Onshore Oil and Gas Operations, Federal and Indian Oil and Gas Leases; Onshore Oil and Gas Order No. 4, Measurement of Oil

DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3160

[WO-610-4111-02-24 1A]

RIN: 1004-AB80

Onshore Oil and Gas Operations, Federal and Indian Oil and Gas

Leases; Onshore Oil and Gas Order No. 4, Measurement of Oil

AGENCY: Bureau of Land Management, Interior.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise Onshore Oil and Gas Order No.

4 originally issued February 24, 1989 (54 FR 8086), and made effective

August 23, 1989. This proposed revision would reorganize the Order to

make it more logical in sequence, remove unnecessary provisions,

resolve internal inconsistencies identified in the Order, and amend or

clarify certain provisions. These changes are based on more than 4

years of experience in implementing the Order, and on suggestions from

the public and internal personnel.

DATES: Comments should be submitted by May 9, 1994. Comments received

or postmarked after the above date may not be considered in the

decisionmaking process on the final rule.

ADDRESSES: Comments should be sent to: Director (140), Bureau of Land

Management, room 5555, Main Interior Building, 1849 C Street, NW.,

Washington, DC 20240. Comments will be available for public review at

the above address during regular business hours (7:45 a.m. to 4:15

p.m.), Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Stuart Cerovski, (307) 332-7822.

SUPPLEMENTARY INFORMATION: Order No. 4, Measurement of Oil, implements

and supplements requirements set forth in 43 CFR 3162.7-2 relating to

the measurement of oil produced under the terms of Federal and Indian

(except Osage) oil and gas leases, as well as oil produced from State

or privately owned lands when Federal and/or Indian leases receive a

share of such production under the terms of an approved agreement. The

Order addresses oil measurement by tank gauging, by positive

displacement metering systems, and by other methods acceptable to and

approved by the authorized officer of the Bureau of Land Management

(BLM). Through the implementation of the existing Order, several

provisions of the Order were identified as being in need of

clarification or amendment, and some provisions relating to oil

measurement need to be updated.

No amendments are proposed to the existing definitions in Section

II. of the Order. However, it is proposed to add one new definition

(Light Ends), which supports and clarifies the amendments proposed in

Section III.C.1.

An additional reference to the standards and recommended practices

of the American Petroleum Institute (API) would be included to update

the Order. This reference, ``Chapter 18, Section 1--Custody Transfer,

First Edition, September 1990--Measurement Procedures for Crude Oil

Gathered From Small Tanks by Truck,'' would be added to appropriate

provisions of the Order.

It is proposed to remove all requirements that instrument standards

be traceable to the standards of the National Institute of Standards

and Technology (formerly the National Bureau of Standards). This

applies to gauging tapes, instruments used to determine oil gravity,

and thermometers (woodbacks) used for determining tank temperatures,

and to certifications of accuracy by independent testing facilities.

The rationale for removing these provisions is a determination, based

on experience of BLM field personnel and discussions with operators and

manufacturers' representatives, that compliance with them cannot be

achieved by any practical and cost effective means. However, the

requirement that manufacturers warrant that such equipment has been

made in conformity with the applicable specifications of the National

Institute of Standards and Technology would be retained. Any

measurement equipment whose accuracy is questioned and found

inadequate, based on observation of defects by BLM personnel, would be

required to be replaced.

All proposed changes in Order No. 4 are amendments and additions

intended to enhance operator understanding of BLM's requirements for

the proper measurement of oil produced from or for the benefit of

Federal and Indian (except Osage) leases. The following is a section-

by-section discussion of the proposed revisions in the Order.

III.C.1. and III.C.1.a. would be amended to clarify the nature and

intent of the existing requirement for vent line- valves and/or

pressure vacuum thief hatches. As proposed, the Order would require, in

the absence of an approved variance, all crude oil storage tanks to be

equipped with vent line-valves and/or pressure vacuum thief hatches to

prevent the loss of light ends and the resultant decrease in the

quantity, quality, and value of the crude oil.

III.C.2. would be amended to remove the present requirement that

tank gauge volumes be corrected for scale or high bottoms in accordance

with API RP 2556, because adjustments in that regard are inexact. If

high bottoms or scaling on a sales tank occurs, the tank should be

cleaned prior to further use.

III.C.3. would be amended to clarify the use of the two presently

cited standards in API Chapter 8, and also would add Chapter 18,

Section 1--Custody Transfer, First Edition, September 1990, as a new

reference. This would allow all methods of oil sampling without prior

approval, provided that the method used meets the applicable API

standards of practice.

III.C.3.b. would be amended to state more specifically the proper

practice for retrieving oil samples from a sales tank for determining

the physical properties thereof. The proposed changes are necessary to

provide adequate instruction in the Order without the need for an

operator to refer to API standard practices for sampling. Tanks of

1,000 barrels or less capacity would require the use of the two-sample

method and tanks of greater than 1,000 barrels capacity would require

the use of either the two-sample method or the three-sample method

depending on the height of the fluid level in the tank. Moreover, the

proposed revision would allow an operator the option, with respect to

tanks of 1,000 barrels or less, of using one representative sample from

the middle of the oil column for gravity determinations.

