Federal Oil and Gas Leases: Opportunities Exist to Capture Vented and Flared Natural Gas, Which Would Increase Royalty Payments and Reduce Greenhouse Gases
Published: 2010-10-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of the Interior (Interior) leases public lands for oil and natural gas development, which generated about $9 billion in royalties in 2009. Some gas produced on these leases cannot be easily captured and is released (vented) directly to the atmosphere or is burned (flared). This vented and flared gas represents potential lost royalties for Interior and contributes to greenhouse gas emissions. GAO was asked to (1) examine available estimates of the vented and flared natural gas on federal leases, (2) estimate the potential to capture additional gas with available technologies and associated potential increases in royalty payments and decreases in greenhouse gas emissions, and (3) assess the federal role in reducing venting and flaring. In addressing these objectives, GAO analyzed data from Interior, the Environmental Protection Agency (EPA), and others and interviewed agency and industry officials.
section_title: What GAO Found
paragraphs: Estimates of vented and flared natural gas for federal leases vary considerably, and GAO found that data collected by Interior to track venting and flaring on federal leases likely underestimate venting and flaring because they do not account for all sources of lost gas. For onshore federal leases, operators reported to Interior that about 0.13 percent of produced gas was vented or flared. Estimates from EPA and the Western Regional Air Partnership (WRAP) showed volumes as high as 30 times higher. Similarly, for offshore federal leases, operators reported that 0.5 percent of the natural gas produced was vented and flared, while data from an Interior offshore air quality study showed that volume to be about 1.4 percent, and estimates from EPA showed it to be about 2.3 percent. GAO found that the volumes operators reported to Interior do not fully account for some ongoing losses such as the emissions from gas dehydration equipment or from thousands of valves--key sources in the EPA, WRAP, and Interior offshore air quality studies. Data from EPA, supported by information obtained from technology vendors and GAO analysis, suggest that around 40 percent of natural gas estimated to be vented and flared on onshore federal leases could be economically captured with currently available control technologies. According to GAO analysis, such reductions could increase federal royalty payments by about $23 million annually and reduce greenhouse gas emissions by an amount equivalent to about 16.5 million metric tons of CO2--the annual emissions equivalent of 3.1 million cars. Venting and flaring reductions are also possible offshore, but data were not available for GAO to develop a complete estimate. As part of its oversight responsibilities, Interior is charged with minimizing vented and flared gas on federal leases. To minimize lost gas, Interior has issued regulations and guidance that limit venting and flaring during routine procedures. However, Interior's oversight efforts to minimize these losses have several limitations, including that its regulations and guidance do not address some significant sources of lost gas, despite available control technologies to potentially reduce them. Although EPA does not have a role in managing federal leases, it has voluntarily collaborated with the oil and gas industry through its Natural Gas STAR program, which encourages oil and gas producers to use gas saving technology, and through which operators reported venting reductions totaling about 0.4 percent of natural gas production in 2008.
section_title: What GAO Recommends
paragraphs: To reduce lost gas, increase royalties, and reduce greenhouse gas emissions, GAO recommends that Interior improve its venting and flaring data and address limitations in its regulations and guidance. Interior generally concurred with these recommendations.

section_title: Letter
paragraphs: Production of oil and natural gas on federal lands and waters is an  important part of the nation’s energy portfolio and a significant source of  revenue for the federal government. The Department of the Interior  (Interior) manages lands that account for nearly a quarter of domestic oil  and gas production. In fiscal year 2009, companies that leased these lands  paid about $6 billion in royalties to the federal government on the sale of  oil and gas produced offshore in federal waters, and about $3 billion for  production on federal lands, making revenues from federal oil and gas one  of the largest nontax sources of federal government funds. Interior’s  Bureau of Land Management (BLM) is responsible for managing leases  onshore, and its Bureau of Ocean Energy Management, Regulation and  Enforcement (BOEMRE) is responsible for leases offshore.
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). The venting and flaring of natural gas is the potential loss of a  valuable resource and, on leased federal lands or waters, the loss of  federal royalty payments. In addition, venting releases methane, and  flaring emits carbon dioxide (CO), both greenhouse gases that contribu to global climate change. Methane is a particular concern since it  potent greenhouse gas than is In 2004, we reported that Interior, the department charged with managing  federal oil and gas leases and regulating venting and flaring, collected and  reported information on the extent of venting and flaring on leased federal  lands and waters. We made two recommendations to Interior to improve  the measurement of vented and flared gas and to reduce its impact, which  the department implemented. Since that time, the Environmental  Protection Agency (EPA) and the oil and gas industry identified sources of  vented and flared gas that were releasing substantially more gas than  previously thought possible, suggesting that the expanded use of available  technologies could help capture additional gas. This report responds to  your request that we review the extent of venting and flaring of natural gas  on federal leases. Our objectives were to (1) examine available estimates  of vented and flared natural gas on federal leases; (2) estimate the  potential to capture additional vented and flared natural gas with available  technologies and the associated potential increases in royalty payments  and reductions in greenhouse gas emissions and; (3) assess the federal  role in reducing venting and flaring of natural gas. ); methane (CH).
GAO, Natural Gas Flaring and Venting: Opportunities to Improve Data and Reduce  Emissions, GAO-04-809 (Washington D.C.: July 14, 2004). of offshore oil and gas exploration, development, and production on  onshore air quality in the Gulf of Mexico region, which made up about 98  percent of federal offshore gas production in 2008. BOEMRE also uses  GOADS as part of an impact analysis required by the National  Environmental Policy Act. In addition, we analyzed EPA estimates of  vented and flared gas onshore and offshore. in conjunction with the Independent Petroleum Association of  Mountain States, collected from the oil and gas industry to measure air  quality in a number of large production basins in the mountain west. We  had consultants from the Environ International Corporation, the firm that  collected and analyzed the air quality data for WRAP, reconfigure these  data to provide information on venting and flaring volumes on federal  leases for a number of these onshore basins. Our sources of venting and  flaring data were from 2006 to 2008, and we examined only the portions of  these data related to federal leases in order to ensure comparability  between them. We assessed the reliability of the data we used by analyzing  the methods used to construct them and found them sufficiently reliable  for the purposes of this report.
EPA developed these estimates to support a proposed rule in 2010 to require the reporting  of greenhouse gas emissions from the oil and gas industry. These estimates were for 2006  to 2008. and royalty rates from Interior. To assess the federal role in reducing  vented and flared gas, we interviewed officials from BLM and BOEMRE,  including officials from field offices that manage oil and gas leases in large  onshore and offshore production basins; EPA; the Department of Energy;  state agencies; and the oil and gas industry. We also reviewed BLM and  BOEMRE regulations and other documentation, other studies related to  federal management and oversight of the oil and gas industry, as well as a  prior GAO report that described limitations in the systems Interior has in  place to track oil and gas production on federal leases. See appendix I for  more detailed information on our scope and methodology.
