On April 10, 2024, the Bureau of Land Management (BLM) issued the final Waste Prevention, Production Subject to Royalties, and Resource Conservation Rule, bringing significant changes to venting and flaring regulations on federal and Indian leases. Also known as the Methane and Waste Prevention Rule, the rule mandates new gas takeaway plans before permit approvals and introduces leak detection and repair (LDAR) requirements. Replacing the 1979 Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases: Royalty or Compensations for Oil and Gas Lost (NTL-4A), the rule aims to prevent waste, ensure royalty payments, and conserve resources. BLM emphasized that the “Waste Prevention Rule serves a different statutory purpose (conservation of resources) than EPA’s rule (protection of human health and welfare vis-a-vis air quality).” The rule becomes effective on June 10, 2024.

Who Does the BLM Methane and Waste Prevention Rule Apply to?

The final rule applies to onshore federal and Indian oil and gas leases with certain exclusions. It also affects Indian Mineral Development Act Agreements and leases related to tribal energy resource development under a tribal energy resource agreement, unless expressly omitted. Moreover, it covers wells, equipment, and operations on state or private tracts within a participating area of a federally approved unit agreement or communitized area.

How Does the BLM Methane and Waste Prevention Rule Impact Oil & Gas Lease Holders?

Operators will need to adjust their operations to comply with the rule, including paying royalties on more vented or flared gas, installing meters and equipment, conducting regular emissions inspections and repairs, submitting plans and records, and minimizing waste from all sources. Let's take a closer look at some of the details.

Royalties on Vented or Flared Gas

The final rule tightens the definition of "avoidably lost" gas. Previously, a larger portion of vented or flared gas might have been classified as "unavoidably lost" and exempt from royalties. The new rule tightens this definition, meaning a greater share of vented or flared gas will be considered "avoidably lost" and subject to royalties. The rule also mandates the installation of meters on flares and compliance with gas sampling programs to monitor progress and optimize practices. Emergency venting remains an option for critical situations, within a 48-hour window, before it is considered “avoidably loss.” Finally, the ability to request royalty-free flaring based on individual economic circumstances has been eliminated.

Venting Restrictions

In most cases, the final rule specifies that operators must flare (burn) instead of vent (release directly into the atmosphere) any gas they cannot capture. Recognizing there may be situations where venting is unavoidable, the rule does allow exceptions for:

• Technically infeasible venting (small volumes when approved)

• Emergencies where venting is necessary for safety reasons

• Normal operation of certain equipment (gas-activated pneumatic controllers)

Flare Measurement and Compliance

Operators must measure the volume of gas flared if the amount exceeds 1,050 thousand cubic feet per month (Mcf/month). This data collection helps track gas capture rates and identify areas for improvement. The BLM offers two approved methods for measuring flared gas from high-pressure wells:

• Orifice plates and meter tubes

• Ultrasonic meters meeting specific requirements

For low-pressure flares or high-pressure flares with volumes below the threshold, operators can estimate flared volumes using a BLM-provided formula (page 25430). This simplifies compliance for low-volume operations. All flares or combustion devices must be equipped with an automatic ignition system or an on-demand ignition system. An immediate violation assessment of $1,000 will apply if a flare is not combusting gas sent to device.

Storage Tank Requirements

The rule requires vapor-tight thief hatches, connections, and other access points. Operators are required to keep storage tank thief hatches closed except as necessary to conduct production and measurement operations. An immediate violation assessment of $1,000 will apply if a storage tank hatch is open or unlatched, and unattended. 

Waste Minimization Plan or Self-Certification

Operators will need to submit either a Waste Minimization Plan (WMP) or a Self-Certification Statement. The WMP requires detailed planning, including production forecasts and sales contracts to demonstrate the ability to capture 100% of the well's gas. Operators must use all reasonable precautions to prevent the waste of oil or gas developed from the lease. Recognizing the unique circumstances of different projects, the rule offers a simpler Self-Certification option. This allows operators confident in their capture capabilities to streamline the process. Both the WMP and Self-Certification emphasize minimizing waste from other on-site sources like storage tanks and equipment. 

Leak Detection and Repair (LDAR) Program

The final rule introduces a requirement of maintaining a Leak Detection and Repair (LDAR) program requiring regular inspections and repairs of leaks. This program requires oil and gas operators to develop and submit a state-specific LDAR plan outlining how they will regularly inspect for leaks and ensure timely repairs. 

The rule requires a minimum of quarterly optical gas imaging (OGI) surveys and bimonthly AVO inspections of all oil and gas production, processing, treatment, storage, and measurement equipment on the lease site. Well head only sites are only required to have quarterly AVO inspections conducted. Repair requirements include repair of leaks within 30 days of detection and 30-day verification of repair with an additional 15 days allowed to repair if verification is unsuccessful. To verify the effectiveness of repairs, operators can choose between a traditional soap-bubble test or an approved instrument like an OGI camera. Detailed records of all leaks and repairs are required to be maintained and subject to BLM review upon request.

What are the Compliance Deadlines for the New BLM Methane and Waste Prevention Rule?

While the final rule takes effect on June 10, 2024, BLM has extended the deadlines for certain conditions:

Key Takeaways from the BLM Methane and Waste Prevention Rule

Producers will need to adjust their operations to comply with the rule, including:

• Waste minimization plans demonstrating gas capture solutions will be mandatory with permit applications.

• Venting will be largely prohibited, forcing companies to flare associated gas unless they can capture it all.

• Regular inspections and prompt repairs of leaks will become essential.

• Operators must maintain detailed records of gas volumes, flaring events, and leak repairs.

• Non-compliance with the rule could result in immediate violation assessments for flares not combusting gas or improperly secured storage tank thief hatches.

Curious How the BLM Methane and Waste Prevention Rule Impacts You? We Can Help.

Trihydro’s air quality and regulatory specialists remain current on changing regulations to support you in maintaining compliant operations and reporting. Connect with us if you would like to discuss how the BLM Waste Prevention Rule affects your facility.