III.C.4. would be amended to provide for the use of hand gauging

tapes to be the only acceptable method for gauging tank volumes. Any

other method of gauging, as referenced in the applicable API standards,

would not be accepted in the absence of prior approval by the

authorized officer of a request for a variance. This would ensure the

proper installation and use of any alternative method of tank volume

measurement.

III.C.6. would be amended to provide for the use of cup case

thermometers as the only acceptable method for obtaining tank

temperature. Any other method of obtaining tank temperature, as

addressed in applicable API standards or any new industry innovations,

would require the prior approval of a variance request by the

authorized officer to ensure proper installation and use. The proposal

would not limit tank temperature measurements by thermometer only, as

other types of temperature measurement instruments could be used if the

authorized officer agrees that the alternative method would ensure

proper temperature measurements and approves a request for a variance.

Language would also be added to ensure that temperature measurements

are made at the same time that opening and closing gauges are taken.

III.D.2.l. would be amended to include a new provision that would

allow, without prior approval, the use of an electronic temperature

averager (ETA) to record the temperature of oil sold through a positive

displacement metering system. Any type of electronic temperature

compensator (ETC) that meets the minimum requirements specified would

be authorized in accordance with the proposed revision. It is also

proposed to add a new Section III.D.3.c.(3) that would require that an

ETA or ETC be checked for accuracy each time the related meter is

proven.

III.D.3.a.(2) would be replaced in its entirety with minimum

requirements for meter proving. Positive displacement meters are

required to be in good working order to measure the product as

accurately as mechanically possible. Since the devices used in proving

are expected to be more accurate than the meters being proven, that

level of accuracy is required to be verified on a regular basis. As

these devices are used in all types of operating environments for

proving meters measuring oils of differing characteristics, the

proposed section would impose stringent calibration requirements for

provers.

III.D.3.c.(1) and III.D.4.a. would be amended to clarify the

differences among repeatability problems during proving, meter

malfunctions, and excessive meter factor deviations, and to specify

corrective actions appropriate to the identified problem.

III.D.5.b. would be added as a new section that would require the

immediate application of a newly obtained meter factor to the

production sold after the the date when the meter is proved. In other

words, the new meter factor would be used from that date forward until

such time as a subsequent proving establishes a different meter factor.

A new Section III.E. would be added to incorporate the

documentation requirements for the removal of crude oil from storage

facilities now included in Onshore Oil and Gas Order No. 3, Site

Security. This consolidation should enhance operator understanding of

requirements of the Order. These requirements will be removed from

Order No. 3 when it is next revised. Existing sections III.E. and F.

would be redesignated III.F. and G., respectively.

The existing Order No. 4 provides in Section III.E.2. that an

application is required to be submitted to the authorized officer and

written approval obtained prior to any off-lease measurement facility

being installed and operated. It is proposed to add off-lease storage

to this section in order to conform with the regulations at 43 CFR

3162.7-2, and to set forth the required contents of applications for

approval of off-lease measurement and/or storage facilities.

It is proposed to add a new Section III.H. to establish standards

relating to the commingling of oil production, both on the surface and

in a wellbore, and to set forth the required contents of applications

for approval to commingle oil production.

Other changes proposed are editorial corrections to accommodate the

new sections addressed above and slight wording modifications to add

emphasis and clarity to the requirements of the Order.

The principal authors of this proposed rule are Stuart Cerovski,

Petroleum Engineer, Lander Resource Area; Vince Balderaz, Supervisory

Petroleum Engineering Technician, Carlsbad Resource Area; Joe Delozier,

Supervisory Petroleum Engineering Technician, Caliente Resource Area;

A.L. Schweighart, Supervisory Petroleum Engineering Technician, Worland

District Office; Sherry Thompson, Petroleum Engineer, Colorado State

Office; and Darrell Self, Petroleum Engineering Technician, Tulsa

District Office, assisted by the staff of the Division of Legislation

and Regulatory Management, all of the Bureau of Land Management.

It is hereby determined that this proposed rule does not constitute

a major Federal action significantly affecting the quality of the human

environment, and that no detailed statement pursuant to Section

102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C.

4332(2)(C)) is required. The Bureau of Land Management has determined

that this proposed rule is categorically excluded from further

environmental review pursuant to 516 Departmental Manual (DM), Chapter

2, Appendix 1, Item 1.10, and that the proposal would not significantly

affect the 10 criteria for exceptions listed in 516 DM 2, Appendix 2.