We conducted this performance audit from July 2009 to October 2010 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.
subsections: section_title: Background
paragraphs: The Mineral Leasing Act of 1920 charges Interior with overseeing oil and  gas leasing on federal lands and private lands where the federal  government has retained mineral rights covering about 700 million  onshore acres. Offshore, the Outer Continental Shelf Lands Act, as  amended, gives Interior the responsibility for leasing and managing  approximately 1.76 billion acres. BLM and BOEMRE are responsible for  issuing permits for oil and gas drilling; establishing guidelines for  measuring oil and gas production; conducting production inspections; and  generally providing oversight for ensuring that oil and gas companies  comply with applicable laws, regulations, and department policies. This  oversight includes the authority to ensure that firms produce oil and gas in  a manner that minimizes any waste of these resources. Together, BLM and  BOEMRE are responsible for oversight of oil and gas operations on more  than 28,000 producible leases.
Interior’s MRM program, which is managed under BOEMRE, is charged  with ensuring that the federal government receives royalties from the  operators that produce oil and gas from both onshore and offshore federal  leases. MRM is responsible for collecting royalties on all of the oil and gas  produced, with some allowances for gas lost during production.  Companies pay royalties to MRM based on a percentage of the cash value  of the oil and gas produced and sold. Currently, royalty rates for onshore  leases are generally 12.5 percent, while rates for offshore leases range  from 12.5 percent to 18.75 percent.
The production of oil and gas on these federal leases involves several  stages, including the initial drilling of the well; clearing out liquid and mud  from the wellbore; production of oil and gas from the well; separation of  oil, gas, and other liquids; transfer of oil and gas to storage tanks; and  distribution to central processing facilities. Throughout this process,  operators typically vent or flare some natural gas, often intermittently in  response to maintenance needs or equipment failures. This intermittent  venting may take place when operators purge water or hydrocarbon  liquids that collect in well bores (liquid unloading) to maintain proper well  function or when they expel liquids and mud with pressurized natural gas  after drilling during the well completion process. BLM and BOEMRE  permit operators of wells to release routine amounts of gas during the  course of production without notifying them or incurring royalties on this  gas. In addition, production equipment often emits gas to maintain  proper internal pressure, or in some cases, the release of pressurized gas  itself is the power source for the equipment, particularly in remote areas  that are not linked to an electrical grid. This “operational” venting may  include the continuous releases of gas from pneumatic devices––valves  that control gas flows, levels, temperatures, and pressures in the  equipment and rely on pressurized gas for operation––as well as leaks, or  “fugitive” emissions. It also includes natural gas that vaporizes from oi condensate storage tanks or during the normal operation of natur al gas  l or  dehydration equipment. Until recently, the industry considered these  operational losses to be small, but recent infrared camera technology ha shed new light on these sources of vented gas, particularly from  condensate storage tanks. According to oil and gas industry  representatives, the cameras helped reveal that losses from storage tanks and fugitive emissions were much higher than they originally thought ( to video). In addition, recent calculations from EPA suggest that  emissions from completions and liquid unloading make larger  contributions to lost gas than previously thought possible. Operators can  use a number of techniques to estimate emissions based on gas and oil  characteristics and well operating conditions, such as temperature and  pressure, without taking direct measurements of escaping gas.
While venting and flaring of natural gas is often a necessary part of  production, the lost gas has both economic and environmental  implications. On federal oil and gas leases, natural gas that is vented or  flared during production, instead of captured for sale, represents a loss of  royalty revenue for the federal government. Venting and flaring natural  gas also adds to greenhouse gases in the atmosphere. In general, flaring  emits CO, while venting releases methane, both of which the scientific  community agrees are contributing to global warming. Methane is  considered particularly harmful in this respect, as it is roughly 25 times  more potent by weight than CO Other  hydrocarbons and compounds in vented and flared gas can also harm air  quality by increasing ground-level ozone levels and contributing to  regional haze. Volatile organic compounds, present in vented gas, are  contributors to elevated ozone and haze, and ozone is a known  carcinogen, according to EPA analysis. In some areas in the western  United States, the oil and gas industry is a major source of volatile organic  compounds. According to EPA, in many western states, including in many  rural areas where there is substantial oil and gas production and limited  population, there have been increases in ozone levels, often exceeding  federal air quality limits. Interior is required to conduct environmental  impact assessments in advance of oil and gas leasing and generally works  with state environmental and air quality agencies to ensure that oil and gas  producers will comply with environmental laws such as the Clean Air Act  or Clean Water Act and the related implementing regulations. However,  the state agencies may be charged with maintaining the standards  established by the federal government in law and regulation, and often  have primary responsibility in this regard.
While much of the natural gas that is vented and flared is considered to be  unavoidably lost, certain technologies and practices can be applied  throughout the production process to capture some of this gas according  to the oil and gas industry and EPA. The technologies’ technical and  economic feasibility varies and sometimes depends on the characteristics  of the production site. For example, some technologies require a  substantial amount of electricity, which may be less feasible for remote  production sites that are not on the electrical grid. However, certain  technologies are generally considered technically and economically  feasible at particular production stages, including the following:    Drilling: Using “reduced emission” completion equipment when cleaning  out a well before production, which separates mud and debris to capture  gas or condensate that might otherwise be vented or flared.
Production: Installing a plunger lift system to facilitate liquid unloading.
Plunger-lift systems drop a plunger to the bottom of the well, and when  the built-up gas pressure pushes the plunger to the surface, liquids come  with it. Most of the accompanying gas goes into the gas line rather than  being vented. Computerized timers adjust when the plunger is dropped  according to the rate at which liquid collects in the well, further  decreasing venting.
Storage: Installing vapor recovery units that capture gas vapor from oil or  condensate storage tanks and send it into the pipeline.
Dehydration: Optimizing the circulation rate of the glycol and adding a  flash tank separator that reduces the amount of gas that is vented into the  atmosphere.
Pneumatic devices: Replacing pneumatic devices at all stages of  production that release, or “bleed,” gas at a high rate (high-bleed  pneumatics) with devices that bleed gas at a lower rate (low-bleed  pneumatics).
