GETTING YOUR BLM/ONRR HOUSE IN ORDER. Some Basics And Some Not-So Basics

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1 GETTING YOUR BLM/ONRR HOUSE IN ORDER Some Basics And Some Not-So Basics Dennis Cameron Attorney GableGotwals 1100 ONEOK Plaza, 100 West 5th Street, Tulsa, OK Office:

2 CURRENT WORLD OF THE AGENCY Tired of Repeated Reporting Violations Tired of Companies Ignoring Revenue Neutral Issues Agency is Under a Microscope with Regard to Policing Producers Instructed to Look for Areas to Impose Fines /Penalties

3 FINES & PENALTIES What is the Violation: One with notice to correct 30 CFR [30 USC 1719 (a)-(b)] At least 20 days to correct up to $500/ day 20 days after specified time period goes up to $5,000/day One with no time to correct 30 CFR [30 USC 1719 (c)-(d)(1)] Specific willful acts up to $10,000 / day (b) civil penalty up to $25,000/ day if (1) Knowingly or willfully prepare, maintain, or submit false, inaccurate, or misleading reports, notices, affidavits, records, data, or other written information

4 HR 3534 Designee Informal and Liable Fines Go Up Marketing Affiliate Broad Compliance Review Longer Appeal Time / Record Keeping Btu Reporting / Takes vs. Entitlements Fines / Penalties 1719 FORRMA Promptly Tender Documents Fail to Correctly Report and Timely Provide Records 315 Late or Incorrect Reporting Penalties

5 BOTTOM LINE GET YOUR BLM HOUSE IN ORDER Try to Develop Coordination with: Land Production Accounting Field Operations Regulatory Compliance Groups Be Prepared to Act Fast

6 THE OBVIOUS SUBMIT YOUR REPORTS MAKE YOUR PAYMENTS

7 SITE SECURITY DOCUMENTS 43 CFR BLM Onshore Order No. 3 This Is The Ultimate Summary of Your Lease Equipment Valves That Seal Measurement That Can t Be Bypassed Site Security Plans Inspections/Monitoring /Security Site Diagrams Facility Accurate Depictions of Equipment

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9 PRACTICAL TIPS RE: DIAGRAMS Update The Diagrams Maintain The Old Ones Establishes The Support For Lease Use Fuel Data

10 MEASUREMENT FACILITIES Onshore Order 4 Oil Onshore Order 5 Gas Devices AGA/ORIFICE METERS Maintenance /Calibration Records Location, Location, Location

11 MEASUREMENT FACILITIES LOCATION ON/OFF LEASE ON LEASE Does it Measure From More Than One Facility Facility = Lease Land - Not Individual Wells Check For Other Applicable Rules, e.g., Jicarilla Ordinance RE: Individual Wells

12 MEASUREMENT FACILITIES LOCATION ON/OFF LEASE OFF LEASE Off Lease Boundary Unique Operational Issues CDP Measurement CDP Sales to Pipeline If More Than 1 Lease Commingling Approval Required Be Careful of Private vs. Government Lease State Commission Approvals Are Not Enough

13 MEASUREMENT FACILITIES LOCATION ON/OFF LEASE OFF LEASE To Get Approval Required Per BLM Order 5 Justification For The Alternative Measurement - Get An Engineer To Explain Why Data Meter Data/Maintentance/Calibration Practices - Obtain Measurement Practice Documents - Obtain Detail Manufacture Data For Devices - Provide Sample Inspection/Maintenance Reports Allocation Sample How it Works

14 OGOR REPORTING Oil and Gas Operations Report Three Parts A = Production B = Disposition C = Inventory

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16 OGOR REPORTING Unique Disposition Codes Appendix 1 Minerals Production Reporter Handbook 20 = Gas Used On or For The Benefit of The Lease 04 = Sales Subject to Royalty Not Measured Gas Used Off The Lease For Another Lease 42 = Differences / Adjustments Dear Reporter Letter 12/15/2010 Effective Production Month March = Native Gas Used on Lease = Volumes Purchased For Use On The Lease 15) 15 The Volume that Left Lease, But Bought Back 25 The Volume Purchased For Use (Must Offset

17 BTU REPORTING Issue: How Do I Report The Gas Btu? Minerals Revenue Reporter Handbook On Gas Volumes:... The same degree of water saturation used to report Btu on (OGOR). Minerals Production Reporter Handbook On Gas Volumes: Report Gas Volumes and Btu Heating Volumes,... Under The Same Degree of Water Saturation Dear Reporter Letter Refers to 5-14 (Reported On a Dry Gas Basis) What To Do - My Vote is Be Consistent and Report

18 ONRR IMPACT? In Audits The Requests For Information Now Include Requests For: Unmeasured Lease Use Fuel Support Confirmation Of Location Of Measurement Equipment Copies Of Approvals For Varying From Onshore Orders Comparison of OGOR To 2014 Through Data

19 ONRR IMPACT? Monetize Gas Used Off The Lease In Compression Must Have Approval For Beneficial Lease Use No Factual Record to Establish Transportation Use Dual Accounting Issues Inability To Obtain Data From Third Party Processors To Complete Calculation

20 THE OBVIOUS SUBMIT YOUR REPORTS Accurate and With Proper Approval MAKE YOUR PAYMENTS Timely