BLM Update of Gas/Oil Measurement
Richard Estabrook, BLM – California State Office (Ukiah)
Petroleum Accountants Society of OklahomaSeptember 9, 2011
Outline• Royalty Determination• Volume Measurement• Heating Value Measurement/Reporting
• Science• Regulations and policy
• Onshore Order Update• Other Pre-Questions (Off-lease msmt)• Questions
Offshore OilOffshore Gas
Onshore Gas
Onshore Oil
Coal
Mining Fees
Other Minerals
TimberGrazing
R-O-W
$billions
Public Land Revenues, FY2010
0 1 2 3
Land Transactions
Royalty Determination
Gas
Royalty = Royalty Ratex Volume (Mcf)x Heating Value (MMBtu/Mcf)x Value* ($/MMBtu)
Lease terms
ONRR
*value less transportation and processing allowances
Royalty Determination
Gas
Royalty = Royalty Ratex Volume (Mcf)x Heating Value (MMBtu/Mcf)x Value* ($/MMBtu)
Lease termsBLM - Onshore Order 5
*value less transportation and processing allowances
ONRR
Royalty Determination
Gas
Royalty = Royalty Ratex Volume (Mcf)x Heating Value (MMBtu/Mcf)x Value* ($/MMBtu)
Lease termsBLM - Onshore Order 5
*value less transportation and processing allowances
ONRR
13,251 Mcf1024 Btu
Well#2-2
NMNM03551
For the month of June, 2009
POMEquipment
129 Mcf(est.)
OIL AND GAS OPERATIONS REPORT PART B – PRODUCTION DISPOSITION
(OGOR-B) OGOR Document Number: 100914190 BLM Case Number: NMNM03551
REPORT TYPE X ORIGINAL MODIFY (DELETE/ADD BY LINE) REPLACE (OVERLAY PREVIOUS REPORT)
MMS LEASE/AGREEMENT NUMBER
AGENCY LEASE/AGREEMENT NUMBER NMNM03551
PRODUCTION MONTH (YYYY-MM) 2009-06
MMS OPERATOR NUMBER 19900
OPERATOR NAME ABC ENERGY
OPERATOR LEASE/AGREEMENT NAME
OPERATOR LEASE/AGREEMENT NUMBER
L I N E
A C T
DISP
CODE
METERING
POINT
GAS PLANT
API GRAV 99.9
BTU 9999
DISPOSITION VOLUMES OIL/CONDENSATE
(BBL) GAS
(MCF) WA (B
1 A 01 0.0 1024 0 13251 0 2 A 20 0.0 0 0 129 0 3 A 0 0 0
TOTAL DISPOSITIONS 0 13380 0 Disposition Codes:
01 Sales-Subject to Royalty (MEASURED) 11 Transferred 20 Used on Lease/Agreement 27 Water Disposal-Other than Transferred/Injection
Volume
Onshore Order 5
Orifice Plate
Chart Recorder
123.9 McfdOnshore Order 5
Orifice Plate
Electronic Flow Computer
Statewide Notices to Lessees (NTLs)
123.9 Mcfd
Heating Value
123.9 Mcfd
Heating Value
Component
MethaneEthanePropanei-Butanen-Butanei-Pentanen-PentaneHexane+CO2N2
Mole %
84.56415.68123.02580.98421.25990.88430.25120.21372.76140.4102
Gas Analysis Report
Location: Tribal 6-22Sample Date: 2011-07-06Sample Type: SpotTechnician: EJ
Heating Value (Dry): 1034.87 Btu/scfHeating Value (Wet): 1016.86 Btu/scfRelative Density: 0.6965
What is a BTU?
BTU = “British Thermal Unit”The amount of heat needed to raise the
temperature of 1 lb of water by 1⁰F
Where does the heat come from?
C
Methane
HH
H
H
Hydrocarbon ComponentsMethane
C
Ethane
C CC C CC CC
Propane
C CC CC CC
n-Butane
C CC CC CCC
n-Pentane
C C C
Propane
Where does the heat come from?
Non-Hydrocarbon Components
• Carbon dioxide (CO2)• Nitrogen (N2)• Water vapor (H20)
1000 Btu1 scf
900 Btu
Non Hydro-carbonsHydrocarbons
Component
MethaneEthanePropanei-Butanen-Butanei-Pentanen-PentaneHexane+CO2N2
Mole %
84.56415.68123.02580.98421.25990.88430.25120.21372.76140.4102
Gas Analysis Report
Location: Tribal 6-22Sample Date: 2011-07-06Sample Type: SpotTechnician: EJ
Heating Value (Dry): 1034.87 Btu/scfHeating Value (Wet): 1016.86 Btu/scfRelative Density: 0.6965
Non-Hydrocarbon Components
• Carbon dioxide (CO2)• Nitrogen (N2)• Water vapor (H20)
Non-Hydrocarbon Components
• Carbon dioxide (CO2)• Nitrogen (N2)• Water vapor (H20) Difficult to measure
Must ASSUME water vapor content
0 ≤ Water Vapor ≤ Saturation
Water Vapor Saturation-is-
the maximum amount of water vapor a gas can hold at a given
pressure and temperature
PTP
F vapwv
)(=
Example:T = 60⁰FP = 14.73 psiaPvap(60 ⁰F) = 0.2536 psia
%74.173.14
2563.0==wvF
0
0.5
1
1.5
2
2.5
Pressure, psia
Wat
er v
apor
con
tent
, mol
e%
0 100 200 300 400 500
Saturation
Water vapor saturation at 60⁰F
14.73
1.74
0
0.5
1
1.5
2
2.5
Pressure, psia
Wat
er v
apor
con
tent
, mol
e%
0 100 200 300 400 500
Water vapor saturation at 60⁰F
0.26
As-delivered
997.4
Wet or Saturated
1.74 982.6
Dry 1000
Btu/
scf
What BLM regulation dictates how to report Btus?