Pursuant to the Council on Environmental Quality regulations (40 CFR

1508.4) and environmental policies and procedures of the Department of

the Interior, ``categorical exclusions'' means a category of actions

that do not individually or cumulatively have a significant effect on

the human environment and that have been found to have no such effect

in procedures adopted by a Federal agency and for which neither an

environmental assessment nor an environmental impact statement is

required.

This rule was not subject to review by the Office of Management and

Budget under Executive Order 12866.

Further, the Department has determined under the Regulatory

Flexibility Act (5 U.S.C. 601, et seq.) that it will not have a

significant economic impact on a substantial number of small entities.

The principal small entities affected by this rule will be the oil and

gas lessees and operators known as ``independents.'' The standards

prescribed by the American Petroleum Institute, upon which this rule is

based, are equally applicable to all prudent oil and gas operations,

regardless of size. The Order would impose no new standards, and

certain proving requirements would be removed. The Order would not

require a substantial amount of additional information or monitoring.

Some additional equipment may be required in certain cases, but the

total cost of these changes would not be significant. Costs to the

public should not increase at all as a result of the Order.

The Department certifies that this proposed rule does not represent

a governmental action capable of interference with constitutionally

protected property rights. There would be no taking of private property

without due process. Failure to abate violations in a timely manner

could result in assessments under the Mineral Leasing Act and/or

penalties under the Federal Oil and Gas Royalty Management Act, and

possible lease cancellation if the failure continues, but not without

due process. Therefore, as required by Executive Order 12630, the

Department of the Interior has determined that the proposed rule would

not cause a taking of private property.

The Department has certified to the Office of Management and Budget

that this proposed rule meets the applicable standards provided in

Sections 1(a) and 2(b)(2) of Executive Order 12788.

The information collection requirements contained in Part 3160 that

relate to this proposed Order have been approved by the Office of

Management and Budget under 44 U.S.C. 3501, et seq.,and assigned

clearance number 1004-0134.

List of Subjects in 43 CFR Part 3160

Government contracts, Indian lands-mineral resources, mineral

royalties, Oil and gas exploration, Public lands-mineral resources,

Reporting and recordkeeping requirements.

Dated: February 4, 1994.

Bob Armstrong,

Assistant Secretary of the Interior.

For the reasons stated above, and under the authorities cited

below, it is proposed to amend part 3160, Group 3100, subchapter C,

chapter II of title 43 of the Code of Federal Regulations, as set forth

below:

PART 3160--[AMENDED]

1. The authority citation for part 3160 is revised to read as

follows:

Authority: 30 U.S.C. 181 et seq.; 30 U.S.C. 351-359; 30 U.S.C.

301-306; 25 U.S.C. 396; 25 U.S.C. 396a-396q., 397, 398, 398a- 398e,

399; 43 U.S.C. 1457; see also 40 Op. Atty. Gen. 41; 40 U.S.C. 471 et

seq.; 42 U.S.C. 4321 et seq.; 42 U.S.C. 6508; 30 U.S.C. 1701 et

seq.; and 25 U.S.C. 2101 et seq.

2. Section 3164.1 is amended by revising the table in paragraph (b)

to read as follows:

Sec. 3164.1 Onshore Oil and Gas Orders.

* * * * *

(b) * * *

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Federal Register

Order No./Subject Effective date reference Supersedes

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1. Approval of Operations............ Nov. 21, 1983.................. 48 FR 48916 and 48 FR NTL-6.

56226.

2. Drilling Operations............... Dec. 19, 1988.................. 53 FR 46798.............. None

3. Site Security..................... Mar. 27, 1989.................. 54 FR 8060............... NTL-7

4. Measurement of Oil................ [30 days after date of ......................... None.

publication].

5. Measurement of Gas................ [date to be supplied upon ......................... None.

publication of No.5].

6. Hydrogen Sulfide Operations....... Jan. 22, 1991.................. 55 FR 48958.............. None.

7. Disposal of Produced Water........ Oct. 8, 1993................... 58 FR 47354.............. NTL-2B.

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Note: Numbers will be assigned sequentially by the Washington

Office, Bureau of Land Management, as additional Orders are prepared

for publication and added to this table.

The Appendix--text of Oil and Gas Order reads as follows:

Appendix--Text of Oil and Gas Order No. 4

Note: This appendix will not appear in the Code of Federal

Regulations.

Onshore Oil and Gas Order No. 4

I. Introduction.

A. Authority.

B. Purpose.

C. Scope.

II. Definitions.

III. Requirements.

A. Required Recordkeeping.

B. General.

C. Oil Measurement by Tank Gauging.

D. Oil Measurement by Positive Displacement Metering System.

E. Documentation for Removal of Crude Oil from Storage

Facilities.

F. Oil Measurement by Other Methods or at Other Locations

Acceptable to the Authorized Officer.

G. Determination of Oil Volumes by Methods Other than

Measurement.

