43 Cfr 3173

Bureau of Land Management, Interior

§ 3173.1

records are generated, the record holder must retain all records regarding
production from the lease, unit PA, or
CA until the final nonappealable decision in such judicial proceeding is
made, or with respect to that demand
is rendered, unless the Secretary or his/
her designee authorizes in writing a release of the requirement to maintain
such records before a final nonappealable decision is made or rendered.
(2) If a judicial proceeding or demand
is not commenced within 7 years after
the records are generated, the record
holder must retain all records regarding production from the unit or
communitized area until the Secretary
or his/her designee releases the record
holder from the obligation to maintain
the records;
(f) The lessee, operator, purchaser, or
transporter must maintain an audit
trail.
(g) All records, including source
records, that are used to determine
quality, quantity, disposition, and
verification of production attributable
to a Federal or Indian lease, unit PA,
or CA, must include the FMP number
or the lease, unit PA, or CA number,
along with a unique equipment identifier (e.g., a unique tank identification
number and meter station number),
and the name of the company that created the record. For all facilities existing prior to the assignment of an FMP
number, all records must include the
following information:
(1) The name of the operator;
(2) The lease, unit PA, or CA number;
and
(3) The well or facility name and
number.
(h) Upon request of the AO, the operator, purchaser, or transporter must
provide such records to the AO as may
be required by regulation, written
order, Onshore Order, NTL, or COA.
(i) All records must be legible.
(j) All records requiring a signature
must also have the signer’s printed
name.

jstallworth on DSKBBY8HB2PROD with CFR

§ 3170.8

Appeal procedures.

(a) BLM decisions, orders, assessments, or other actions under the regulations in this part are administratively appealable under the procedures

prescribed in 43 CFR 3165.3(b), 3165.4,
and part 4.
(b) For any recommendation made by
the PMT, and approved by the BLM, a
party affected by such recommendation
may file a request for discretionary review by the Assistant Secretary for
Land and Minerals Management. The
Assistant Secretary may delegate this
review function as he or she deems appropriate, in which case the affected
party’s application for discretionary
review must be made to the person or
persons to whom the Assistant Secretary’s review function has been delegated.
§ 3170.9

Enforcement.

Noncompliance with any of the requirements of this part or any order
issued under this part may result in enforcement actions under 43 CFR subpart 3163 or any other remedy available
under applicable law or regulation.

Subparts 3171–3172 [Reserved]
Subpart 3173—Requirements for
Site Security and Production
Handling
§ 3173.1

Definitions and acronyms.

(a) As used in this subpart, the term:
Access means the ability to:
(i) Add liquids to or remove liquids
from any tank or piping system,
through a valve or combination of
valves or by moving liquids from one
tank to another tank; or
(ii) Enter any component in a measuring system affecting the accuracy of
the measurement of the quality or
quantity of the liquid being measured.
Appropriate valves means those valves
that must be sealed during the production or sales phase (e.g., fill lines,
equalizer, overflow lines, sales lines,
circulating lines, or drain lines).
Authorized representative (AR) has the
same meaning as defined in 43 CFR
3160.0–5.
Business day means any day Monday
through Friday, excluding Federal
holidays.
Commingling and allocation approval
(CAA) means a formal allocation agreement to combine production from two
or more sources (leases, unit PAs, CAs,

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jstallworth on DSKBBY8HB2PROD with CFR

§ 3173.1

43 CFR Ch. II (10–1–18 Edition)

or non-Federal or non-Indian properties) before that product reaches an
FMP.
Economically marginal property means
a lease, unit PA, or CA that does not
generate sufficient revenue above operating costs, such that a prudent operator would opt to plug a well or shutin the lease, unit PA, or CA instead of
making the investments needed to
achieve non-commingled measurement
of production from that lease, unit PA,
or CA. A lease, unit PA, or CA may be
regarded as economically marginal if
the operator demonstrates that the expected revenue (net any associated operating costs) generated from crude oil
or natural gas production volumes on
that property is not sufficient to cover
the nominal cost of the capital expenditures required to achieve measurement of non-commingled production of
oil or gas from that property over a
payout period of 18 months. A lease,
unit PA, or CA can also be considered
economically marginal if the operator
demonstrates that its royalty net
present value (RNPV), or the discounted value of the Federal or Indian
royalties collected on revenue earned
from crude oil or natural gas production on the lease, unit PA, or CA, over
the expected life of the equipment that
would need to be installed to achieve
non-commingled
measurement
volumes, is less than the capital cost of
purchasing and installing this equipment. Both the payout period and the
RNPV are determined separately for
each lease, unit PA, or CA oil or gas
FMP. Additionally, oil FMPs are evaluated using estimated revenue (net of
taxes and operating costs) from crude
oil production, as defined in this section, while gas FMPs are evaluated
using estimated revenue (net of taxes
and operating costs) from natural gas
production, as defined in this section.
Effectively sealed means the placement of a seal in such a manner that
the sealed component cannot be
accessed, moved, or altered without
breaking the seal.
Free water means the measured volume of water that is present in a container and that is not in suspension in
the contained liquid at observed temperature.

