requests for flaring 

that was ongoing or may occur in the future—the field office proposed 

reviewing the merits of each request individually, as the guidance 

outlines, to determine whether gas was or would be avoidably or 

unavoidably lost. According to a field office official, however, operators 

formally objected to the proposed formula, so officials may have to review 

the merits of each venting or flaring request individually.

In the three other field offices we reviewed—Farmington, New Mexico; 

Miles City, Montana; and Vernal, Utah—officials cited various reasons for 

not charging royalties on approved long-term flaring requests. Overall, 

these offices tended to generalize about the industry in their regions and 

the need to vent or flare, approving all requests as unavoidably lost gas 

and royalty-free. For example, in the Farmington office, officials we spoke 

with told us that their region was dominated by gas development, so 

flaring was not as much an issue for their office. In the Miles City office, 

officials we interviewed told us that there was little associated gas at oil 

wells in their region, and that charging royalties on flared gas might make 

it more costly for operators to drill new wells or shorten the life of existing 

wells, which they were reluctant to do. In the Vernal office, officials we 

spoke with told us that they had considered charging royalties on flared 

gas, but they were concerned that the alternative to flaring—shutting in a 

well—might damage oil recoverability from wells in their region.

BLM’s proposed methane and waste reduction regulations would reduce 

the number of venting or flaring requests field offices officials will have to 

individually review and acknowledges the substantial variation in how it 

has interpreted and applied its existing guidance. In this regard, the 

proposed regulations, if adopted, would include updated guidance on 

which gas volumes should be considered avoidably or unavoidably lost. 

Specifically, instead of requiring BLM field office officials to review the 

merits of each flaring request individually, BLM proposes setting monthly 

flaring limits on each well with a requirement that operators meter flaring 

above certain monthly limits. According to officials, if upon inspection or 

review, an operator is found to be exceeding flaring limits, it would be 

subject to penalties for noncompliance with the regulations. However, 

operators could seek an exception from BLM to flare above the monthly 

per-well limit based on an economic and geologic justification similar to 

BLM’s Proposed 

Regulations May Alter 

How It Manages Future 

Venting or Flaring 

Requests
Page 27 GAO-16-607 Natural Gas Emissions on Federal Lands

that required in the existing guidance.48 The proposed regulations also 

require operators to communicate their anticipated gas collection needs 

to pipeline operators at the time they apply to drill a new well, which may 

reduce an operator’s need to flare gas assuming the infrastructure is 

developed. The proposed regulations also would, among other things, 

mandate reductions in venting from pneumatic devices and require 

inspections to detect and repair leaks in the oil and gas production 

process. As discussed above, Interior officials we spoke with told us that 

BLM plans to finalize the proposed regulations by the end of calendar

year 2016, and they told us that finalizing the proposed regulations is an 

Administration priority. 

To fulfill its responsibility to ensure that operators use all reasonable 

precautions to prevent waste of oil or gas on federal leases, Interior must 

be able to account for oil and gas produced from these leases, including 

how it is sold, lost, or used. Natural gas emissions are an important 

component of this accounting and affect both BLM’s collection of royalties 

as well as its tracking of harmful greenhouse gas emissions from federal 

leases. Since Interior has historically focused on royalty-bearing oil and 

gas production and has limited guidance on how to report natural gas 

emissions, it cannot yet consistently account for these emissions on 

federal leases. Better guidance for OGOR reporting could improve 

Interior’s ability to account for natural gas emissions and better ensure 

that royalties are collected where appropriate on these emissions. 

Further, improved reporting from operators could also help Interior better 

track its efforts to curb greenhouse gases from federal leases and its new 

goals for methane reduction.

 48The proposal states that exemptions would only be allowed when an operator can show 

that the net costs of compliance with the flaring limit would be sufficient to cause the 

operator to cease production and abandon “significant” recoverable oil reserves. An 

operator would have to provide documentation about the quantity of flaring from the lease, 

projected costs of capture (including an evaluation of on-site approaches), and projected 

prices and returns on oil and gas production from the lease. Where operators need to 

project future costs and returns, the projections would be required to cover either the life 

of each lease or the next 15 years, whichever is less.

Conclusions
Page 28 GAO-16-607 Natural Gas Emissions on Federal Lands

We are making four recommendations to the Secretary of the Interior.