In 2004, we reported that information on the extent to which venting and  flaring occurs was limited. Although BLM and BOEMRE require  operators to report data on venting and flaring on a monthly basis, our  2004 report found that these data did not distinguish between gas that is  vented and gas that is flared, making it difficult to accurately identify the  extent to which each occurs. In implementing our recommendations for  offshore operators, BOEMRE now requires operators to report venting  and flaring separately and to install meters to measure this gas on larger  platforms. The Energy Information Administration (EIA) also collects  data from oil and gas producing states on venting and flaring, but our 2004  work found that EIA did not consider these state-reported data to be  consistent and, according to discussions with EIA officials, these data  have not improved.
section_title: Available Estimates of Vented and Flared Natural Gas Vary, but Volumes Reported to OGOR Are Likely Underestimated because They Do Not Include Some Sources
paragraphs: Available estimates of vented and flared natural gas on federal leases vary  considerably, and we found that estimates based on data from MRM’s  OGOR data system likely underestimate these volumes because they  include fewer sources of emissions than other estimates, including EPA’s  and WRAP’s. For onshore federal leases, operators reported to OGOR that  about 0.13 percent of the natural gas produced was vented and flared,  while EPA estimates showed the volume to be about 4.2 percent, and  estimates based on WRAP data showed it to be as high as 5 percent.  Similarly, for offshore federal leases, operators reported to OGOR that 0.5  percent of the natural gas produced was vented and flared, while data in  BOEMRE’s GOADS system––a database that focuses on the impacts of  offshore oil and gas exploration, development, and production on air  quality in the Gulf of Mexico region––showed that volume to be about 1.4  percent, and estimates from EPA showed it to be about 2.3 percent.
Onshore leases. Onshore leases showed the largest variation between  OGOR data and others’ estimates of natural gas venting and flaring.  Operators reported to MRM’s OGOR system that about 0.13 percent of the  natural gas produced on onshore federal leases was vented or flared each  year between 2006 and 2008. BLM uses guidance from 1980, which sets  limits on the amount of natural gas that may be vented and flared on  onshore leases, requires operators to report vented and flared gas to  OGOR, and in some cases to seek permission before releasing gas.  Although the guidance states that onshore operators must report all  volumes of lost gas to OGOR, it does not enumerate the sources that  should be reported or specify how they should be estimated. Staff from  BLM told us that the reported volumes were from intermittent events like  completions, liquid unloading, or necessary releases after equipment  failures; however, operators did not report operational sources such as  venting from oil storage tanks, pneumatic valves, or glycol dehydrators. In  general, BLM staff said that they thought that vented and flared gas did not  represent a significant loss of gas on federal leases. In addition, we found a  lack of consistency across BLM field offices regarding their understanding  of which intermittent volumes of lost gas should to be reported to OGOR.  For example, staff from some of the offices said that they thought that  intermittent vented and flared gas was not to be reported if operators had  advance permission or where volumes were under BLM’s permissible  limits, while others said that they thought that operators still needed to  report this gas. Our discussions with operators reflected this lack of  consistency from BLM field office staff. Operators we spoke with said that  they generally did not report operational sources, and in some cases did  not report intermittent sources as long as they were under BLM’s  permissible limits for venting and flaring.
In contrast, EPA’s estimate of venting and flaring was approximately 4.2  percent of gas production on onshore federal leases for the same period  and consistently included both intermittent and operational sources. EPA  estimated these emissions using data on average nationwide oil and gas  production equipment and their associated emissions (see table 1). As  noted earlier, venting from operational sources had not previously been  seen as a significant contributor to lost gas. With these additional sources,  EPA’s estimates are around 30 times higher than the volumes operators  reported to OGOR. According to EPA’s estimates, the amount of natural  gas vented and flared on onshore leases totaled around 126 billion cubic  feet (Bcf) of gas in 2008. This amount is roughly equivalent to the natural  gas needed to heat about 1.7 million homes during a year, according to our  calculations. See figure 2 for a comparison between EPA’s estimated gas  emissions and the volumes reported to OGOR as a percentage of gas  production on federal onshore leases.
Similarly, analysis of WRAP data for five production basins in the  mountain west in 2006 indicated as much as 5 percent of the total natural  gas produced on federal leases was vented and flared. WRAP based its  estimates, in part, on a survey of the types of equipment operators were  using, and provided a detailed list of sources to be reported. WRAP’s data  included similar sources as EPA’s data, as well as estimates of emissions  from fugitive sources like leaking seals and valves. Although estimates  based on WRAP data varied from basin to basin—between 0.3 and 5  percent—they were consistently much higher than the volumes operators  reported to OGOR. The average vented and flared gas as a percentage of  production was 2.2 percent across the five basins. See table 2 for a list of  the key sources in one of the five basins.
In figure 3, which compares estimates based on WRAP data with the  volumes operators reported to OGOR for 2006, for the Uinta basin, the  WRAP estimate was about 20 times higher than the volumes reported to  OGOR, and for two other basins (i.e., Denver-Julesburg and N. San Juan)  no volumes of vented and flared gas were reported to OGOR.
Offshore leases. Offshore leases showed less variation between OGOR  data and others’ estimates of natural gas venting and flaring than onshore  leases, but the volumes that operators reported to MRM’s OGOR were still  much lower than the volumes they reported to BOEMRE’s GOADS system  and estimates from EPA. Operators reported to OGOR that between 0.3  and 0.5 percent of the natural gas produced on offshore leases was vented  and flared each year from 2006 to 2008; however, they reported to GOADS  that they vented and flared about 1.4 percent—about 32 Bcf––of the  natural gas produced on federal leases in the Gulf of Mexico in 2008.  Although regulations require offshore operators to report all sources of  lost gas to OGOR, BOEMRE officials said that that this did not include  fugitive emissions. Furthermore, these officials also said that operators  likely reported volumes from some operational sources as “lease-use” gas  instead of including it in the venting and flaring data, thus contributing to  the differences between OGOR and GOADS. GOADS data included  sources similar to those included in EPA’s and WRAP’s data for onshore  production, including the same operational sources. Further, guidance to  operators for reporting to GOADS explicitly outlines the sources to be  reported and how they should be estimated, while guidance for OGOR  does not. Table 3 outlines the emission sources for volumes operators  reported to the GOADS system for 2008. In addition, EPA’s offshore  estimates showed that around 2.3 percent of gas produced on offshore  federal leases––as much as 50 Bcf––was vented and flared every year from  2006 to 2008. According to our analysis of EPA’s work, additional venting  from natural gas compressors, used to maintain proper pressure in  production equipment, accounted for the majority of the difference  between the offshore EPA and GOADS volumes.
On several occasions BOEMRE has made comparisons between data on  vented and flared volumes in the OGOR and GOADS systems, according to  BOEMRE officials. In 2004, BOEMRE compared data from the 2000  GOADS study with data from OGOR for a subset of offshore leases and  found reported vented and flared volumes were not always in agreement— attributing this difference to different operator interpretations of GOADS  and OGOR reporting requirements. BOEMRE officials said they revised  reporting procedures for the 2005 GOADS study. More recently, BOEMRE  made similar comparisons between data from the 2008 GOADS study and  OGOR data for a subset of leases and found they were in closer  agreement. BOEMRE officials told us they will continue to make such  comparisons to try to ensure the accuracy of the data in each system. In  reporting volumes of vented and flared gas to both systems, operators can  choose from a broad array of software packages, models, and equations to  estimate emissions, and these techniques can yield widely varied results.  For example, one study found that various estimation techniques to  determine emissions from oil storage tanks either consistently  underestimated or overestimated vented volumes. OGOR reporting  instructions for both onshore and offshore operators, as noted, do not  specify how operators should estimate these volumes.