Land description means a location
surveyed in accordance with the U.S.
Department of the Interior’s Manual of
Surveying Instructions (2009), that includes the quarter-quarter section, section, township, range, and principal
meridian, or other authorized survey
designation acceptable to the AO, such
as metes-and-bounds, or latitude and
longitude.
Maximum ultimate economic recovery
has the same meaning as defined in 43
CFR 3160.0–5.
Mishandling means failing to measure
or account for removal of production
from a facility.
Payout period means the time required, in months, for the cost of an investment in an oil or gas FMP for a
specific lease, unit PA, or CA to be covered by the nominal revenue earned
from crude oil production, for an oil
FMP, or natural gas production, for a
gas FMP, minus taxes, royalties, and
any operating and variable costs. The
payout period is determined separately
for each oil or gas FMP for a given
lease, unit PA, or CA.
Permanent measurement facility means
all equipment constructed or installed
and used on-site for 6 months or longer,
for the purpose of determining the
quantity, quality, or storage of production, and which meets the definition of
FMP under § 3170.3.
Piping means a tubular system (e.g.,
metallic, plastic, fiberglass, or rubber)
used to move fluids (liquids and gases).
Production phase means that event
during which oil is delivered directly
to or through production equipment to
the storage facilities and includes all
operations at the facility other than
those defined by the sales phase.
Royalty Net Present Value (RNPV)
means the net present value of all Federal or Indian royalties paid on revenue
earned from crude oil production or
natural gas production from an oil or
gas FMP for a given lease, unit PA, or
CA over the expected life of metering
equipment that must be installed for
that lease, unit PA, or CA to achieve
non-commingled measurement.
Sales phase means that event during
which oil is removed from storage facilities for sale at an FMP.
Seal means a uniquely numbered device that completely secures either a

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Bureau of Land Management, Interior

§ 3173.3

valve or those components of a measuring system that affect the quality or
quantity of the oil being measured.
(b) As used in this subpart, the following additional acronyms apply:
BIA means the Bureau of Indian Affairs.
BMP means Best Management Practice.

jstallworth on DSKBBY8HB2PROD with CFR

§ 3173.2 Storage and sales facilities—
seals.
(a) All lines entering or leaving any
oil storage tank must have valves capable of being effectively sealed during
the production and sales phases unless
otherwise provided under this subpart.
During the production phase, all appropriate valves that allow unmeasured
production to be removed from storage
must be effectively sealed in the closed
position. During any other phase
(sales, water drain, or hot oiling), and
prior to taking the top tank gauge
measurement, all appropriate valves
that allow unmeasured production to
enter or leave the sales tank must be
effectively sealed in the closed position
(see Appendix A to subpart 3173). Each
unsealed or ineffectively sealed appropriate valve is a separate violation.
(b) Valves or combinations of valves
and tanks that provide access to the
production before it is measured for
sales are considered appropriate valves
and are subject to the seal requirements of this subpart (see Appendix A
to subpart 3173). If there is more than
one valve on a line from a tank, the
valve closest to the tank must be
sealed. All appropriate valves must be
in an operable condition and accurately reflect whether the valve is open
or closed.
(c) The following are not considered
appropriate valves and are not subject
to the sealing requirements of this subpart:
(1) Valves on production equipment
(e.g., separator, dehydrator, gun barrel,
or wash tank);
(2) Valves on water tanks, provided
that the possibility of access to production in the sales and storage tanks does
not exist through a common circulating, drain, overflow, or equalizer
system;

(3) Valves on tanks that contain oil
that has been determined by the AO or
AR to be waste or slop oil;
(4) Sample cock valves used on piping
or tanks with a Nominal Pipe Size of 1
inch or less in diameter;
(5) Fill-line valves during shipment
when a single tank with a nominal capacity of 500 barrels (bbl) or less is used
for collecting marginal production of
oil produced from a single well (i.e.,
production that is less than 3 bbl per
day). All other seal requirements of
this subpart apply;
(6) Gas line valves used on piping
with a Nominal Pipe Size of 1 inch or
less used as tank bottom ‘‘roll’’ lines,
provided there is no access to the contents of the storage tank and the roll
lines cannot be used as equalizer lines;
(7) Valves on tank heating systems
that use a fluid other than the contents of the storage tank (i.e., steam,
water, or glycol);
(8) Valves used on piping with a
Nominal Pipe Size of 1 inch or less connected directly to the pump body or
used on pump bleed off lines;
(9) Tank vent-line valves; and
(10) Sales, equalizer, or fill-line
valves on systems where production
may be removed only through approved
oil metering systems (e.g., LACT or
CMS). However, any valve that allows
access for removing oil before it is
measured through the metering system
must be effectively sealed (see Appendix A to subpart 3173).
(d) Tampering with any appropriate
valve is prohibited. Tampering with an
appropriate valve may result in an assessment of civil penalties for knowingly or willfully preparing, maintaining, or submitting false, inaccurate, or
misleading reports, records, or written
information under 30 U.S.C. 1719(d)(1)
and 43 CFR 3163.2(f)(1), or knowingly or
willfully taking, removing, transporting, using, or diverting oil or gas
from a lease site without valid legal
authority under 30 U.S.C. 1719(d)(2) and
43 CFR 3163.2(f)(2), together with any
other remedies provided by law.
§ 3173.3 Oil measurement system components—seals.
(a) Components used for quantity or
quality determination of oil must be

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