H. Commingling of Production.

IV. Variances from Minimum Standards. .

Onshore Oil And Gas Order No. 4

Federal and Indian Oil and Gas Leases--Measurement of Oil

I. Introduction

A. Authority. This Order is established pursuant to the

authority granted to the Secretary of the Interior under various

Federal and Indian mineral leasing statutes and the Federal Oil and

Gas Royalty Management Act of 1982. This authority has been

delegated to the Bureau of Land Management (BLM) and is implemented

by the onshore oil and gas operations regulations contained in 43

CFR part 3160. Section 3164.1 thereof specifically authorizes the

Director, BLM, to issue Onshore Oil and Gas Orders when necessary to

implement or supplement the operating regulations, and provides that

all such Orders shall be binding on the lessees and operators of all

Federal and restricted Indian oil and gas leases that have been, or

may hereafter be, issued.

Specific authority for the provisions contained in this Order is

found at Sec. 3162.4-1 Well records and reports; Sec. 3162.4-2

Samples, tests, and surveys; Sec. 3162.7-1 Disposition of

production; Sec. 3162.7-2 Measurement of oil; Sec. 3162.7-5 Site

security on Federal and Indian (except Osage) oil and gas leases;

and Subpart 3163--Noncompliance, Assessments, and Penalties.

B. Purpose. One purpose of this Order is to establish the

requirements and minimum standards for the measurement of oil, and

to provide standard operating practices for oil storage and handling

facilities by the methods authorized in 43 CFR 3162.7-2, i.e.,

measurement by tank gauging, positive displacement metering system,

or other methods acceptable to and approved by the authorized

officer. Proper oil measurement ensures that the Federal Government

and Indian mineral owners receive the correct royalties due, as

specified in the governing oil and gas leases.

Another purpose of this Order is to establish abatement periods

for corrective action when noncompliance with the minimum standards

is detected. This Order also serves as notice to any party cited for

noncompliance that it may request from the authorized officer an

extension of the abatement period for any violation, provided that

the request for extension is applied for and granted prior to the

expiration of the abatement period previously allowed.

C. Scope. This Order is applicable to all Federal and Indian

(except Osage) oil and gas leases. In addition, this Order also is

applicable to all wells and facilities on State or privately-owned

mineral lands committed to a unit or communitization agreement that

affects Federal or Indian interests, notwithstanding any provision

of the unit or communitization agreement to the contrary.

II. Definitions

A. Authorized officer means any employee of the BLM authorized

to perform the duties described in Groups 3000 and 3100.

B. Barrel (bbl) means 42 standard United States gallons of 231

cubic inches each.

C. Business day means any day, Monday through Friday, excluding

Federal holidays.

D. Cpl. means the correction factor for the effect of pressure

on liquid.

E. Cps. means the correction factor for the effect of pressure

on steel.

F. Ctl. means the correction factor for the effect of

temperature on liquid.

G. Cts. means the correction factor for the effect of

temperature on steel.

H. INC means incident of noncompliance, which serves as a Notice

of Violation under 43 CFR subpart 3163.

I. Lessee means a person or entity holding record title in a

lease issued by the United States.

J. Light ends means those lighter hydrocarbons such as, but not

limited to, gasoline, light kerosene, heptane, and natural gasoline.

K. Major violation means noncompliance that causes or threatens

immediate, substantial, and adverse impact on public health and

safety, the environment, production accountability, or royalty

income.

L. Minor violation means noncompliance that does not rise to the

level of a ``major violation.''

M. Operating rights owner means a person or entity holding

operating rights in a lease issued by the United States. A lessee

also may be an operating rights owner if the operating rights in a

lease or portion thereof have not been severed from record title.

N. Operator means any person or entity, including but not

limited to the lessee or operating rights owner, that has stated in

writing to the authorized officer that it is responsible under the

terms and conditions of the lease for the operations conducted on

the leased lands or portions thereof.

O. Oil, for the purpose of this Order, means any liquid

hydrocarbons produced from or for the benefit of jurisdictional

leases, including condensate or oil from tar sands that is measured

as a liquid.

O.1. Clean oil/Pipeline oil means crude oil or condensate that

is acceptable to purchasers.

O.2. Slop oil means crude oil that is of such quality that it is

not acceptable to purchasers and requires special treatment other

than that which can be provided economically with the existing or

modified facilities or by portable equipment, and is usually sold to

oil reclaimers.

O.3. Waste oil means crude oil that has been determined by the

authorized officer to be of such quality that it cannot be treated

economically and put in a marketable condition with existing or

modified lease facilities or portable equipment, cannot be sold to

reclaimers, that has been determined by the authorized officer to

have no economic value, and for which no royalty is due.

III. Requirements

A. Required Recordkeeping

The operator shall keep all test data, meter reports, charts/

recordings, and other similar records for 6 years after the date

generated or, if involved in an audit or investigation, the records

shall be maintained until the record holder is released by the

Secretary of the Interior or appropriate delegate from the

obligation to maintain them. The authorized officer may request

these records any time within this period. Records submitted shall

include all additional information used to compute volumes so that

computations may be verified.