To help improve reporting of emissions data on the OGOR, the Secretary 

of the Interior should direct BLM or ONRR, as appropriate, to take the 

following four actions:

• BLM should provide additional guidance on how to estimate natural 

gas emissions from federal oil and gas leases.

• ONRR should provide additional guidance on

• how to report royalty-free and royalty-bearing flaring and consider 

creating a separate category for royalty-bearing flaring;

• how to report certain unreported or underreported emissions, such 

as emissions from storage tanks and gas vented during well 

completions; and

• how to differentiate between combusted and noncombusted lease 

use volumes reported on the OGOR, which could assist Interior in 

measuring its progress toward greenhouse gas reduction goals.

We provided our draft report to Interior for review and comment. Interior 

provided written comments, in which it concurred with two of the six 

recommendations in the draft report, partly concurred with two others, 

and did not concur with the remaining two recommendations. Interior’s 

comments reflected the views of BLM and ONRR. Interior’s comments 

are reproduced in appendix III and key areas are discussed below. 

Interior also provided technical comments, which we incorporated as 

appropriate.

Interior partially concurred with our third and fourth recommendations, 

which would have ONRR provide guidance on how to report certain 

unreported or underreported emissions and on how to differentiate 

between combusted and non-combusted lease use volumes on the 

OGOR, respectively. Regarding these recommendations, Interior said 

ONRR would defer to BLM to provide guidance on how the emissions 

discussed should be accounted for by Interior. Once these decisions are 

made, ONRR would work with BLM to develop requirements for reporting 

volumes on the OGOR and collecting royalties, as appropriate. We 

recognize that these actions will require a collaborative effort between 

ONRR and BLM, as noted in Interior’s letter, and if implemented as 

described, would address the intent of our third and fourth 

recommendations.

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
Page 29 GAO-16-607 Natural Gas Emissions on Federal Lands

Interior did not concur with two recommendations included in the draft 

report, which would have BLM apply its existing guidance on venting and 

flaring and issue interim guidance on the circumstances under which 

long-term flaring would be subject to royalties, respectively. Regarding 

these recommendations, Interior noted that finalizing BLM’s proposed 

rule, the Methane and Waste Prevention Rule, will directly address many 

of the concerns pointed out in the findings and recommendations directed 

at BLM. In its letter, Interior stated that finalizing the proposed rule is an 

Administration priority, and that it expects the rule to be finalized by the 

end of calendar year 2016. Furthermore, Interior said that issuing interim 

guidance before the rule is finalized would divert resources from BLM’s

rulemaking effort, and would likely create significant confusion among 

BLM staff and the industry when the new rule is issued several months 

later. In response to BLM’s timeframe and stated prioritization for 

finalizing its proposed rule, we removed these recommendations and 

modified the report accordingly.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the appropriate 

congressional committees, the Secretary of the Interior, and other 

interested parties. In addition, the report will be available at no charge on 

the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix IV.

Frank Rusco

Director, Natural Resources and Environment
Appendix I: Regulatory Actions to Reduce 

Natural Gas Emissions in Selected States

Page 30 GAO-16-607 Natural Gas Emissions on Federal Lands

Since operators of federal leases may be subject to state regulations and 

policies regarding natural gas emissions, we reviewed the regulatory 

activity in five states with high federal oil and gas production and 

emissions. One of the five states we reviewed—Colorado—has adopted 

regulations intended to reduce natural gas emissions from oil and gas 

produced on all lands in the state. Two others—North Dakota and 

Wyoming—have taken similar regulatory actions within specific areas of 

their states. Another state—Utah—has taken regulatory actions that 

indirectly address natural gas emissions. The fifth state we reviewed—

New Mexico—recently took an action that may reduce natural gas 

emissions.

These states have undertaken various actions to address natural gas 

emissions, as follows:

• Colorado: In February 2014, Colorado adopted regulations that apply 

statewide to limit venting1 and to capture fugitive emissions, such as 

those emissions that leak from equipment.2 These regulations include 

a requirement that operators collect or flare 95 percent of gas 

associated with new wells.3 In addition, operators are required to use 

leak detection equipment at oil and gas facilities across the state.4

Colorado’s leak detection requirements vary by the amount of 

emissions produced at a facility, with higher-producing facilities 

required to check for leaks more often.5 In addition, the regulations 

 1

Vented gas is a source of volatile organic compounds, a group of chemicals that 

contribute to the formation of ground-level ozone. According to the Environmental 

Protection Agency (EPA), the oil and gas industry is one of the largest sources of volatile 

organic compounds. Under the Clean Air Act, EPA may designate areas that do not meet 

the ground-level air quality standard for ozone as “ozone nonattainment areas.” 42 U.S.C. 

