BLM: New Rules Will Ensure Accurate Royalties

by Elizabeth Alford on October 24, 2016

The Bureau of Land Management announced last week it has finalized new rules to ensure for accurate accounting for oil and gas activity on federal lands.

Related: Fracking Rule for Federal Lands Ruled Unlawful

The ruling updates three sections of the BLM Onshore Oil and Gas Orders and is the first comprehensive update of measurement rules in over 25 years. The rules ensure that proper royalties can be paid from any oil and gas produced from Federal and Indian leases due to more accurate measurement and record keeping.

“The conclusion of this rulemaking effort is a significant milestone in the BLM’s effort to modernize its oil and gas program,” said Janice Schneider, Assistant Secretary for Land and Minerals Management. “The updates made by these rules create a durable framework for the future that will support the responsible development and management of the nation’s oil and gas resources and ensure that both the American public and tribes receive a fair return for these resources.” 

The new rules call for the incorporation of the “latest industry standards,” measurement technology and practices. The financial considerations include:

  • Changes will reduce the total one-time compliance costs of the rules by nearly $100 million
  • Costs have decreased by about $32 million relative to the proposed rules
  • Rules will cost $12,856 per operator per year for the first 3 years, and then $7,654 thereafter

BLM’s oil and gas program is big business with the total value of production last year at nearly $20 billion. They estimate that more than $2 billion in royalty revenue is generated annually from federal leases and nearly $600 million in royalty revenue from tribal and allotted leases. Indian tribes and individual Indian allotment owners keep 100 percent of the royalties collected from leases on their lands.


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