B. General

The regulations at 43 CFR 3162.7-2 authorize oil measurement

methods for production from leases, units, and communitization

agreements subject to BLM jurisdiction, as such jurisdiction is

defined in 43 CFR 3161.1. The authorized oil measurement methods are

tank gauging, positive displacement metering systems, and other

methods acceptable to and approved by the authorized officer. The

requirements and minimum standards for each of these methods are set

forth below.

These requirements and minimum standards are based on the

standards and practices recommended by the American Petroleum

Institute (API). The API standards and recommended practices are

considered by both the Department of the Interior and the oil and

gas industry to be appropriate for proper oil measurement. The

requirements and minimum standards set out herein are those

necessary to promote conservation of natural resources and to ensure

that oil production, except for waste oil, is properly measured for

sales or removal and for allocation purposes, in order that the

Federal Government and Indian mineral owners will receive the proper

royalties due under the governing oil and gas leases.

When an infraction of the minimum standards in this Order is

discovered, it will be considered noncompliance and an incident of

noncompliance (INC) will be issued. Operators who discover

noncompliance with these minimum standards and take immediate

corrective action will not be issued an INC. If the authorized

officer is present when an operator discovers a malfunction or does

not use correct procedures as specified in this Order, an INC will

be issued unless immediate corrective action is taken.

A major violation, as defined in this Order, will generally

require an immediate shut-in of the metering device. However, where

irreparable damage to the resource is likely to occur if a shut-in

is required, an abatement period of 24 hours may be given.

The intent of these minimum standards is to ensure that when

equipment malfunctions occur that could result in inaccurate

measurement, that proper corrective actions are taken, the

authorized officer notified, and a report is submitted. An equipment

failure that is discovered by the operator and promptly corrected

will not be considered a violation. However, equipment failures that

are not corrected are considered violations, and a partial list is

as follows:

Failure to install equipment properly.

Failure to repair or correct an equipment malfunction properly

or in a timely manner.

Failure to submit a report when an alternate method of

measurement is used for sales.

Failure to submit other required reports in a timely manner.

Failure to adhere to the minimum standards and procedures

specified in this Order.

The use of improper equipment or procedures, when discovered,

will be considered a violation, and an INC will be issued.

When improper procedures are witnessed by the authorized

officer, immediate corrective action will be required. The use of

such improper procedures will still be considered a violation, but

in the event that proper procedures are then used, as required by

this Order, prior to completing the operation, calibration, or

proving, the violation will be considered properly corrected. In

this case, although the violation will be documented in BLM's files,

no formal INC will be issued.

All sales and allocation facilities shall meet the minimum

standards prescribed in this Order, unless covered by a valid

variance.

Meter facilities constructed in accordance with the API

standards in effect at the time of installation shall not be

required automatically to retrofit to meet revised API standards.

The BLM will review any revised API standards and, when deemed

necessary, will amend the Order through the rulemaking process.

Any variances from these requirements and minimum standards

shall be in accordance with Section IV. of this Order.

A violation of a minimum standard established by this Order

shall be abated within the time period specified in this Order.

Unless stated otherwise, all abatement periods shall be measured

from the date of notification by the authorized officer.

Where abatement is required ``prior to sales or removal,'' this

means that necessary actions shall be taken so that no oil may be

sold or removed beyond the measurement point until it can be

properly measured.

If any such violation is not abated within the required period,

action shall be initiated in accordance with 43 CFR subpart 3163.

C. Oil Measurement by Tank Gauging

Oil measurement by tank gauging shall accurately compute the

volume of oil withdrawn from a properly calibrated sales tank by

measuring the height of the oil level in the tank before delivery

(opening gauge) and by measuring the height of the oil level in the

tank after delivery (closing gauge). The opening and closing gauges

obtained shall be used with the applicable tank calibration chart

(tank table) to compute accurately the volume of oil withdrawn.

Gauging may be accomplished by measuring the height of the oil level

from the tank bottom or a fixed datum plate upward to the surface of

the oil in the tank (innage gauging) or by measuring from a fixed

reference point at the top of the tank downward to the surface of

the oil in the tank (outage gauging). Before gauging, samples shall

be taken of the oil to determine the API oil gravity and the

sediment and water content. As the opening and closing gauges are

taken, the opening and closing temperature of the oil in the tank

shall be obtained. The measured oil volume shall then be corrected

for sediment and water content, and to the standard sales

temperature of 60 deg.F.

The following requirements and minimum standards shall be met in

accordance with API Standard 2545 (ANSI/ASTM D 1085), Method of

Gauging Petroleum and Petroleum Products, 1965 (Reaffirmed in 1987),

and ANSI/ASTM D 1250, Tables 5A and 6A.