§ 7407(d). States may impose measures affecting the oil and gas operators, as well as 

other industries and activities in that state, as part of their plans to reduce emissions of 

volatile organic compounds and meet the air quality standard in future years. 

2

Colorado Air Quality Control Commission Regulations, Regulation 7, Control of Ozone 

via Ozone Precursors and Control of Hydrocarbons via Oil and Gas Emissions (Emissions 

of Volatile Organic Compounds and Nitrogen Oxides), 5 CCR 1001-9, sections XII, XVII, 

and XVIII (Colorado Regulations).

3

Colorado Regulations, at section XVII.G. 

4

Colorado Regulations, at section XVII.F. 

5

Colorado Regulations, at sections XVIII and XVII.F.

Appendix I: Regulatory Actions to Reduce 

Natural Gas Emissions in Selected States
Appendix I: Regulatory Actions to Reduce 

Natural Gas Emissions in Selected States

Page 31 GAO-16-607 Natural Gas Emissions on Federal Lands

mandate the use of low-bleed pneumatic devices and increased the 

gas capture target for certain storage tanks.6

• North Dakota: North Dakota has targeted the amount of gas flared 

from two geologic formations in the state by imposing restrictions on 

the amount of gas operators may flare from existing and new 

sources.7 North Dakota has imposed gas capture targets to decrease 

flaring by setting goals for the amount of gas that operators must 

collect each year; these goals increase in later years. Operators are 

currently working to meet a gas capture target of 85 percent for 

November 2016. North Dakota also requires operators, when they 

apply to drill a new oil well, to include a gas capture plan. According to 

state officials, gas capture plans help facilitate discussions between 

oil producers and firms that process and transport gas, and they have 

improved the speed at which new wells are connected to gas 

gathering infrastructure. State officials also told us that to meet the 

state’s gas capture target, operators have reduced production at 

some wells and delayed completing others.

• Wyoming: According to state officials, reducing vented natural gas 

emissions has been a focus for the state of Wyoming. Wyoming has 

an ozone nonattainment area in the Upper Green River Basin, and 

regulations require operators in the nonattainment area, among other 

things, to use leak detection equipment to identify facilities with 

fugitive emissions.8 Generally, operators must check for leaks 

quarterly under the state’s leak detection program, but according to 

state officials, operators with satisfactory prior performance records 

may be allowed to check for leaks less frequently.9 The regulations 

also require that operators replace high-bleed pneumatic controllers 

with low-bleed controllers.10 According to a state official, Wyoming is 

reviewing its flaring rules and considering requiring gas capture plans.

 6

Colorado Regulations, at section XII. 

7

North Dakota Industrial Commission Order No. 24665 (July 1, 2014), and North Dakota 

Industrial Commission Order No. 24665 Policy/Guidance Version 102215.

8

Wyoming Department of Environmental Quality, Air Quality Division, Standards and 

Regulations, Nonattainment Area Regulations, ch. 8 (June 2015) (Wyoming regulations).

9

Wyoming regulations, at section 6(g).

10Wyoming regulations, at section 6(f).
Appendix I: Regulatory Actions to Reduce 

Natural Gas Emissions in Selected States

Page 32 GAO-16-607 Natural Gas Emissions on Federal Lands

• Utah: Utah has adopted regulations requiring oil and gas operators to 

minimize their emissions of volatile organic compounds11—a group of 

chemicals that contribute to the formation of ground-level ozone—

which effectively prohibit venting from oil and gas wells, according to a 

state official. According to this official, because Utah is concerned with 

the Uinta Basin being designated an ozone nonattainment area the 

state’s actions have been focused on reducing ozone in the area 

rather than on reducing volumes of flared gas.

• New Mexico: According to state officials, New Mexico was considering 

actions that could reduce emissions from oil and gas leases in the 

state, including on federal leases, and in April 2016, the New Mexico 

Energy, Minerals and Natural Resources Department issued a notice 

to operators of a new gas capture planning requirement. Effective 

May 1, 2016, operators are required to submit a gas capture plan 

outlining actions to be taken to reduce venting and flaring at new well 

completions.