As part of our review, we analyzed 2008 OGOR and GOADS data for the  Gulf of Mexico and found that the OGOR data likely underestimated the  volumes of vented and flared natural gas on federal offshore leases. To do  this analysis, we compared 2008 data from GOADS’s vent and flare source  categories with OGOR data for the same categories—looking at these  source categories allowed us to directly compare the two data systems. In  doing this analysis, we accounted for OGOR’s exclusion of fugitive  emissions and the reporting of sources, like pneumatic valves, as lease-use  gas. Our analysis found that the volumes operators reported to OGOR–– about 12 Bcf––were much lower than the volumes operators reported to  GOADS—about 18 Bcf. Neither we nor MRM and BOEMRE officials could  account for or explain these differences in the two data systems. BOEMRE  officials said that they are still working to improve reporting to OGOR and  GOADS and expect these two data systems to converge in the future.
To improve reported data, BOEMRE recently released a final rule, in  response to the recommendations in our 2004 report, that requires  operators on larger offshore platforms to route vented and flared gas from  a variety of sources through a meter to allow for more accurate  measurement, among other things. BOEMRE officials said that these  meters would help to improve the accuracy of data reported to both  OGOR and GOADS. However, BOEMRE officials said they have had to  address questions from some operators who were not sure which sources  of vented gas should be routed through the newly required meters. In this  regard, these officials said it may be useful to enumerate the required  emission sources for reporting to OGOR in future guidance to offshore  operators. They also noted that BOEMRE is planning a workshop in  October 2011 to stress to operators the need for accurate reporting on  their submissions to both GOADS and OGOR systems. In a similar way,  EPA has taken action to improve the reporting of emissions from the oil  and natural gas industry. EPA recently proposed a greenhouse gas  reporting rule that would require oil and gas producers emitting over  25,000 metric tons of carbon dioxide equivalent to submit detailed data on  vented and flared gas volumes to allow EPA to better understand the  contribution of venting and flaring to national greenhouse gas emissions.  For onshore leases, the proposed EPA rule provides details on the specific  sources of vented and flared gas to be measured and proposes  standardized methods for estimating volumes of greenhouse gas emissions  where direct measurements are not possible. For offshore leases,  operators would use the GOADS system to report venting and flaring. Data  collection would begin in 2011 if the rule becomes finalized in 2010.
section_title: Available Technologies Could Reduce About 40 Percent of Natural Gas Estimated to Be Lost to Venting and Flaring on Onshore Federal Leases, Potentially Increasing Federal Royalty Payments and Reducing Greenhouse Gas Emissions
paragraphs: Data from EPA, supported by information obtained from technology  vendors and our analysis of WRAP data, suggest that about 40 percent of  natural gas estimated to be vented and flared on federal onshore leases  could be economically captured with currently available control  technologies, although some barriers to their increased use exist. Such  captures could increase federal royalty payments and reduce greenhouse  gas emissions.
subsections: section_title: Available Technologies Could Reduce Venting and Flaring on Onshore Federal Leases, but According to EPA Officials and Technology Vendors, Some Barriers Exist
paragraphs: Available technologies could reduce venting and flaring at many stages of  the production process. However, there are some barriers to implementing  these technologies.
subsections: section_title: Available Technologies Could Reduce Venting and Flaring on Onshore Federal Leases
paragraphs: EPA analysis and our analysis of WRAP data identified opportunities for  expanded use of technologies to reduce venting and flaring. Specifically:    EPA’s 2008 analysis, the most recent data available, indicates that the  increased use of available technologies, including technologies that  capture emissions from sources such as well completions, liquid  unloading, or venting from pneumatic devices, could have captured  about 40 percent––around 50 Bcf––of the natural gas EPA estimated was  lost from onshore federal leases nationwide. nd  significant opportunities to add “smart” automation to existing plunger  lifts, which tune plunger lifts to maximum efficiency and, in turn, minimize  the amount of gas lost to venting. EPA estimated that using this  technology where economically feasible could have resulted in the capture  of more than 7 Bcf of vented and flared natural gas on federal leases in  2008––around 6 percent of the total volume estimated by EPA to be vented  and flared on onshore federal leases. Similarly, EPA estimated that  additional wells on onshore federal leases could have incorporated  reduced emission completion technologies in 2008, which could have  captured an additional 14.7 Bcf of vented and flared natural gas. Table 4  outlines EPA’s estimates of potential reductions in venting and flaring on  onshore federal leases.
section_title: Reductions in Natural Gas Lost to Venting and Flaring Could Increase Federal Royalty Payments and Reduce Greenhouse Gas Emissions
paragraphs: Reductions in natural gas lost to venting and flaring from federal leases  would increase the volume of natural gas produced and sold, thereby  potentially increasing federal royalty payments. If, for instance, a total of  126 Bcf of natural gas was lost to venting and flaring on onshore federal  leases in 2008, as EPA has estimated, that loss would equal approximately  $58 million in federal royalty payments. If, as EPA estimates, 40 percent of  this lost gas could have been economically captured and sold, federal  royalty payments could increase by approximately $23 million annually,  which represents about 1.8 percent of annual federal royalty payments on  natural gas.
Reducing natural gas lost to venting and flaring from federal leases could  also reduce greenhouse gases to the atmosphere according to our  calculations. Because methane is about 25 times more potent as a  greenhouse gas over a 100-year period, and almost 72 times more potent  over a 20-year period according to the Intergovernmental Panel on Climate  Change, reducing direct venting of natural gas to the atmosphere has a  significantly greater positive effect, in terms of global warming potential,  than does reducing flaring. Again using EPA’s estimates, if a total of 98 Bcf  of natural gas was vented and 28 Bcf was flared annually, those releases  would account for about 41 million metric tons of carbon dioxide  equivalent released to the atmosphere, which would be roughly equivalent  to the emissions of almost 8 million passenger vehicles or about 10  average-sized coal-fired power plants. Capturing 40 percent of this volume  would result in emissions reductions of about 50 Bcf, which is equivalent  to the emissions of 3.1 million passenger vehicles or about 4 average-sized  coal-fired power plants, according to our analysis.
Some EPA officials also told us that they believed that federal efforts to  reduce venting and flaring could also have a spillover effect––that is, it  could lead operators to use these technologies on state and private leases  as well. Data from EPA and WRAP included vented and flared gas from  nonfederal leases, and the data showed that there were similar  percentages of gas being lost, suggesting that the potential greenhouse gas  reductions from the expanded use of these technologies could go well  beyond those from federal oil and gas production.
