Source: https://www.federalregister.gov/articles/2012/05/11/2012-11304/oil-and-gas-well-stimulation-including-hydraulic-fracturing-on-federal-and-indian-lands
Timestamp: 2016-07-02 00:13:49
Document Index: 678033568

Matched Legal Cases: ['art 3160', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162', 'ART 3160', 'art 3160', 'art 3160', '§ 3160', '§ 3160', 'art 3162', '§ 3162', '§ 3162', '§ 3162', '§ 3162']

Dates: Send your comments on this proposed rule to the BLM on or before July 10, 2012. The BLM need not consider, or include in the administrative record for the final rule, comments that the BLM receives after the close of the comment period or comments delivered to
-27711 (21 pages)
Document Number: 2012-11304
Shorter URL: https://federalregister.gov/a/2012-11304 Related Topics
The Bureau of Land Management (BLM) is proposing a rule to regulate hydraulic fracturing on public land and Indian land. The rule would provide disclosure to the public of chemicals used in hydraulic fracturing on public land and Indian land, strengthen regulations related to well-bore integrity, and address issues related to flowback water. This rule is necessary to provide useful information to the public and to assure that hydraulic fracturing is conducted in a way that adequately protects the environment.
Hydraulic Fracturing 7 actions from May 11th, 2012 to November 2014
78 FR 31636
Supplemental NPRM Comment Period Extended
Supplemental NPRM Comment Period Extended End
Section-by-Section Discussion of Proposed Changes
Federal and Indian Oil and Gas Leasing Activity
Estimating Benefits and Costs
Results for the Proposed Regulations (Preferred Approach)
Economic Impact Analysis and Distributional Assessments
Energy System Impact Analysis
Summary of Information Collection Requirements
Request for Prior Approval (i.e., Notice of Intent Sundry)
Subsequent Report (i.e., Subsequent Report Sundry Notice)
Estimated Annual Hour and Cost Burdens
Send your comments on this proposed rule to the BLM on or before July 10, 2012. The BLM need not consider, or include in the administrative record for the final rule, comments that the BLM receives after the close of the comment period or comments delivered to an address other than those listed below (see ADDRESSES). If you wish to comment on the information collection requirements in this proposed rule, please note that the Office of Management and Budget (OMB) is required to make a decision concerning the collection of information contained in this proposed rule between 30 to 60 days after publication of this document in the Federal Register. Therefore, a comment to OMB is best assured of having its full effect if OMB receives it by June 11, 2012.
Comments on the information collection requirement: Fax: Office of Management and Budget (OMB), Office of Information and Regulatory Affairs, Desk Officer for the Department of the Interior, fax 202-395-5806. Electronic mail:
oira_docket@omb.eop.gov. Please indicate “Attention: OMB Control Number 1004-XXXX,” regardless of the method used to submit comments on the information collection burdens. If you submit comments on the information collection burdens, please provide the BLM with a copy of your comments, at one of the addresses shown above.
“Hydraulic fracturing,” a process used to stimulate production from oil and gas wells, has been a growing practice in recent years. Public awareness of fracturing has grown as new horizontal drilling technology has allowed increased access to shale oil and gas resources across the country, sometimes in areas that have not previously experienced significant oil and gas development. The extension of the practice has caused public concern about whether fracturing can allow or cause the contamination of underground water sources, whether the chemicals used in fracturing should be disclosed to the public, and whether there is adequate management of well integrity and the “flowback” fluids that return to the surface during and after fracturing operations.
The Bureau of Land Management (BLM) oversees approximately 700 million subsurface acres of Federal mineral estate and 56 million subsurface acres of Indian mineral estate across the United States. The BLM proposes to modernize its management of well stimulation activities, including hydraulic fracturing, to ensure that fracturing operations conducted on the public mineral estate (including split estate where the Federal Government owns the subsurface mineral estate) follow certain best practices, including: (1) The public disclosure of chemicals used in hydraulic fracturing operations on Federal lands; (2) confirmation that wells used in fracturing operations meet appropriate construction standards; and (3) a requirement that operators put in place appropriate plans for managing flowback waters from fracturing operations.
If you wish to comment, you may submit your comments by any one of several methods: Mail: You may mail comments to U.S. Department of the Interior, Director (630), Bureau of Land Management, Mail Stop 2134LM, 1849 C Street NW., Washington, DC 20240, Attention: 1004-AE26. Personal or messenger delivery: Bureau of Land Management, 20 M Street SE., Room 2134 LM, Attention: Regulatory Affairs, Washington, DC 20003. Federal eRulemaking Portal:
http://www.regulations.gov. Follow the instructions at this Web site.
Well stimulation techniques, such as hydraulic fracturing, are used by oil and natural gas producers to increase the volumes of oil and natural gas that can be extracted from wells. Hydraulic fracturing techniques are particularly effective in enhancing oil and gas production from “shale” gas or oil formations. Until quite recently, shale formations rarely produced oil or gas in commercial quantities because shale does not generally generate flow of hydrocarbons to well bores unless mechanical changes to the properties of the rock can be induced. The development of horizontal drilling, combined with hydraulic fracturing, have made the production of oil and gas from shale possible. Hydraulic fracturing involves the injection of fluid under high pressure to create or enlarge fractures in the reservoir rocks. The fluid that is used in hydraulic fracturing is usually accompanied by proppants, such as particles of sand, that are carried into the newly fractured rock and help keep the fractures open once the pressure from the fracturing operation is released. The proppant-filled fractures become conduits for fluid migration from the reservoir rock to the wellbore and the fluid is subsequently brought to the surface. In addition to the water and sand (which together typically make up 98 to 99 percent of the materials pumped into a well during a fracturing operation), chemical additives are also frequently used. These chemicals can serve many functions in hydraulic fracturing, including limiting the growth of bacteria and preventing corrosion of the well casing. The exact formulation of the chemicals used varies depending on the rock formations, the well, and the requirements of the operator.