 11State of Utah, Department of Air Quality, Air Quality Rules, R307-501-4 (a).
Appendix II: Objectives, Scope, and 

Methodology

Page 33 GAO-16-607 Natural Gas Emissions on Federal Lands

This report examines (1) the extent to which the Department of the 

Interior (Interior) can account for natural gas emissions from onshore 

federal leases and (2) how selected Bureau of Land Management (BLM) 

field offices have managed requests to vent or flare natural gas emissions 

on onshore leases.

To conduct this work, we reviewed relevant laws, regulations, and BLM 

and Office of Natural Resources Revenue (ONRR) guidance. We also 

reviewed independent studies of Interior’s accounting of onshore natural 

gas emissions conducted by Interior’s Office of Inspector General as well 

as related reports prepared by other federal entities, such as the 

Environmental Protection Agency (EPA) and the Congressional Research 

Service. We also reviewed BLM’s proposed regulations to reduce waste 

of natural gas from venting, flaring, and leaks during oil and natural gas 

production activities on onshore federal and Indian leases that were 

proposed in January 2016.1

We interviewed officials from Interior’s offices responsible for accounting 

for onshore natural gas emissions—BLM and ONRR. Specifically, we 

interviewed BLM officials in BLM headquarters; BLM’s National 

Operations Center in Lakewood, Colorado; and six BLM field offices we 

selected primarily based on (1) the volume of flared gas emitted in that 

region, (2) the amount of lease use gas consumed in that region, and (3) 

the volume of vented gas in that region in fiscal year 2014, the most 

recent year for which complete data were available. These field offices 

are located in Carlsbad, New Mexico; Casper, Wyoming; Dickinson, North 

Dakota; Farmington, New Mexico; Miles City, Montana; and Vernal, Utah. 

We visited the two BLM field offices overseeing the largest amount of 

flaring—Carlsbad, New Mexico, and Dickinson, North Dakota. Because 

this was a nonprobability sample, our findings are not generalizable to 

other BLM field offices but help illustrate how some offices have 

accounted for and managed natural gas emissions. We also visited and 

interviewed officials at ONRR’s office in Lakewood, Colorado. In addition, 

we interviewed representatives from oil and gas companies (operators) 

and environmental organizations.

 1

Waste Prevention, Production Subject to Royalties, and Resource Conservation, 81 Fed. 

Reg. 6616 (2016) (to be codified at new 43 C.F.R. subparts 3178 and 3179) (proposed 

Jan. 22, 2016).

Appendix II: Objectives, Scope, and 

Methodology
Appendix II: Objectives, Scope, and 

Methodology

Page 34 GAO-16-607 Natural Gas Emissions on Federal Lands

To examine the extent to which Interior can account for natural gas 

emissions from onshore federal leases, we reviewed the guidance Interior 

provides on reporting natural gas emissions, including BLM’s Notices to 

Lessees and instruction memorandums and ONRR’s Minerals Production 

Reporter Handbook.2 To examine the methodology used by operators to 

measure or estimate natural gas emissions, we reviewed the instructions 

in ONRR’s Minerals Production Reporter Handbook on how operators are 

to report natural gas emissions in monthly Oil and Gas Operations 

Reports (OGOR). We interviewed BLM and ONRR officials on how 

natural gas emissions are estimated and reported on the OGOR. We 

obtained contact information for operators from the field offices and 

interviewed representatives from four operators operating in New Mexico 

and North Dakota that were able to meet with us during our fieldwork. We 

asked them how they calculated and reported natural gas emission 

volumes for the OGOR. We examined five records provided by BLM for 

examples of documentation of natural gas emissions volumes that 

operators submitted to BLM for its records review.3 To examine the 

guidance BLM provides to operators regarding reporting flared volumes 

on the OGOR, we reviewed BLM’s existing guidance on venting and 

flaring—Notice to Lessees and Operators of Onshore Federal and Indian 

Oil and Gas Leases (NTL-4A)—and interviewed officials from our 

selected field offices on how such volumes are to be reported on the 

OGOR. To compare Interior’s methodology for measuring and estimating 

natural gas emissions with that from another agency, we also examined 

how EPA collects emissions data from operators for its Greenhouse Gas 

Inventory and Greenhouse Gas Reporting programs.