We did not find complete quantitative data on reduction opportunities  offshore from Interior, EPA, or others that could be used to fully identify  the potential to reduce emissions offshore. However, EPA officials told us  that opportunities for reducing emissions from venting and flaring from  offshore production platforms likely exist. For instance, EPA found that  various production components, including valves and compressor seals,  contribute significant volumes of fugitive emissions, but that these  emissions could be mitigated through equipment repair or retrofitting. One  estimate based on EPA analysis of 15 offshore platforms in 2008, suggests  that most of the gas lost through compressor seals could be recovered  economically—saving about 70 percent of the overall gas they estimated to  be lost on those platforms. However, EPA’s analysis warns that some  mitigation strategies may be less cost-effective in the offshore  environment because capital costs and installation costs tend to be higher.
section_title: Interior’s Oversight Does Not Ensure That Operators Minimize Venting and Flaring on Federal Leases, While a Voluntary EPA Program Has Reduced Vented Gas According to EPA and Industry Participants
paragraphs: Interior is responsible for ensuring that operators minimize natural gas  venting and flaring on federal onshore and offshore leases; however, while  both BLM and BOEMRE have taken steps to minimize venting and flaring  on federal leases, their oversight of such leases has several limitations.  Although EPA does not have a direct regulatory role with respect to  managing federal oil and gas leases, its Natural Gas STAR program has  helped to reduce vented gas on federal leases according to EPA and  industry participants.
subsections: section_title: BLM and BOEMRE Have Taken Steps to Minimize Venting and Flaring on Federal Leases, but Their Oversight Has Several Limitations
paragraphs: As part of their oversight responsibilities, Interior’s BLM and BOEMRE are  charged with minimizing the waste of federal resources, and, to that end,  both agencies have issued regulations and guidance that limit venting and  flaring of gas during routine procedures such as liquid unloading and well  completions. However, their oversight has several limitations, namely (1)  the regulations and guidance do not address new capture technologies or  all sources of lost gas; (2) the agencies do not assess options for reducing  venting and flaring in advance of oil and gas production for purposes other  than addressing air quality; and (3) the agencies have not developed or do  not use information regarding available technologies that could reduce  venting and flaring.
subsections: section_title: Regulations and Guidance Limit Venting and Flaring, but Do Not Address Newer Technologies or All Sources of Lost Gas
paragraphs: Onshore leases. BLM’s guidance limits venting and flaring from routine  procedures and requires operators to request permission to vent and flare  gas above these limits. If operators request permission to exceed these  limits, BLM is to assess the economic and technical viability of capturing  additional gas and require its capture when warranted. Although BLM  guidance sets limits on venting and flaring of natural gas and allows  flexibility to exceed them in certain cases, it does not address newer  technologies or all sources of lost gas. Specifically, BLM guidance is 30  years old and therefore does not address venting and flaring reduction  technologies that have advanced since it was issued. For example, since  the guidance was written, technologies have been developed to  economically reduce emissions from well completions and liquid  unloading—namely the use of reduced emission completion and  automated plunger lift technologies respectively. These two sources of  emissions were important contributors to vented and flared volumes that  we discussed earlier. Despite this fact, the use of such technologies where  it is economic to do so is not covered in BLM’s current guidance. In  general, BLM officials said that they thought the industry would use  venting and flaring reduction technologies if they made economic sense.  Similarly, new lower-emission devices could also reduce venting and  flaring from other sources of emissions that are not covered by BLM’s  guidance, such as pneumatic valves or gas dehydrators––two sources that  contribute to significant lost gas. In discussions with BLM staff about their  guidance, staff acknowledged that existing guidance was outdated given  current technologies and said that they were planning to update it by the  second quarter of 2012.
Offshore leases. Like BLM, BOEMRE has regulations that limit the  allowable volumes of vented and flared gas from offshore leases to  minimize losses of gas from routine operations. Operators can also apply  for permission to exceed these limits and, like BLM, BOEMRE would  evaluate the economic and technical viability of capturing additional gas.  Further, BOEMRE inspects offshore platform facilities each year and, as  part of these inspections, reviews on-site daily natural gas venting  records. BOEMRE officials told us that the agency requires operators to  keep these venting records and that it uses them to, among other things,  identify any economically viable opportunities for an operator to install  control equipment. Overall BOEMRE officials said that operators were  required to install venting and flaring reduction equipment where  economic, even if they would make as little as $1 in net profit from the  captured gas. According to agency officials, due to the type of production  and operations offshore, reduction opportunities mostly consist of  installing vapor recovery units, and these officials said that they generally  believe that companies have installed such equipment where it is  economic to do so. Although BOEMRE conducts regular inspections, the  daily venting records do not include all sources of vented gas. For  example, emission estimates from sources of gas such as pneumatic valves  and glycol dehydrators are not included, and therefore inspectors are not  able to make assessments of the potential to reduce emissions from these  sources. Both of these sources were contributors to lost gas offshore from  the 2008 GOADS study, suggesting potential reduction opportunities.  BOEMRE officials said that the agency considers these sources lease-use  gas, and as a result, believed that they could not legally consider the  economic and technical viability of this gas and require its capture when  warranted. However, based on our review of BOEMRE regulations and  authorizing legislation, it appears that BOEMRE has the authority to  require operators to minimize the loss of this gas, including requiring its  capture where appropriate. BOEMRE officials agreed with our  assessment.
section_title: The Agencies Do Not Assess Options for Reducing Venting and Flaring in Advance of Oil And Gas Production
paragraphs: Onshore leases. While BLM regulations authorize and direct BLM officials  to offer technical advice and issue orders for specific lease operations to  minimize waste, BLM does not explicitly assess options to minimize  waste from vented and flared gas before production. For example, we  identified two phases in advance of production where BLM could assess  venting and flaring reduction options—during the environmental review  phase and when the operator applies to drill a new well. However, the  agency does not explicitly assess these options, or discuss them with  operators, during either phase. For example, during the environmental  review phase, BLM works with states to assess emissions from oil and gas  production, and that air quality assessment may include venting and  flaring reduction requirements. According to BLM officials, since states  generally have primary responsibility to implement and enforce air quality  standards, the standards drive these requirements, and states focus only  on the role venting and flaring plays in air pollution, rather than the  minimization of waste. Therefore in production basins where air quality  standards are being met, or where only minimal use of technology is  required to meet them, BLM would not assess venting and flaring  reduction technologies to the full extent that they could economically  reduce vented and flared gas. One official noted that some BLM officials  felt constrained in their ability to consider the use of venting and flaring  reduction technologies because of this. Similarly, during the phase when  operators apply to drill new wells, BLM assesses detailed technical and  environmental aspects of the project, but BLM officials told us their  assessment does not include a review of options to reduce venting and  flaring.