Over the past few years, in response to strong public interest, several states—including Colorado, Wyoming, Arkansas, and Texas—have substantially revised their state regulations related to hydraulic fracturing. One of the BLM's key goals in updating its regulations on hydraulic fracturing is to complement these state efforts by providing a consistent standard across all public and Indian lands. The BLM is also actively working to minimize any duplication between the reporting required for state regulations and for this regulation and to make reported information consistent and easily accessible to the public. For instance, the BLM is working closely with the Ground Water Protection Council and the Interstate Oil and Gas Commission in an effort to integrate the disclosure called for in this rule with the existing Web site known as FracFocus. The FracFocus.org Web site is already well established and used by many states. This online database includes information from oil and gas wells in roughly 12 states and includes information from over 206 companies. The BLM understands that the database is in the process of being improved and will in the near future have enhanced search capabilities and allow for easier reporting of information.
The BLM acknowledges that some states already have in place rules and regulations that address hydraulic fracturing and that these rules may be either more or less stringent than the provisions in this proposal. In keeping with longstanding practice and consistent with relevant statutory authorities, it is the intention of the BLM to implement on public lands whichever rules, state or Federal, are most protective of Federal lands and resources and the environment.
III. Discussion of the Proposed Rule Back to Top
The BLM proposes to revise its hydraulic fracturing regulations, found at 43 CFR 3162.3-2, and adding a new section 3162.3-3. Existing section 3162.3-3 would be retained and renumbered. The Federal Land Policy and Management Act (FLPMA) directs the BLM to manage the public lands so as to prevent unnecessary or undue degradation, and to manage lands using the principles of multiple use and sustained yield. FLPMA declares multiple use to mean, among other things, a combination of balanced and diverse resource uses that takes into account long-term needs of future generations for renewable and non-renewable resources. FLPMA also requires that the public lands be managed in a manner that will protect the quality of their resources, including ecological, environmental, and water resources. The Mineral Leasing Act and the Mineral Leasing Act for Acquired Lands authorize the Secretary to lease Federal oil and gas resources, and to regulate oil and gas operations on those leases, including surface-disturbing activities. The Indian Mineral Leasing Act assigns regulatory authority to the Secretary over Indian oil and gas leases on trust lands (except those excluded by statute). As stewards of the public lands, and as the Secretary's regulator for oil and gas leases on Indian lands, the BLM has evaluated the increased use of well stimulation practices over the last decade and determined that the existing rules for well stimulation require updating.
43 CFR 3160.0-5Onshore Oil and Gas Operations: General Definitions
This proposal would replace the current definition of usable water found in 43 CFR 3162.5-2(d) and define six other terms used in the oil and gas drilling industry to make the rule clearer and easier to understand. The definitions would be consistent with those used in the BLM's Oil and Gas Onshore Orders and by industry.
43 CFR 3162.3-2(a)Subsequent Well Operations
This proposal would remove the phrase “performing nonroutine fracturing jobs.”
43 CFR 3162.3-2(b)Subsequent Well Operations
This proposal would remove the phrase “routine fracturing or acidizing jobs, or * * * ”
No existing regulation
43 CFR 3162.3-3(a) through (j)
This proposal would add provisions addressing well stimulation operations, would require disclosure of well stimulation fluids, and would require approval of well stimulation operations. The proposed rule would also require that mechanical integrity tests be conducted before well stimulation activities are conducted and would require full reporting of the results of the well stimulation activity within thirty days of its completion. This proposal would also add a section allowing the authorized officer to grant a variance to specific conditions of these rules if the operator can demonstrate that alternative procedures would meet or exceed the intent of the minimum standards in this rule. This variance language is consistent with that found in the BLM's Oil and Gas Onshore Orders.
43 CFR 3162.5-2(d)Protection of fresh water and other minerals
This proposal removes the definition of usable water from this section. The new definition of usable water would be placed in 43 CFR 3160.0-5.
As an administrative matter, the proposed rule would amend the authorities section for the BLM's oil and gas operations management regulations at 43 CFR 3160.0-3 to include FLPMA. Section 310 of FLPMA authorizes the Secretary of the Interior to promulgate regulations to carry out the purposes of FLPMA and other laws applicable to the public lands. See 43 U.S.C. 1740. This amendment would not be a major change and would have no effect on lessees, operators, or the public.
Annulus means the space around a pipe in a wellbore, the outer wall of which may be the wall of either the borehole or the casing; sometimes also called the annular space.
Bradenhead means a heavy, flanged steel fitting connected to the first string of casing that allows suspension of intermediate and production strings of casing, and supplies the means for the annulus to be sealed off.
Well stimulation means those activities conducted in an individual well bore designed to increase the flow of hydrocarbons from the rock formation to the well bore by modifying the permeability of the reservoir rock. Examples of well stimulation operations are acidizing and hydraulic fracturing.
The proposed rule would delete the definition of “fresh water.” The BLM has maintained a definition of fresh water in its oil and gas operating regulations since 1988. However, in its onshore orders, the BLM has sought to protect all usable waters during drilling operations, not just fresh water. This distinction has led to confusion in the regulations. Usable water includes fresh water and water that is of lower quality than fresh water. The BLM intends to be more protective when it seeks to protect all usable water during drilling operations, not just fresh water. Therefore, the BLM proposes to delete the definition of fresh water.