To examine how selected BLM field offices managed requests to vent or 

flare natural gas emissions on onshore federal leases, we reviewed BLM 

regulations and documents and interviewed BLM officials. To examine 

BLM’s actions to implement NTL-4A, we analyzed all fiscal year 2014 

 2

BLM’s instruction memorandums are temporary directives that supplement the BLM 

manual, which contains BLM policy and program direction. BLM’s Notices to Lessees 

supplement regulations for oil and gas operations for specific types of activities or to 

address local or regional issues. ONRR’s Minerals Production Reporter Handbook is a 

reference document for operators responsible for reporting minerals operations 

information to ONRR.

3

Of those five records, one record contained documentation from an operator showing its 

estimated lease use volumes.
Appendix II: Objectives, Scope, and 

Methodology

Page 35 GAO-16-607 Natural Gas Emissions on Federal Lands

venting or flaring requests recorded in BLM’s Automated Fluid Minerals 

Support System. Fiscal year 2014 was the most recent year for which 

BLM could provide complete data. Specifically, we examined electronic 

data for 1,281 venting or flaring requests that were sent to 17 BLM field 

offices nationwide. We assessed the reliability of these data by 

interviewing knowledgeable BLM officials responsible for data entry and 

compared our data set with other published data. We determined that 

these data were sufficiently reliable for assessing BLM field office 

compliance with BLM’s venting and flaring guidance.

To better understand the rationale behind BLM’s acceptance or rejection 

of these requests, we selected a simple random sample of 100 of the 

1,281 venting or flaring requests for further review. Estimates based on a 

probability sample are subject to sampling error. Because we followed a 

probability procedure based on random selections, our sample is only one 

of a large number of samples that we might have drawn. Since each 

sample could have provided different estimates, we express our 

confidence in the precision of our particular sample’s results as a 95 

percent confidence interval (e.g., plus or minus 10 percentage points). 

This is the interval that would contain the actual population value for 95 

percent of the samples we could have drawn. These findings can be 

generalized to all BLM field offices. We requested additional 

documentation from BLM field offices for 64 of these 100 requests that 

based on our review of the venting or flaring requests did not appear to 

result in revenue-bearing flaring. For each of these 100 requests, we 

reviewed the remarks field and any additional documentation that we 

requested and received, and determined for each venting or flaring 

request the NTL-4A provision and rationale, if applicable, that was used 

to justify royalty-free venting or flaring. We also interviewed BLM field 

office officials from our six selected field offices about implementation of 

NTL-4A in their respective offices.

To describe the actions some states have taken to address natural gas 

emissions on onshore leases, we selected the five states with the largest 

federal production of oil and gas as reported by operators on the OGOR 

for fiscal year 2014 (see app. I). These states were Colorado, New 

Mexico, North Dakota, Utah, and Wyoming. We reviewed venting and 

flaring regulations and policies for each state. Using a standard set of 

questions, we also interviewed the air quality and oil conservation offices 

for each of the selected states. Because this was a nonprobability 

sample, our findings from these states are not generalizable to other 

states but provide information on actions some states have taken to 

reduce natural gas emissions from onshore leases.
Appendix II: Objectives, Scope, and 

Methodology

Page 36 GAO-16-607 Natural Gas Emissions on Federal Lands

We conducted this performance audit from January 2015 to July 2016 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix III: Comments from the Department 

of the Interior

Page 37 GAO-16-607 Natural Gas Emissions on Federal Lands

Appendix III: Comments from the 

Department of the Interior
Appendix III: Comments from the Department 

of the Interior

Page 38 GAO-16-607 Natural Gas Emissions on Federal Lands
Appendix III: Comments from the Department 

of the Interior

Page 39 GAO-16-607 Natural Gas Emissions on Federal Lands
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 40 GAO-16-607 Natural Gas Emissions on Federal Lands

Frank Rusco, (202) 512-3841 or ruscof@gao.gov

In addition to the contact named above, Dan Haas (Assistant Director), 

Carl Barden, Chuck Bausell, Richard Burkard, Keya Chateauneuf, Cindy 

Gilbert, Paul Kazemersky, Alison O’Neill, Katrina Pekar-Carpenter, Sara 

Sullivan, Jack Wang, and Arvin Wu made key contributions to this report.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(361596)
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