Offshore leases. Similar to BLM, BOEMRE assesses venting and flaring  reduction options in advance of production to determine whether vented  and flared gas from offshore platforms would harm coastal air quality, but  again, the focus is on meeting air quality standards rather than assessing  whether gas can be economically captured. Therefore, when BOEMRE  does not anticipate harm to coastal air quality, as is often the case  according to officials, the agency does not further consider venting and  flaring reduction options at this phase. Further, while the application  operators submit in advance of drilling must include a description of the  technologies and recovery practices that the operator will use during  production, venting and flaring reduction options are not included in that  submission.
section_title: Agencies Have Not Developed or Do Not Use Information Regarding Available Technologies That Could Reduce Venting and Flaring
paragraphs: Onshore leases. We found that BLM does not maintain a database  regarding the extent to which available venting and flaring reduction  technologies are used on federal oil and gas leases. As such, it could be  difficult for BLM to identify opportunities to reduce venting and flaring or  estimate the potential to increase the capture of gas that is currently  vented or flared. For example, while BLM guidance provides that the  natural gas vaporizing from storage tanks must be captured if BLM  determines recovery is warranted, BLM does not collect data on the use of  control technologies and available OGOR data do not contain the volumes  of lost gas from storage tanks. Thus BLM may be overlooking  circumstances where recovery could be warranted. In addition, according  to BLM officials we spoke with, although infrared cameras can be used to  identify sources of lost gas, BLM has not used them during inspections of  production facilities. Although relatively expensive, infrared cameras  allow users to rapidly scan and detect vented gas or leaks across wide  production areas. BLM officials cited budgetary constraints and challenges  in developing a policy and protocols for why the cameras have not been  used regularly by the agency.
Offshore leases. Although the GOADS data system contains some  information on the types of equipment operators use, BOEMRE has not  analyzed this information to identify emission-reduction opportunities  according to officials. GOADS contains information about the use of  equipment such as vapor recovery systems. These data have not been used  by BOEMRE to identify venting and flaring reduction opportunities  because the agency has not considered using these data for purposes other  than addressing air quality, according to a BOEMRE official. Nonetheless,  based on our review of the GOADS data system, by not analyzing such  data, BOEMRE is not able to identify emission-reduction opportunities. As  a case in point, we found that emissions from pneumatic valves in the 2008  GOADS study made noticeable contributions to overall lost gas, which  might suggest the potential to expand the use of low-bleed pneumatics in  some cases. BOEMRE officials also noted that, unlike BLM, its inspectors  had used infrared cameras to look for obvious sources of vented and  flared gas in a few sample locations close to shore. In this regard, they said  expanded use of infrared cameras could be useful to help enforce their  new rule that requires the use of meters for vented and flared gas.  Specifically, they said that the cameras could identify sources of gas that  operators may have not routed through the meter as required. They also  noted that expanded use of the cameras could help to identify and  potentially reduce fugitive gas emissions that currently go undetected.
section_title: EPA’s Voluntary Natural Gas STAR Program Has Helped Reduce Vented Gas, According to EPA and Industry Participants
paragraphs: Although Interior has the primary role in federal oil and gas leasing, EPA’s  Natural Gas STAR program has encouraged some operators to adopt  technologies and practices that have helped to reduce methane emissions  from the venting of natural gas, according to EPA and industry  participants. Through this program, industry partners evaluate their  emissions and consider ways to reduce them, although the reductions are  voluntary. The program also maintains an online library of technologies  and practices to reduce emissions that quantify the costs and benefits of  each emission-reduction option. Natural Gas STAR also sponsors  conferences to facilitate information exchange between operators  regarding emissions reductions technologies. Partner companies report  annually about their efforts to reduce emissions along with the volumes of  the emission reductions.
According to the Natural Gas STAR Web site, domestic oil and gas  industry partners reported more than 114 Bcf of methane emission  reductions in 2008, which amounts to about 0.4 percent of the total natural  gas produced that year. However, one industry representative said that,  while large and midsize operators were aware of the Natural Gas STAR  program, smaller operators were not aware and, even if some smaller  operators were aware of the program, they may not have the  environmental staff to implement the technologies and practices. Despite  the potential usefulness of information from the Natural Gas STAR  program to oil and gas producers on federal leases, some of the BLM  officials that we spoke with were unfamiliar with Natural Gas STAR.
section_title: Conclusions
paragraphs: Fulfilling its responsibility to ensure that the country’s oil and natural gas  assets are developed reasonably and result in fair compensation for the  American people requires Interior to have accurate and complete  information on all aspects of oil and natural gas leases. Interior has  collected some information on vented and flared gas through MRM’s  OGOR system, but without a full understanding of these losses Interior  cannot fully account for the disposition of taxpayer resources or identify  opportunities to prevent undue waste. MRM’s OGOR data system does not  provide information on all sources of lost gas, which is the primary source  of data that BLM uses to measure overall vented and flared gas onshore.  Therefore, OGOR data present an incomplete picture of venting and flaring  onshore, leading BLM officials to believe that vented and flared gas  volumes do not represent a significant loss of gas on federal leases.  Similarly, data in BOEMRE’s GOADS data system differ considerably from  data in OGOR, and have not been reconciled—raising questions about the  accuracy of offshore data sources.
Regarding Interior’s oversight of operators venting and flaring gas,  because current guidance and regulations from BLM and BOEMRE do not  require the minimization of all sources of vented and flared gas––although  legislation exists authorizing them to require that waste on federal leases  be minimized––operators may be venting and flaring more gas than should  otherwise be allowed. In fact, we found that operators are not using  available technologies in all cases to economically reduce vented and  flared gas. BLM guidance has not kept pace with the development of  economically viable capture technologies for a number of sources of lost  gas, and BOEMRE has been reluctant to consider the economic and  technical viability of minimizing the waste of “lease-use” gas because  officials had believed they were legally constrained from doing so.
In addition to the limitations of these regulations, BLM and BOEMRE have  not used their authority in two situations where they could potentially  further reduce venting and flaring. First, neither agency has used its  authority to minimize waste beyond relevant air quality standards by  assessing the use of venting and flaring reduction technologies before  production. Second, because BLM lacks data about the use of venting and  flaring technologies for onshore leases and BOEMRE does not analyze its  existing information for offshore leases in its GOADS data system, these  agencies are not fully aware of potential opportunities to use available  technologies. Further, neither agency takes full advantage of newer  infrared camera technology that can help to identify sources of lost gas— as BOEMRE officials have acknowledged, this technology could help  reveal additional sources of lost gas.