Proposed section 3162.3-3(c)(1) would require a report that includes the geological names, a geological description, and the depth of the top and the bottom of the formation into which well stimulation fluids would be injected. The report is needed so that the BLM may determine the properties of the rock layers and the thickness of the producing formation and identify the confining rocks above and below the zone that would be stimulated.
Proposed section 3162.3-3(c)(7) would require the operator to provide, at the request of the BLM, additional information pertaining to any facet of the well stimulation proposal. For example, the BLM may require new or different tests or logs in cases where the original information submitted was inadequate, out of date, or incomplete. Any new information that the BLM may request will be limited to information necessary for the BLM to ensure that operations are consistent with applicable laws and regulation. Such information may include, but is not limited to, tabular or graphical results of a mechanical integrity test, the results of logs run, the results of tests showing the total dissolved solids in water proposed to be used as the base fluid, and the name of the contractor performing the stimulation. This provision would allow the BLM to obtain additional information about the proposed well stimulation activities. For example, after initial cementing activities, an operator may be asked to perforate the well casing and squeeze cement into the areas with inadequate cement bonding. In this case, the BLM may ask for additional information to show that the corrective action was successful and to ensure that the corrective work addressed any cement bonding deficiencies. The BLM wants to ensure that any additional information requested under this provision is the least burdensome to operators as possible while still accomplishing the goal of protecting the public lands and resources; therefore, the BLM is specifically requesting public comment on how this may be best achieved.
Additional conditions of approval for the handling of flowback water may be placed on the project by the BLM if needed to ensure protection of the environment and other resources. The BLM specifically requests comments on whether this rule should impose additional requirements that would require tanks or lined pits for drilling fluids and any other fluids associated with well stimulation operations. The BLM recognizes the ongoing efforts of states to regulate hydraulic fracturing operations. In implementing this rule, the BLM intends to avoid duplication of existing state requirements and will continue to engage states in cooperative efforts to avoid duplication. Please comment on whether this proposed provision would be duplicative of provisions of state rules and whether it is unnecessarily burdensome.
Proposed sections 3162.3-3(h) and (i) would notify the operator of procedures it needs to follow to identify information required to be submitted under this section that the operator believes to be exempt, by law, from public disclosure. If the operator fails to specifically identify information as exempt from disclosure by Federal law, the BLM will release that information. The BLM may also release information which the operator has marked as exempt if the BLM determines that public release is not prohibited by Federal law after providing the operator with no fewer than 10 business days' notice of the determination. All other information submitted by the operator will become a matter of public record.
Revised section 3162.5-2(d) would remove the references to fresh water and remove the phrase “containing 5,000 ppm or less of dissolved solids.” This revision would require the operator to isolate all usable water. This language does not set a new standard in the BLM's regulations. Since 1988, Onshore Order Number 2, Drilling Operations, (53 FR 46790) Section II.Y. has defined usable water and Onshore Order Number 2, Drilling Operations, Section III.B. has required the operator to “protect and/or isolate all usable water zones.” Section 3162.5(d) was not revised when Onshore Order Number 2, Drilling Operations, was promulgated, which has led to some confusion in implementing and interpreting the regulations.
To understand the context of costs and benefits of the proposed rule, background information concerning the BLM's leasing of Federal oil and gas, and management of Federal and Indian leases may be helpful and is included here. This discussion is provided to explain the basis for the conclusions related to the procedural matters sections that follow. The BLM Oil and Gas Management program is one of the most important mineral leasing programs in the Federal Government. There were 49,173 Federal oil and gas leases covering 38,463,410 acres at the end of fiscal year (FY) 2011. For FY 2011, there were 90,452 producible and service drill holes and 96,606 producible and service completions on Federal leases.
Table 1—Federal and Indian Oil and Gas Production and Royalties, Fiscal Year 2011 Back to Top
Sales value ($MM)
Royalty ($MM)
Source: ONRR, Federal Onshore Reported Royalty Revenue, Fiscal Year 2011 and American Indian Reported Royalty Revenue, Fiscal Year 2011.
Federal Leases:
97,721,813
2,974,916,041
NGL (Gal)
2,551,994,725
Indian Leases:
19,550,536
255,401,453
This analysis attempts to capture the potential benefits and costs that would result if the BLM implemented the proposed rule. As such, the current operating environment is the reference point from which the change is measured.
Potential costs and benefits rely on the number of well stimulation events estimated to occur in the future. Those estimates depend on a number of factors, including, but not limited to, future oil and gas prices, the number of applications to drill, the number of wells completed, and the portion of wells that are stimulated. Expected costs and benefits are anticipated to increase in the future because the number of wells drilled and well stimulation activities are expected to increase in the future, considering projected commodities prices and production.
There are other benefits that are difficult to quantify in monetary terms though they exist. The disclosure requirements might encourage operators to use fewer or safer chemicals in the hydraulic fracturing fluid. The public would benefit from increased knowledge about the fluids used. Increased transparency is also likely to benefit scientists, state and Federal agencies, and other organizations that study the potential impacts of hydraulic fracturing operations, and the BLM would have more information with which to make resource management decisions or respond to incidents.
This analysis presents costs and benefits expected to occur over the next 10 years, from 2013 to 2022. This period of analysis was chosen because 10 years is the length of the primary lease term on BLM-managed lands. Net benefits are discounted using 7 and 3 percent discount rates. The analysis presents a range of expected outcomes since the number of well stimulation events occurring in the future is highly variable and subject to future conditions.