None
Onshore Order 5 III.C.24 – “BTU content shall be determined at least annually…”
ONRR Regulations
30 CFR 1202.152(a)(1)(i) – “Report gas volumes and British thermal unit (Btu) heating values, if applicable, under the same degree of water saturation;”
123.9 Mcfd
Dry
Measured Components
123.9 Mcfd
As-delivered
Measured ComponentsAssumed water vapor
123.9 Mcfd
Wet or saturated
Measured ComponentsAssumed water vapor
ONRR Regulations
30 CFR 1202.152(a)(1)(i) – “Report gas volumes and British thermal unit (Btu) heating values, if applicable, under the same degree of water saturation;”
Onshore Order 5 III.C.21 – “Volumes of gas delivered shall be determined according to the flow equations specified in AGA Committee Report No. 3 [1985]”
AGA Report No. 3 Flow Equation
( ) fwrbf
b
f
bdv ph
GpTT
ZZCYdQ 11
1511.218
4
2
β−=
Relative Density (Specific Gravity)
• No provision in AGA Report No. 3 (1985) that allows Gr to be determined from assumed gas components• Gr is determined from measured gas components• If water vapor is not measured, it is assumed to be zero, which is “dry”
ONRR Regulations
30 CFR 1202.152(a)(1)(i) – “Report gas volumes and British thermal unit (Btu) heating values, if applicable, under the same degree of water saturation;”
How does BLM enforce Btu reporting?
Instruction Memorandum (IM) 2009-186:• BLM compares OGOR Btu with dry Btu on gas analysis as part of all production audits• If dry Btu is not used, turn it over to ONRR
Pre-question
Assuming saturated Btu is okay, should (or could) the Mcf be reported on a saturated basis also?
• Reporting saturated Btu is not ok• No volume adjustments are allowed per OO5 III.C.21
Onshore Order Revisions
Revisions proposed for:
• Onshore Order 3 – Site Security• Onshore Order 4 – Oil Measurement• Onshore Order 5 – Gas Measurement
Timeline (Orders 3, 4, and 5)
• Complete Internal Drafts: Sept. 2011• “Surnaming”: Oct. 2011• OMB review: Nov. 2011 – Jan. 2012• Publish Draft Orders: Feb. 2012• Public comment: Feb. 2012 – Mar. 2012• Revise Orders: Apr. 2012 – May 2012• “Surnaming”: June 2012• OMB review: Jul. 2012 – Sept. 2012• Publish as final: Oct. 2012
Pre-question
Concerned about FMP proposal
• Can’t comment on specifics of proposal
Pre-questionWhat is the procedure for requesting off-lease measurement? What if the purpose for the request is to claim Beneficial Use for Stage One Compression downstream of the current FMP?
• Regulations: Must request and justify• Gail and Virginia gave good guidance for request• Must consider public interest; operator’s economics are NOT justification unless it is related to ultimate recovery
Pre-questionDoes BLM expect companies to notify them when they use gas for drilling operations – assume that the well being drilled is located on the same lease or agreement or Participating Area?
• NTL-4A implies that this does not need approval• Would behoove operator to notify BLM
Pre-questionIn many cases Stage One Compressors are located on the same Unit PA or lease as the producing wells. How should companies report Beneficial Use where the FMP for wells are upstream the compressor?
Well#2-2
NMNM03551
POM Stage 1 compressor
Pre-questionIn many cases Stage One Compressors are located on the same Unit PA or lease as the producing wells. How should companies report Beneficial Use where the FMP for wells are upstream the compressor?
• This is allowed per MLA/Wexpro IBLA case• BLM should require lease use to be measured to
Onshore Order 5 standards
Well#2-2
NMNM03551
POM Stage 1 compressor
Well#2-2
NMNM03551
POM Stage 1 compressor
Pre-questionPlease explain how to allocate Beneficial Use gas used at a gas plant located downstream from the lease or Unit PA? Would BLM accept a plant-average percentage or should the fuel volume include a factor for Btu value and CO2 (and other impurities)?
• This is not beneficial use• Get clarification from ONRR