1. Tanks and Production Equipment. All oil storage tanks used

for oil sales by tank gauging shall be properly equipped for such

gauging, using the API Recommended Practices for Setting,

Connecting, Maintenance, and Operation of Lease Tanks, API RP 12 R1,

1986. Tanks also shall be connected, maintained, and operated to

comply with the site security regulations, 43 CFR 3162.7-5, and

Onshore Oil and Gas Order No. 3. Tanks and production equipment

shall meet the following requirements:

a. All oil tanks and vessels shall be equipped and maintained in

such a manner as to minimize potential shrinkage and gravity loss

from the evaporation of light ends to the atmosphere. Equipment may

include, but is not limited to, vent-line valves and pressure-vacuum

thief hatches.

Violation: Major.

Corrective Action: Replace or repair defective equipment or

install any necessary equipment.

Abatement Period: 30 days.

b. Each sales tank shall be set and maintained level and free of

distortion in accordance with the above-referenced API recommended

practices.

Violation: Major.

Corrective Action: Level tank.

Abatement Period: Prior to sales.

c. Pursuant to API Standard 2545 (ANSI/ASTM D 1085), Method of

Gauging Petroleum and Petroleum Products, October 1965 (Reaffirmed

August 1987), each tank shall be equipped with a gauging reference

point, with the height of the reference point stamped on a fixed

bench-mark plate or stenciled on the tank near the gauging hatch.

Violation: Minor.

Corrective Action: Affix a gauging reference point in the

gauging hatch and stamp on bench-mark plate or stencil on tank near

gauging hatch.

Abatement Period: 30 days.

2. Sales Tank Calibrations. Each oil storage tank used for sales

shall be accurately calibrated for tank gauging, using the API

Standard 2550 (ANSI/ASTM D 1220), Method for Measurement and

Calibration of Upright Cylindrical Tanks, 1965 (Reaffirmed August

1987). The following minimum standards shall be satisfied:

a. Sales tank capacities shall be determined by actual tank

measurements by the method known as ``tank calibration,'' and in

accordance with the above-referenced API standard.

Violation: Minor.

Corrective Action: Make capacity determination and develop an

appropriate capacity table.

Abatement Period: 60 days.

b. A sales tank shall be recalibrated if it is relocated or

repaired or the capacity is changed through denting, damage, or the

installation or removal of interior components, or otherwise.

Violation: Minor.

Corrective Action: Recalibrate tank and develop new (revised)

capacity table.

Abatement Period: 60 days.

c. Calibration charts (tank tables) shall be submitted to the

authorized officer on request.

Violation: Minor.

Corrective Action: Submit requested tables to authorized

officer.

Abatement Period: 30 days.

3. Oil Sampling. Sampling of oil to be sold from a sales tank is

required and shall be conducted to yield a representative sample of

the oil for purposes of determining the physical properties of the

oil, as addressed in C.5. and C.7. of this Section, following the

API Standards in Chapter 8, Section 1--Manual Sampling (ASTM D

4057), October 1981 (Reaffirmed August 1987), for thief or tap

sampling; or Chapter 8, Section 2--Automatic Sampling, April 1983

(Reaffirmed August 1987), for automatic sampling; or, Chapter 18,

Section 1--Custody Transfer, First Edition, September 1990, for

tanks of 1,000 barrels or less in capacity. The sampling shall meet

the following minimum standards:

a. All samples shall be taken from the contents of the sales

tank prior to gauging, after allowing the tank contents to settle

for at least 30 minutes following isolation of the tank.

Violation: Major.

Corrective Action: Repeat sampling procedure.

Abatement Period: Prior to sales or removal.

b. Samples for determining the gravity and the sediment and

water content of the oil in sales tanks of 1,000 barrels or less in

capacity shall be obtained by the two-sample method. For gravity

determinations on tanks of 1,000 barrels or less in capacity, one

representative sample from the middle of the oil column may be used.

For tanks greater than 1,000 barrels in capacity, samples for

determining gravity shall be a composite using the two-sample method

or, if the oil column is greater than 15 feet, the three-sample

method.

Violation: Major.

Corrective Action: Repeat sampling procedure.

Abatement Period: Prior to sales or removal.

4. Sales Tank Gauging. Gauging of the oil sales tank is required

using gauging tapes warranted by the manufacturer as having been

made in conformity with the applicable specifications of the

National Institute of Standards and Technology. Other methods of

gauging may be approved by the authorized officer provided these

meet or exceed the standard of measurement accuracy achievable by a

gauging tape. Gauging tapes shall be used to measure the contents of

the tank accurately, following API Standard 2545 (ANSI/ASTM D 1085),

Method of Gauging Petroleum and Petroleum Products 1965 (Reaffirmed

August 1987), or Chapter 18, Section 1--Custody Transfer, First

Edition, September 1990. Gauging shall meet the following minimum

standards:

a. Gauging shall be accomplished using gauging tapes made of

steel or corrosion-resistant material with the graduations clearly

legible and not be kinked or spliced. Gauging tapes shall be

maintained in good working condition.