The proposed regulation is designed to reduce the risk that well stimulation events may pose to the environment. Any contamination event that occurs is expected to require remediation. Since the remediation costs are uncertain, the analysis makes assumptions about remediation costs which may underestimate the true costs of remediation. The analysis assumes two scenarios: A low remediation cost—low environmental risk scenario and a high remediation cost—high environmental risk scenario. The benefits, while representing the value of risk reduction, will underestimate or overestimate the true benefits if the true risk of well stimulation operations varies from the assumptions.
There is a time dimension to estimates of potential benefits and costs. The potential events described, if they occur at all, may be in the distant future. The further in the future the benefits and costs are expected to occur, the smaller the present value associated with the stream of costs and benefits. As such, future costs and benefits must be discounted (the discount factor equals 1/(1+r)
where r is the discount rate and t is time measured in years during which benefits and costs are expected to occur). The discount factor is then used to convert the stream of costs and benefits into “present discounted values.” When the estimated benefits and costs have been discounted, they can be added to determine the overall value of net benefits.
The OMB's basic guidance on the appropriate discount rate to use is provided in OMB Circular A-94. The OMB's Circular A-94 states that a real discount rate of 7 percent should be used as a base-case for regulatory analysis. The OMB considers the 7 percent rate as an estimate of the average before-tax rate of return to private capital in the U.S. economy. It is a broad measure that reflects the returns to real estate and small business capital as well as corporate capital. It approximates the opportunity cost of capital, and it is the appropriate discount rate whenever the main effect of a regulation is to displace or alter the use of capital in the private sector.OMB Circular A-4 also states that a 3 percent discount rate should be used for regulatory analyses and explains the use of that discount rate as follows: “The effects of regulation do not always fall exclusively or primarily on the allocation of capital. When regulation primarily and directly affects private consumption (e.g., through higher consumer prices for goods and services), a lower discount rate is appropriate. The alternative most often used is sometimes called the `social rate of time preference.' This simply means the rate at which “society” discounts future consumption flows to their present value.”
The benefits and costs provided in this analysis are indeed estimates and come with uncertainty. Estimated costs and benefits rely on the number of well stimulation events occurring in future years and those estimates are uncertain. This analysis estimates the number of future well stimulation events using regression models and future projections of commodity prices.
This analysis does not quantify other benefits that are undoubtedly relevant, such as the benefit that disclosing the components of fracturing fluids will have for public health research and the remediation of contamination events. It is also uncertain what additional benefits, if any, would result from the disclosure requirements, for instance, if companies find safer substitutes for the chemicals in the fracturing fluids.
The analysis estimates the effects of the proposed regulations over a baseline scenario, where no action is taken. The BLM considered an alternative to the proposed regulation which would remove the requirement for operators to use lined pits if they choose to use pits to store hydraulic fracturing fluids.
A summary of the results appears in Table 2 and Table 3, with the entire results available in the full Economic Analysis and Initial Regulatory Flexibility Analysis available at the address listed in the ADDRESSES section of this rule.
Table 2—Annualized Value of Net Benefits of the Proposed Regulations and Alternatives Back to Top
[7% Discount rate; $MM]
Low remediation cost/low environmental risk
High remediation cost/high environmental risk
Alternative 1: No Requirement for Lined Pits
−40.84
Estimated Number of Well Stimulations
Table 3—Annualized Value of Net Benefits of the Proposed Regulations and Alternatives Back to Top
[3% Discount rate; $MM]
−30.33
Alternative 1: No Requirement for Lined Pits:
−41.02
Benefits: Under the proposed regulations, it is assumed that the regulations would remove much of the risk associated with potential wellbore integrity issues and unlined pits. The change in social benefits from the baseline scenario is positive. If you assume that there is low environmental risk posed by wellbore integrity issues and storage of hydraulic fracturing fluids in unlined pits and the costs of surface and subsurface remediation is low (on the range assumed), then the change in social benefit as a result of the proposed regulation is positive and ranges between $11.70MM and $13.79MM per year using a discount rate of 7% and between $11.74MM and $13.85MM per year using a discount rate of 3%. If you assume that environmental risks are high and remediation costs are high (on the range assumed), then the social benefits of the proposed regulation is positive and ranges between $42.67MM and $50.27MM per year using a discount rate of 7% and between $42.79MM and $50.49MM per year using a discount rate of 3%. Tables 7 and 8 (below) show the annual change in benefits over the baseline.
Executive Order 13211 provides that agencies prepare and submit to the Administrator of the Office of Information and Regulatory Affairs (OIRA), OMB, a Statement of Energy Effects for certain actions identified as significant energy actions. Section 4(b) of Executive Order 13211 defines a “significant energy action” as “any action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking: (1)(i) That is a significant regulatory action under Executive Order 12866 or any successor order, and (ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (2) that is designated by the Administrator of OIRA as a significant energy action.”
Table 4 presents drilling costs per well for a range of wells from 1998 to 2007. The data clearly show that drilling costs increased during this time. Using the estimates for the average burden per well stimulation and the average cost of drilling wells in 2007, the annual costs of this proposed rule represent about 0.3% of the drilling cost of a well. As such, the proposed regulations are unlikely to have an effect on the investment decisions of firms, and the rule is unlikely to affect the supply, distribution, or use of energy.
Table 4—Per Well Costs of Crude Oil and Natural Gas Wells Drilled Back to Top
Crude oil, natural gas, and dry wells drilled
Crude oil wells drilled (nominal $)
Natural gas wells drilled (nominal $)
Source: Energy Information Administration (2012), “Costs of Crude Oil and Natural Gas Wells Drilled”.