Ultimately, a sharper focus by BOEMRE and BLM on the nature and extent  of venting and flaring on federal leases could have multiple benefits.  Specifically, increased implementation of available venting and flaring  reduction technologies, to the extent possible, could increase sales  volumes and revenues for operators, increase royalty payments to the  federal government, and decrease emissions of greenhouse gases. In  addition, our analysis of WRAP and EPA data showed as much or more  vented and flared gas on nonfederal leases, and we share the observation  with EPA officials that a spillover effect may occur, whereby oil and gas  producers, seeing successes on their federal leases, take similar steps on  state and private leases.
section_title: Recommendations for Executive Action
paragraphs: To ensure that Interior has a complete picture of venting and flaring on  federal leases and takes steps to reduce this lost gas where economic to  do so, we are making five recommendations to the Secretary of the  Interior.
To ensure that Interior’s data are complete and accurate, we recommend  that the Secretary of the Interior direct BLM and BOEMRE to take the  following action:    Take additional steps to ensure that each agency has a complete and  accurate picture of vented and flared gas, for both onshore and offshore  leases, by (1) BLM developing more complete data on lost gas by taking  into consideration additional large onshore sources and ways to estimate  them not currently addressed in regulations—sources that EPA’s newly  proposed greenhouse gas reporting rule addresses—and (2) BOEMRE  reconciling differences in reported offshore venting and flaring volumes in  OGOR and GOADS data systems and making adjustments to ensure the  accuracy of these systems.
To help reduce venting and flaring of gas by addressing limitations in their  regulations, we recommend that the Secretary of the Interior direct BLM  and BOEMRE to take the following four actions:    BLM should revise its guidance to operators to make it clear that  technologies should be used where they can economically capture sources  of vented and flared gas, including gas from liquid unloading, well  completions, pneumatic valves, and glycol dehydrators. BOEMRE should  consider extending its requirement that gas be captured where economical  to “lease-use” sources of gas;    BLM and BOEMRE should assess the potential use of venting and flaring  reduction technologies to minimize the waste of natural gas in advance of  production where applicable, and not solely for purposes of air quality;    BLM and BOEMRE should consider the expanded use of infrared cameras,  where economical, to improve reporting of emission sources and to  identify opportunities to minimize lost gas; and    BLM should collect information on the extent that larger operators use  venting and flaring reduction technology and periodically review this  information to identify potential opportunities for oil and gas operators to  reduce their emissions, and BOEMRE should use existing information in  its GOADS data system for this same purpose, to the extent possible.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a copy of our draft report to Interior and EPA for review and  comment. Interior provided written comments that concurred with four of  the five recommendations and partly concurred with the remaining  recommendation. Its comments are reproduced in appendix II and key  areas are discussed below. EPA did not provide formal comments on the  report, but the agency’s Office of Air and Radiation provided written  comments to GAO staff, which we summarize and discuss below. Interior  and EPA also provided other clarifying or technical comments, which we  incorporated as appropriate.
Interior’s comments reflected the views of BLM and BOEMRE. BLM  concurred with all five recommendations and noted that it plans to  incorporate recommended actions into its new Onshore Order in order to  improve the completeness and accuracy of its data and help address  limitations in its current regulations.
BOEMRE concurred with four of the recommendations and partly  concurred with our second recommendation that they consider enforcing  the economical capture of “lease-use” gas. It stated that we  misapprehended the scope of the regulations governing “lease-use”  sources of gas in that BOEMRE does not have current regulations to  require the capture of “lease-use” gas. In response to this comment, we  reworded our recommendation to clarify that BOEMRE should consider  extending its existing requirements for the economical capture of gas to  “lease-use” gas. In a related point, BOEMRE also noted that we were  unable to quantify the potential volumes of additional gas that could be  captured by holding operators to this same economic standard for “lease- use” gas. While current data have limitations, BOEMRE’s GOADS data  suggest potential opportunities to capture additional gas from lease-use  sources, namely glycol dehydrators and pneumatic devices. As such, we  support BOEMRE’s efforts to further evaluate this issue and take action  through new guidance or regulations, as it believes appropriate.
EPA’s Office of Air and Radiation commented on three areas of the report:    First, EPA emphasized the significant air quality impacts from the volatile  organic compounds (VOC) associated with vented gas and provided us  with estimates of the potential volumes of these emissions. While we  recognize that the impacts of VOC emissions on air quality are important,  these impacts were largely beyond the scope of our work. Nonetheless, we  incorporated an estimate of these VOC emissions into supporting notes to  table 1 that reflected EPA’s estimates of vented and flared gas. We also  added additional information to the background regarding VOC emissions.
Second, EPA suggested that we recommend to BLM and BOEMRE that  they require the use of the best available venting and flaring control  measures during leasing or drilling permitting. We continue to believe that  BLM and BOEMRE should require the use of these technologies where  economical, and recognize that requiring the use of such controls when  the economics of capturing gas are unfavorable is not required by current  EPA greenhouse gas regulations.
Third, EPA provided us with its revised emission estimates for vented and  flared gas based on updated analysis for its proposed rule on the reporting  of greenhouse gases by industry. It also provided us with revised estimates  for the use of additional control technologies to reduce the emissions of  vented and flared gas. In both cases, we incorporated these revised  estimates in our report where applicable.
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 of this report to the  appropriate congressional committees, Secretary of the Interior,  Administrator of the Environmental Protection Agency, and other  interested parties. In addition, the report will be available at no charge on  the GAO Web site at http://www.gao.gov.
If you or your staffs 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.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) examine available estimates of vented and  flared natural gas on federal leases; (2) estimate the potential to capture  additional vented and flared natural gas with available technologies and  the associated potential increases in royalty payments and reductions in  greenhouse gas emissions and; (3) assess the federal role in reducing  venting and flaring of natural gas.
To examine available estimates of vented and flared natural gas on federal  leases, we collected data from the Department of the Interior’s (Interior)  Bureau of Land Management (BLM), Bureau of Ocean Energy  Management, Regulation and Enforcement (BOEMRE), including  BOEMRE’s Minerals Revenue Management (MRM) program; the  Environmental Protection Agency (EPA); and the Western Regional Air  Partnership (WRAP). We also interviewed staff from these agencies and oil  and gas producers operating on federal leases regarding venting and  flaring data collection, analysis, and reporting. We obtained data from four  key sources: MRM’s Oil and Gas Operations Report (OGOR) database,  BOEMRE’s Gulfwide Offshore Activity Data System (GOADS), EPA’s  Natural Gas STAR Program, and WRAP’s analysis of air emissions for a  number of western states. We assessed the quality of the data from each of  these sources and determined that these data were sufficiently reliable for  the purposes of our report.