Violation: Major.

Corrective Action: Replace tape.

Abatement Period: Prior to sales or removal.

b. Acceptable gauging requires two identical gauges to the

nearest \1/4\ inch for tanks with a capacity of 1,000 barrels or

less, and two identical gauges to the nearest \1/8\ inch for tanks

with a capacity of more than 1,000 barrels.

Violation: Major.

Corrective Action: Repeat gauging until two identical readings

are obtained.

Abatement Period: Prior to sales or removal.

c. The proper bob for innage gauging or outage gauging shall be

used in accordance with the above-referenced API Standard 2545.

Violation: Major.

Corrective Action: Repeat gauging using proper bob.

Abatement Period: Prior to sales or removal.

5. Oil Gravity. Tests for oil gravity are required using

instruments warranted by the manufacturer as having been made in

conformity with the applicable specifications of the National

Institute of Standards and Technology. All such tests shall be

conducted in accordance with the API Manual of Petroleum Measurement

Standards, Chapter 9--Density Determination (ASTM D 1298-80) 1961,

and ASTM D 287-82, Standard Test Method for API Gravity of Crude

Petroleum and Petroleum Products (Hydrometer Method). Tests shall be

performed on a representative sales tank oil sample obtained

following API Manual of Petroleum Measurement Standards, Chapter

8.1--Manual Sampling of Petroleum and Petroleum Products (ASTM D

4057), October 1981 (Reaffirmed August 1987), or Chapter 18, Section

1--Custody Transfer, First Edition, September 1990, for tanks of

1,000 barrels or less in capacity. Gravity tests shall meet the

following minimum standards:

a. All gravity determinations shall be completed before oil

sales are made.

Violation: Major.

Corrective Action: Obtain sample from sales tank and determine

oil gravity.

Abatement Period: Prior to sales or removal.

b. The instrument used to obtain the oil gravity shall be clean,

with no loose shot weights or detached gravity scale.

Violation: Major.

Correction Action: Clean and/or replace hydrometer.

Abatement Period: Prior to sales or removal.

c. The instrument used to obtain the oil gravity shall be

calibrated for a gravity range that includes the observed gravity of

the oil sample being tested.

Violation: Major.

Corrective Action: Repeat gravity tests using hydrometer with

proper scale.

Abatement Period: Prior to sales or removal.

d. Temperatures shall be measured and recorded to the nearest

1 deg. F.

Violation: Major.

Corrective Action: Repeat test, measuring and recording

temperature to nearest 1 deg. F.

Abatement Period: Prior to sales or removal.

e. Liquid density (gravity) will be measured and recorded to the

nearest 0.1 deg. API gravity, making any necessary meniscus

correction. The observed gravity shall be corrected to 60 deg. F.,

using Table 5A, Generalized Crude Oils, Correction of Observed

Gravity, to API gravity at 60 deg. F.

Violation: Major.

Corrective Action: Repeat test, measuring and recording gravity

to nearest 0.1 deg. API gravity after making necessary correction

for fluid meniscus.

Abatement Period: Prior to sales or removal.

6. Tank Temperature. Determination of the temperature of oil

contained in a sales tank is required using a thermometer warranted

by the manufacturer as having been made in conformity with the

applicable standards of the National Institute of Standards and

Technology. All such determinations shall be made in accordance with

API Standard 2543, Method of Measuring the Temperature of Petroleum

and Petroleum Products (ANSI/ASTM D 1086) October 1965 (Reaffirmed

August 1987), or Chapter 18, Section 1--Custody Transfer, First

Edition, September 1990. Temperatures shall be taken with a cup case

thermometer at the time of the opening and closing gauges. Other

methods for obtaining tank temperatures may be approved by the

authorized officer provided that these meet or exceed the standard

of measurement accuracy achievable by a cup case thermometer. The

use of cup case thermometers shall meet the following minimum

standards:

a. Cup case thermometers shall be no less than 12 inches in

length, graduated in 1 deg. F., and be equipped with a cup case

assembly.

Violation: Major.

Corrective Action: Use above-specified temperature measurement

equipment.

Abatement Period: Prior to sales or removal.

b. Thermometers shall be kept clean and free of mercury

separation. The tank temperature shall be taken by immersing the

thermometer to the approximate vertical center of the fluid column,

not less than 12 inches from the shell of the tank, for a minimum of

5 minutes, and then read and recorded to the nearest 1 deg. F.

Violation: Major.

Corrective Action: Replace thermometer or repeat measurement, as

prescribed.

Abatement Period: Prior to sales or removal.