4,171,700
3,906,900
Executive Order 13563 reaffirms the principles established in Executive Order 12866, but calls for additional consideration of the regulatory impact on employment. It states, “Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation.” An analysis of employment impacts is a standalone analysis and the impacts should not be included in the estimation of benefits and costs.
Another area of interest is the extent to which the financial burden is expected to change operators' investment decisions. If the financial burden is not significant and all other factors are equal, then one would expect operators to maintain existing levels of investment and employment. As with the results in the earlier discussion, the BLM believes that the proposed rule would result in an additional cost per well stimulation that is small and would not alter the investment or employment decisions of firms. Therefore, considering the labor requirements and those operators would not likely reduce investment, the BLM anticipates an overall net gain in employment in the sectors.
In accordance with the criteria in Executive Order 12866, the Office of Management and Budget has determined that this rule is a significant regulatory action.
This proposed rule would not create inconsistencies or otherwise interfere with an action taken or planned by another agency. This proposed rule would not change the relationships of the oil and gas operations with other agencies. These relationships are included in agreements and memoranda of understanding that would not change with this rule. In addition, this proposed rule would not materially affect the budgetary impact of entitlements, grants, loan programs, or the rights and obligations of their recipients. Please see the discussion of the impacts of the proposed rule as described earlier in this section of the preamble.
Congress enacted the Regulatory Flexibility Act of 1980 (RFA), as amended, 5 U.S.C. 601-612, to ensure that Government regulations do not unnecessarily or disproportionately burden small entities. The RFA requires a regulatory flexibility analysis if a rule would have a significant economic impact, either detrimental or beneficial, on a substantial number of small entities. For the purposes of this analysis, we will assume that all entities (all lessees and operators) that may be affected by this proposed rule are small entities, even though that is not actually the case.
The proposed rule deals with well stimulation on all Federal and Indian lands (except those excluded by statute). There would be some increased costs associated with the proposed enhanced recordkeeping requirements and some new operational requirements. However, the BLM expects that these costs would be minor in comparison to overall operations costs. Therefore, the BLM has determined under the RFA that the proposed rule would not have a significant economic impact on a substantial number of small entities. Please see the discussion earlier in this section of the preamble for a discussion of the impacts of the rule.
The Regulatory Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small governmental jurisdictions, or small not-for-profit enterprises.
After considering the economic impact of the proposed rule on these small entities, the screening analysis indicates that this proposed rule would not have a significant economic impact on a substantial number of small entities. Please see the discussion earlier in this section of the preamble for a discussion of the impacts of the rule.
This proposed rule does not contain a Federal mandate that may result in expenditures of $100 million or more for state, local, and tribal governments, in the aggregate, or to the private sector in any one year. Thus, the proposed rule is also not subject to the requirements of Sections 202 or 205 of the Unfunded Mandates Reform Act (UMRA).
This proposed rule is also not subject to the requirements of Section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments; it contains no requirements that apply to such governments nor does it impose obligations upon them.
Executive Order 12630, Governmental Actions and Interference With Constitutionally Protected Property Rights (Takings) Back to Top
Under Executive Order 12630, the proposed rule would not have significant takings implications. A takings implication assessment is not required. This proposed rule would establish recordkeeping requirements for hydraulic fracturing operations and some additional operational requirements on Federal and Indian lands. All such operations are subject to lease terms which expressly require that subsequent lease activities be conducted in compliance with subsequently adopted Federal laws and regulations. The proposed rule conforms to the terms of those Federal leases and applicable statutes, and as such the proposed rule is not a governmental action capable of interfering with constitutionally protected property rights. Therefore, the proposed rule would not cause a taking of private property or require further discussion of takings implications under this Executive Order.
Executive Order 13352, Facilitation of Cooperative Conservation Back to Top
Under Executive Order 13352, the BLM has determined that this proposed rule would not impede facilitating cooperative conservation and would take appropriate account of and consider the interests of persons with ownership or other legally recognized interests in land or other natural resources. This rulemaking process will involve Federal, State, local and tribal governments, private for-profit and nonprofit institutions, other nongovernmental entities and individuals in the decision-making. The process would provide that the programs, projects, and activities are consistent with protecting public health and safety.
Under Executive Order 13132, this proposed rule would not have significant Federalism effects. A Federalism assessment is not required because the proposed rule would not have a substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. The proposed rule would not have any effect on any of the items listed. The proposed rule would affect the relationship between operators, lessees, and the BLM, but would not impact states. Therefore, under Executive Order 13132, the BLM has determined that the proposed rule would not have sufficient Federalism implications to warrant preparation of a Federalism Assessment.
Under Executive Order 13175, the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951), and 512 Departmental Manual 2, the BLM evaluated possible effects of the proposed rule on federally recognized Indian tribes. The BLM approves proposed operations on all Indian onshore oil and gas leases (except those excluded by statute). Therefore, the proposed rule has the potential to affect Indian tribes. In conformance with the Secretary's policy on tribal consultation, the Bureau of Land Management held four tribal consultation meetings to which over 175 tribal entities were invited. The consultations were held in:
Tulsa, Oklahoma on January 10, 2012;
Farmington, New Mexico on January 19, 2012.
The purpose of these meetings was to solicit initial feedback and preliminary comments from the tribes. Comments from tribes will be received and consultation will continue as this rulemaking proceeds. To date, the tribes have expressed concerns about the BLM's Inspection and Enforcement program's ability to enforce the terms of this rule; previously plugged and abandoned wells being potential conduits for contamination of ground water; and the operator having to provide documentation that the water used for the fracturing operation was legally acquired. The BLM will further address these concerns during the drafting of the final rule.