MRM provided OGOR data on vented and flared volumes and production  for both onshore and offshore federal leases for calendar years 2006 to  2008. MRM uses the OGOR data, in part, to ensure accurate federal royalty  payments. The OGOR data are operator-reported, and reported venting  and flaring volumes are a mix of empirical measurements and estimates  from operators. MRM was unable to provide complete estimates of vented  and flared gas on all federal leases because a portion of federal leases are  managed as part of lease agreements—collections of leases that draw from  the same oil or gas reservoir, which may include federal and nonfederal  leases. MRM was unable to determine the share of reported vented and  flared gas from the federal portion of those lease agreements; it reported  venting and flaring from (1) lease agreements that included only federal  leases and (2) all lease agreements, which included some nonfederal  leases. In this report, we discuss the vented and flared volumes from the  agreements that contain only federal leases. As a result, we report vented  and flared gas volumes from the OGOR data as a percentage of total  production on these leases, rather than as absolute volumes, in order to  compare the OGOR estimates to estimates from other data sources.
A second source of venting and flaring data was BOEMRE’s 2008 GOADS  data, which contained estimates of gas lost to venting and flaring on  federal leases in the Gulf of Mexico—which accounted for 98 percent of  federal offshore gas production in 2008. BOEMRE collects GOADS data  every 3 years and uses these data to estimate the impacts of offshore oil  and gas exploration, development, and production on onshore air quality  in the Gulf of Mexico region. BOEMRE also uses GOADS as part of an  impact analysis required by the National Environmental Policy Act.  GOADS data capture specific information on a variety of sources of air  pollutants and greenhouse gases resulting from offshore oil production.  BOEMRE provided us with actual volumes of natural gas released from  the vented and flared source categories. For the other sources, we used  the emissions that were reported in GOADS in tons of methane per year,  and we converted these to volumes of methane and then to natural gas,  assuming a 78.8 percent methane content for natural gas. In the GOADS  study, fugitive emissions are estimated by looking at the number of valves  and other components on a given production platform and then assuming  an average leak rate. BOEMRE’s data contractor performs a series of  quality checks on the data after collection.
A third source of data on vented and flared volumes was a nationwide  analysis performed by officials from EPA’s Natural Gas STAR program, a  national, voluntary program that encourages oil and gas companies,  through outreach and education, to adopt cost-effective technologies and  practices that improve operational efficiencies and reduce methane  emissions. EPA’s nationwide venting and flaring volumes were based on  publicly available empirical data on national oil and gas production for  2006, 2007, and 2008, combined with knowledge of current industry  practices, including usage rates and effectiveness of venting and flaring  reduction technologies. For example, EPA used data on the number of  well completions per year and data on the average venting per completion  to estimate a yearly nationwide total from that source, with similar  approaches used for estimating total venting and flaring from other key  sources. EPA adjusted its estimates to account for the industry’s efforts  to control some venting and flaring emissions. EPA’s analysis was limited  in some ways, however. For instance, lacking empirical data on actua l  nationwide rates of use of certain control technologies, EPA based its  analysis on anecdotal information in some cases. In order to be able to  compare these data with the OGOR data, we scaled EPA’s national  estimates to federal leases based on the proportion of natural gas  production on federal leases over total U.S. natural gas production using  data from MRM and the Department of Energy’s Energy Information  Administration (EIA). flaring based on BOEMRE’s 2005 GOADS data. EPA officials adjusted  volumes reported to GOADS based on publicly available information on  current industry practices, including usage rates and effectiveness of  venting and flaring reduction technologies.
EPA’s initial estimates of venting and flaring were for the methane component of natural  gas. These volumes were converted to reflect overall natural gas emissions by assuming,  for most sources, an average 78.8 percent methane content for the gas. empirical data from operators in these basins, including drilling and  production volume data, as well as data from a survey of operators. This  survey asked operators to report actual vented and flared volumes, as well  as to provide information on other aspects of their operations, including  the emission control technologies they had in place. Similar to the EPA  venting and flaring analysis, however, Environ did not have complete data  from all operators in each basin and thus estimated some information  based on survey data from a subset of operators. In addition, the original  WRAP data did not distinguish between federal and nonfederal oil and gas  operations, so we provided federal well numbers to Environ so that they  well numbers to Environ so that they  could identify the federal lease component of vented and flared gas.  could identify the federal lease component of vented and flared gas.
To estimate the magnitude of potential increases in royalty payments and  reductions in greenhouse gas emissions resulting from capturing  additional vented and flared gas with available technologies, we had EPA  provide us with estimates of the onshore expansion potential of a number  of key technologies and associated venting and flaring volume reductions.  For simplicity, EPA developed these estimates by focusing on the  expansion potential of a subset of technologies considered to provide the  largest emission reductions. These estimates may be conservative,  however, because they did not incorporate reductions from a number of  other potential venting and flaring opportunities catalogued by the Natural  Gas STAR program. These estimates were not based entirely on  comprehensive usage data collected from the oil and gas industry, but  were based, in part, on publicly available evidence collected through years  of experience with the oil and gas industry. In addition, circumstances are  constantly changing, and more technological innovations are potentially  being used as time goes on, so there is some uncertainty in how much lost  gas can be captured. We also compared venting and flaring volumes and  the types of emission-reduction technologies used in each of the basins  from the WRAP data, allowing us to draw conclusions about the impact of  different levels of technology on venting and flaring volumes. We did not  identify similar data on reduction opportunities offshore. We also  interviewed officials from BLM, BOEMRE, EPA, and state agencies, as  well as representatives from private industry, including technology  vendors and an environmental consultant regarding the expanded use of  available technologies to capture additional vented and flared gas. We  conducted background research on venting and flaring reduction  technologies, including from publicly available EPA Natural Gas STAR  case studies. Finally, we obtained royalty information from MRM to  calculate the royalty implications of the onshore venting and flaring  reductions, and used conversion factors from EPA to calculate the  greenhouse gas impacts of the vented and flared natural gas.
To assess the federal role in reducing vented and flared gas, we conducted  interviews with officials from Interior, EPA, the Department of Energy,  state agencies, and members of the oil and gas industry. We also reviewed  agency guidance and documentation, other studies related to federal  management and oversight of the oil and gas industry, as well as prior  GAO work that described limitations in the systems Interior has in place to  track oil and gas production on federal leases. We conducted interviews  with officials in six BLM field offices (Farmington and Carlsbad in New  Mexico; Vernal, Utah; Glenwood Springs, Colorado; Pinedale, Wyoming;  and Bakersfield, California) and staff from BLM headquarters. We also  interviewed BOEMRE staff in Denver, Colorado, and New Orleans,  Louisiana.
We conducted this performance audit from July 2009 to October 2010 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.
section_title: Appendix II: Comments from the Department of the Interior
section_title: Appendix III: Volumes and Sources of Vented and Flared Gas Based on Analysis of 2006 WRAP Data
paragraphs: Volume (Bcf)
Volume (Bcf)
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individuals named above, Daniel Haas (Assistant  Director), Michael Kendix, Michael Krafve, Robert Marek, Alison O’Neill,  David Reed, Rebecca Sandulli, and Barbara Timmerman made important  contributions to this report.