- State Director Remands Flaring Decision
- March 4, 2016
- Law Firm: Crowley Fleck PLLP - Billings Office
- In an administrative review by the Bureau of Land Management (“BLM”) State Director in Montana and the Dakotas, the State Director remanded a BLM North Dakota Field Office (“NDFO”) Decision Record imposing a rule that flaring that occurred for more than 144 hours per month is per se royalty bearing.
This case deals with 2,211 Sundry Notice requests to flare gas from “Federal and Indian oil wells in the western portion of North Dakota.” Many of the Sundry Notice requests have been pending review and approval for several years. 1,943 of these Sundry Notice requests pertained to “flared oil-well gas,” or gas that had been flared without prior authorization. 268 of these Sundry Notice requests pertained to “ongoing flaring and future flaring requests.” A Sundry Notice Flaring Request Environmental Assessment (“EA”) analyzed and disclosed the potential impacts of these 2,211 Sundry Notice flaring requests. The BLM NDFO approved the EA, and in a Decision Record (“Decision”), the NDFO imposed a rule appearing to classify any flaring that occurs for more than 144 hours per month, per se royalty bearing. The Decision made no attempt to determine if the lost gas should be characterized as “avoidably lost” or “unavoidably lost” under NTL-4A. The North Dakota Petroleum Council (“NDPC”) and 13 oil and gas operators requested State Director Review (“SDR”) of this Decision, contending that any flaring beyond 144 hours requires an avoidable/unavoidable determination based on criteria outlined in NTL-4A.
The State Director concluded that the EA and Decision need to be modified to better describe compliance with NTL-4A, as modified by Washington Office Instruction Memorandum (IM) No. 87-652, which allows the operator the opportunity to justify that the venting and flaring was for reasons uneconomical and unavoidable, even without prior authorization. The State Director ordered the NDFO to correct its EA and, following a 30-day public comment period, rewrite its Decision to clearly demonstrate that each venting and flaring request will be evaluated with an economic analysis and an avoidable or unavoidable determination in accordance with NTL-4A and Washington Office IM No. 87-652.