Under Executive Order 12988, the Office of the Solicitor has determined that the proposed rule would not unduly burden the judicial system and meets the requirements of Sections 3(a) and 3(b)(2) of the Order. The Office of the Solicitor has reviewed the proposed rule to eliminate drafting errors and ambiguity. It has been written to minimize litigation, provide clear legal standards for affected conduct rather than general standards, and promote simplification and avoid unnecessary burdens.
The Paperwork Reduction Act (PRA) (44 U.S.C. 3501-3521) provides that an agency may not conduct or sponsor, and a person is not required to respond to, a “collection of information,” unless it displays a currently valid control number. Collections of information include requests and requirements that an individual, partnership, or corporation obtain information, and report it to a Federal agency (44 U.S.C. 3502(3); 5 CFR 1320.3(c) and (k)).
OMB has approved the use of Form 3160-5 under control number 1004-0137, Onshore Oil and Gas Operations (43 CFR part 3160) to collect information on a number of operations, including some well-stimulation operations. Once the BLM is authorized to collect well-stimulation information in accordance with finalized new section 3162.3-3 and a new control number, the BLM will request revision of control number 1004-0137 to:
Add the new well-stimulation uses and burdens of Form 3160-5 to control number 1004-0137, and
Remove the existing well-stimulation uses and burdens from the existing approval of Form 3160-5.
The new collection of information would be required to obtain or retain a benefit for the operators of Federal and Indian (except on the Osage Reservation, the Crow Reservation, and certain other areas) onshore oil and gas leases, units, or communitization agreements that include Federal leases. The BLM has requested a 3-year term of approval for the new control number.
The information collection request for this proposed rule has been submitted to OMB for review under 44 U.S.C. 3504(h) of the Paperwork Reduction Act. A copy of the request can be obtained from the BLM by electronic mail request to Barbara Gamble at barbara_gamble@blm.gov or by telephone request to 202-912-7148. The BLM requests comments to:
Comments on the information collection requirements should be sent to both OMB and the BLM as directed in the ADDRESSES section of this preamble. OMB is required to make a decision concerning the collection of information contained in this proposed rule between 30 to 60 days after publication of this document in the Federal Register. Therefore, a comment to OMB is best assured of having its full effect if OMB receives it by June 11, 2012.
Summary of Information Collection Requirements Back to Top
The proposed rule is intended to increase transparency for the public regarding the fluids and additives used in well stimulation. The proposed provisions that include information collection requirements are amendments to 43 CFR 3162.3-2 new 43 CFR 3162.3-3.
OMB has approved the use of Form 3160-5 under control number 1004-0137 for the operations listed in existing section 3162.3-2. As amended, section 3162.3-2 would no longer include well stimulation jobs (i.e., nonroutine fracturing, routine fracturing, and acidizing) on the list of operations for which prior approval and subsequent reports would be required. Other categories of operations would remain subject to the information collection requirements in section 3162.3-2. Once the BLM is authorized to collect well-stimulation information under new section 3162.3-3 and a new control number, the BLM will request revision of control number 1004-0137 by removing the well-stimulation burdens from the existing approval of Form 3160-5. New section 3162.3-3 would require operators to use Form 3160-5 both to seek prior BLM approval of well stimulation operations, and to submit a report on subsequent actual well stimulation operations. It would also encourage operators to use Form 3160-5 if they want to request a variance from the requirements of new section 3162.3-3.
New section 3162.3-3(b) would require operators to seek and obtain prior approval by the BLM for proposed well stimulation operations. Submission of the information, called a Notice of Intent (NOI) Sundry in the proposed rule, would be required at least 30 days before the date the operator wants to begin well stimulation operations. The information to be included in this Notice of Intent Sundry, and the reasons for requiring it, are listed in the following table:
Proposed regulation 43 CFR
§ 3162.3-3(c)(1)
The geological names, a geological description, and the proposed measured depth of the top and the bottom of the formation into which well stimulation fluids are to be injected
The BLM would use the information to determine the properties of the rock layers and the thickness of the producing formation, and identify the confining rocks above and below the zone that would be stimulated.
§ 3162.3-3(c)(2)
The proposed measured depths (both top and bottom) of all occurrences of usable water and the Cement Bond Logs (or another log acceptable to the authorized officer) proving that the occurrences of usable water have been isolated to protect them from contamination
The BLM would use the information to help protect water resources.
§ 3162.3-3(c)(3)
The proposed measured depth of perforations or the open-hole interval, the source and location(s) of the water used in the stimulation fluid or trade name of the base fluid (if other than water), type of proppants, and estimated pump pressures. Information concerning water supply, such as rivers, creeks, springs, lakes, ponds, and wells, which may be shown by quarter-quarter section on a map or plat, or which may be described in writing. The NOI Sundry must also identify the source, access route, and transportation method for all water anticipated for use in stimulating the well
The BLM would use the information to determine the impacts associated with operations and the need for any mitigation applicable to Federal and Indian lands.
§ 3162.3-3(c)(4)
A certification signed by the operator that the proposed treatment fluid complies with all applicable permitting and notice requirements as well as all applicable Federal, tribal, state, and local laws, rules, and regulations
The BLM would use the information to make an informed decision on the proposed well stimulation.
§ 3162.3-3(c)(5)
A detailed description of the proposed well stimulation design, including: (i) The estimated total volume of fluid to be used; (ii) The anticipated surface treating pressure range; (iii) The maximum injection treating pressure; and (iv) the estimated or calculated fracture length and fracture height
The information would enable the BLM to verify that the proposed engineering design is adequate for safely conducting the proposed well stimulation, that the maximum wellbore design burst pressure will not be exceeded at any stage of the well stimulation operations, and that the intended effects of the well stimulation operation will remain confined to the petroleum-bearing rock layers and will not have unintended consequences for other rock layers, such as aquifers.
§ 3162.3-3(c)(6)
The following information concerning the handling of recovered fluids: (i) The estimated volume of fluid to be recovered during flow back, swabbing, and recovery from production facility vessels; (ii) The proposed methods of handling the recovered fluids, including, but not limited to, pit requirements, chemical composition of the fluid, pipeline requirements, holding pond use, re-use for other stimulation activities, or injection; and (iii) The proposed disposal method of the recovered fluids, including, but not limited to, injection, hauling by truck, or transporting by pipeline
The BLM would use the information to ensure that the facilities needed to process or contain the estimated volume of fluid will be available on location, that the handling methods will adequately ensure protection of public health and safety, and that the BLM has all necessary information regarding disposal of chemicals used, in the event it is needed to protect the environment and human health and safety and to prevent unnecessary or undue degradation of the public lands.
§ 3162.3-3(c)(7)
Additional information, as requested by the authorized officer
The information would allow the BLM to make an informed decision about the proposed well stimulation if special circumstances exist.
Within 30 days after the completion of well stimulation operations, section 3162.3-3(f) of the proposed rule would require operators to submit a Subsequent Report Sundry Notice on Form 3160-5 (Sundry Notices and Report on Wells). The information to be included in this Subsequent Report, and the reasons for requiring it, are listed in the following table.
§ 3162.3-3(e)(1)
A continuous record of the annulus pressure must be submitted with the required Subsequent Report Sundry Notice (Form 3160-5, Sundry Notices and Reports on Wells) identified in paragraph (g) of this section
The BLM would use the information to ensure that well stimulation activities are conducted as designed. The information would also show that stimulation fluids are going to the formation for which they were intended.
§ 3162.3-3(e)(2)
If during the stimulation the annulus pressure increases by more than 500 pounds per square inch as compared to the pressure immediately preceding the stimulation, the operator must orally notify the authorized officer as soon as practicable, but no later than 24 hours following the incident. Within 15 days after the occurrence, the operator must submit a report containing all details pertaining to the incident, including corrective actions taken, as part of a Subsequent Report Sundry Notice (Form 3160-5, Sundry Notices and Reports on Wells)
The BLM would use the information to ensure that stimulation fluids are going into the formation for which they were designed. The BLM also needs to obtain reasonable assurance that other resources are adequately protected.
§ 3162.3-3(g)(1)
The actual measured depth of perforations or the open-hole interval, the source and location(s) of the water used in the stimulation fluid or trade name of base fluid (if other than water), type of proppants, and estimated pump pressures. Information concerning water supply, such as rivers, creeks, springs, lakes, ponds, and wells, which may be shown by quarter-quarter section on a map or plat, or which may be described in writing. It must also identify the source, access route, and transportation method for all water used in stimulating the well
§ 3162.3-3(g)(2)
The actual total volume of the fluid used
The BLM would use the information to maintain a record of the stimulation operation as actually performed.
§ 3162.3-3(g)(3)
The actual surface pressure and rate at the end of each fluid stage, and the actual flush volume, rate, and final pump pressure
The BLM would use the information to ensure that the maximum allowable pressure has not been exceeded at any stage of the well stimulation operation.
§ 3162.3-3(g)(4) and (5)
(4) A report (table) that discloses all additives of the actual stimulation fluid, by additive trade name and purpose (such as, but not limited to, acid, biocide, breaker, brine, corrosion inhibitor, crosslinker, demulsifier, friction reducer, gel, iron control, oxygen scavenger, pH adjusting agent, proppant, scale inhibitor, or surfactant); and (5) A report (table) that discloses the complete chemical makeup of all materials used in the actual stimulation fluid without regard to original source additive (see paragraph (g)(4) of this section). For each chemical, the operator must provide the Chemical Abstracts Service Registry Number as well as the percentage by mass. The percent mass value is the mass value for each component (Mc) divided by the value of the entire fluid mass (Mt) times 100. (Mc/Mt)*100 = percent value. The percent mass values should be for the entire stimulation operation, not for the individual stages
The BLM would use the information to maintain a record of the stimulation operation as performed.
§ 3162.3-3(g)(6)
The actual, estimated, or calculated fracture length and fracture height
The BLM would use the information to verify that the intended effects of the well stimulation operation remain confined to the petroleum-bearing rock layers and will not have unintended consequences on other rock layers or aquifers.
§ 3162.3-3(g)(7)
The Subsequent Report Sundry Notice (Form 3160-5, Sundry Notices and Reports on Wells) may be completed in whole or in part, as applicable, by attaching the service contractor's job log or other report, so long as the information required in paragraphs (g)(1) through (g)(6) of this section is complete and readily apparent
This provision would allow the operator the flexibility to submit a copy of the service company contractor's job log or other report in lieu of all or part of the data described above, so long as the required information is complete and readily apparent.
§ 3162.3-3(g)(8)
A certification signed by the operator that the treatment fluid used complies with all applicable permitting and notice requirements as well as all applicable Federal, tribal, state, and local laws, rules, and regulations
The BLM would use the information to help protect public health and safety and obtain the operator's self-certification of compliance with all necessary permits and notice requirements.
§ 3162.3-3(g)(9)
A certification signed by the operator that wellbore integrity was maintained throughout the operation, as required by paragraphs (d), (e)(1), and (e)(2) of this section
The BLM would use the information to help protect public health and safety and obtain the operator's self-certification that wellbore integrity was maintained throughout the operation.
§ 3162.3-3(g)(10)
The following information concerning the handling of recovered fluids: (i) The volume of fluid recovered during flow back, swabbing, or recovery from production facility vessels; (ii) The methods of handling the recovered fluids, including, but not limited to, pipeline requirements, holding pond use, re-use for other stimulation activities, or injection; and (iii) The disposal method of the recovered fluids, including, but not limited to, injection, hauling by truck, or transporting by pipeline. The disposal of fluids produced during the flow back from the well stimulation process must follow the requirements set out in Onshore Order Number 7, Disposal of Produced Water, Section III. B
The BLM would use the information to help protect human health and safety and prevent the contamination of the environment. The BLM also needs to confirm that the disposal methods used are those that were approved and conform to the regulations.
§ 3162.3-3(g)(11)
If the actual operations deviate from the approved plan, the deviation(s) must be documented
The BLM would use the information to maintain a record of any deviations of the operation from the approved plan in the event such information is needed to protect health and safety and prevent undue degradation of the environment.
Proposed 43 CFR 3162.3-3(j) would encourage operators to use Form 3160-5 to request a variance from the requirements under proposed section 3162.3-3. Any request for a variance, whether filed on Form 3160-5 or not, would have to specifically identify the regulatory provision of this section for which the variance is being requested, explain the reason the variance is needed, and demonstrate how the operator would satisfy the objectives of the regulation for which the variance is being requested.
The estimated annual hour and costs burdens of each aspect of this information collection are shown in the following table:
Sundry Notices and Reports on Wells/Well Stimulation/Notice of Intent Sundry, (43 CFR 3162.3-3), Form 3160-5
Sundry Notices and Reports on Wells/Well Stimulation/Subsequent Report, Sundry Notice, (43 CFR 3162.3-3, Form 3160-5
Sundry Notices and Reports on Wells/Well Stimulation/Variance Request, (43 CFR 3162.3-3), Form 3160-5
The BLM has prepared an environmental assessment (EA) that concludes that the proposed rule would not constitute a major Federal action that may result in a significant adverse effect on the human environment under section 102(2)(C) of the National Environmental Policy Act (NEPA), 42 U.S.C. 4332(2)(C). A detailed statement under NEPA would not be required if the proposed amendments were promulgated as regulations. The BLM has placed the EA and the draft Finding of No Significant Impact on file in the BLM Administrative Record at the address specified in the ADDRESSES section.
Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use Back to Top
In accordance with Executive Order 13211, the BLM has determined that the proposed rule will not have substantial direct effects on the energy supply, distribution, or use, including a shortfall in supply or price increase. Please see the discussion earlier in this section of the preamble for a discussion of the impacts of the rule.
Please send any comments you have on the clarity of the regulations to the address specified in the ADDRESSES section. Authors Back to Top
The principal authors of this rule are: Michael Worden of the BLM Washington Office; Nicholas Douglas of BLM Washington Office; Adrienne Brumley of the BLM New Mexico State Office; Donato Judice of the BLM Great Falls, Montana Oil and Gas Field Office, assisted by Ian Senio and Joe Berry of the BLM's Division of Regulatory Affairs and the Department of the Interior's Office of the Solicitor.
Administrative practice and procedure; Government contracts; Indians—lands; Mineral royalties; Oil and gas exploration; Penalties; Public lands—mineral resources; Reporting and recordkeeping requirements
PART 3160—ONSHORE OIL AND GAS OPERATIONS Back to Top
1. The authorities citation for part 3160 is revised to read as follows:
25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359 and 1751; 40 U.S.C. 4332, and 43 U.S.C. 1732(b), 1733, and 1740.
Subpart 3160—Onshore Oil and Gas Operations: General Back to Top
§ 3160.0-3 [Amended]
§ 3160.0-5 Definitions.
Subpart 3162—Requirements for Operating Rights Owners and Operators Back to Top
4. Amend § 3162.3-2 by revising the first sentence of paragraph (a) and revising paragraph (b) to read as follows:
§ 3162.3-2 Subsequent well operations.
§ 3162.3-3 Subsequent well operations; Well stimulation.
(b) When an Operator Must Submit Notification for Approval of Well Stimulation.
A proposal for well stimulation must be submitted by the operator and approved by BLM before commencement of operations. The proposal may be submitted in one of the following ways:
(2) The proposed measured depths (both top and bottom) of all occurrences of usable water and the cement bond logs (or another log acceptable to the authorized officer) proving that the occurrences of usable water have been isolated to protect them from contamination; (3) The proposed measured depth of perforations or the open-hole interval, the source and location(s) of the water used in the stimulation fluid or trade name of the base fluid (if other than water), type of proppants, and estimated pump pressures. Information concerning water supply, such as rivers, creeks, springs, lakes, ponds, and wells, which may be shown by quarter-quarter section on a map or plat, or which may be described in writing. It must also identify the source, access route, and transportation method for all water anticipated for use in stimulating the well;
(i) The volume of fluid recovered during flow back, swabbing, or recovery from production facility vessels; (ii) The methods of handling the recovered fluids, including, but not limited to, pipeline requirements, holding pond use, re-use for other stimulation activities, or injection; and
§ 3162.5-2 Control of wells.
[FR Doc. 2012-11304 Filed 5-10-12; 8:45 am]
1. U.S. Department of the Interior, Bureau of Land Management, www.blm.gov, Oil and Gas Statistics.