7. Sediment and Water Content. Determinations of the sediment

and water content of oil contained in sales tanks, using samples

obtained in accordance with Sections III.C.3. and III.C.5.a. hereof,

is required following the API Manual of Petroleum Measurement

Standards, Chapter 10--Sediment and Water in Crude Oils by the

Centrifuge Method (Field Procedure), Second Edition, May 1988 (ASTM

96-88), or Chapter 18, Section 1--Custody Transfer, First Edition,

September 1990, for tanks of 1,000 barrels or less in capacity, and

shall meet the following minimum standards:

a. A thoroughly mixed oil sample-solvent combination, prepared

in accordance with the procedures described in the above-referenced

API standards, shall be heated to at least 140 deg.F. if asphaltic-

based oil, or to at least 160 deg.F., if paraffin-based oil, prior

to centrifuging.

Violation: Major.

Corrective Action: Repeat procedures using the defined

standards.

Abatement Period: Prior to sales or removal.

b. The heated sample shall be whirled in the centrifuge for not

less than 5 minutes and, at the conclusion of centrifuging, the

temperature shall be a minimum of 115 deg.F. without water-

saturated diluent, or a minimum of 125 deg.F. with water-saturated

diluent.

Violation: Major.

Corrective Action: Repeat test, as prescribed.

Abatement Period: Prior to sales or removal.

c. The combined volume of sediment and water at the bottom of

the 100 ml. centrifuge tube shall be read:

(1) To the nearest 0.05 ml. in the range from 0.1 to 1 ml.

(2) To the nearest 0.1 ml. if above the 1 ml. graduation.

(3) Estimated to the nearest 0.0025 ml. if the volume is less

than 0.1 ml.

The sediment and water volume in the centrifuge tube so

determined shall be multiplied by the appropriate factor for the

centrifuge tube size and oil sample-solvent ratio, as specified in

the above-referenced API standards, and the product recorded as the

percentage of water and sediment.

Violation: Major.

Corrective Action: Repeat test as specified or repeat procedures

using specified factors.

Abatement Period: Prior to sales or removal.

D. Oil Measurement by Positive Displacement Metering System

Oil measurement by a positive displacement metering system, for

purposes of oil sales, shall be accomplished by a Lease Automatic

Custody Transfer (LACT) unit designed to provide for the unattended

transfer of liquid hydrocarbons from a production facility to the

transporting carrier while providing proper and accurate means for

the determination of net standard volume and quality, while also

providing for fail-safe and tamper-proof operations in accordance

with the regulations at 43 CFR 3162.7-5 and Onshore Oil and Gas

Order No. 3.

A positive displacement meter is one that registers the volume

passing through said meter by a system that constantly and

mechanically isolates the flowing liquid into segments of known

volume.

LACT unit design shall follow API Specification 11N for Lease

Automatic Custody Transfer (LACT) Equipment, 1988, and API Manual of

Petroleum Measurement Standards, Chapter 6--Metering Assemblies,

Section 1, LACT Systems, February 1981 (Reaffirmed August 1987).

LACT units shall be constructed and operated so as to satisfy the

following requirements and minimum standards:

1. LACT Unit Components and General Operating Requirements

a. As a minimum, each LACT unit shall include all of the

following listed components:

(1) Charging pump and motor.

(2) Sampler, composite sample container, and mixing system.

(3) Strainer.

(4) Positive displacement meter.

(5) Meter proving connections.

(6) Meter backpressure valve and check valve.

(7) Air eliminator.

(8) Diverter valve or shut-off valve.

(9) Sediment and Water Monitor.

(10) Automatic Temperature/Gravity Compensator (ATC or ATG) or

Electronic Temperature Recorder.

Violation: Major: a.1., 2., 4., 5., 6., and 10.

Corrective Action: Install component.

Abatement Period: Prior to sales or removal.

Violation: Minor: a.3., 7., 8., and 9.

Corrective Action: Install component.

Abatement Period: 30 days.

b. All components of a LACT unit shall be accessible for

reasonable inspection by the authorized officer.

Violation: Minor.

Corrective Action: Provide authorized officer with means of

access to LACT.

Abatement Period: 30 days.

c. The authorized officer shall be notified of any LACT unit

failure, such as electrical, meter, or other failure that results in

the use of an alternate method of measurement.

Violation: Minor.

Corrective Action: Notify authorized officer of alternate method

used.

Abatement Period: By 5th business day following use of alternate

method.

d. Any and all tests conducted on oil samples extracted from

LACT samplers for determination of oil gravity and sediment and

water (S&W) content shall meet the same requirements and minimum

standards specified in this Order for determining the gravity and

S&W content of oil sold or removed by the tank gauging method of

measurement (Section III.C.5. and C.7.).

Violation: Major.

Corrective Action: Report tests for gravity and S&W content per

Section III.C.5. and C.7. minimum standards.

Abatement Period: Prior to sales or removal.

2. Operating Requirements for LACT Unit Components. All required

LACT unit components shall be operated to satisfy the following

minimum standards:

a. Charging pump and motor. The LACT unit shall include an

electrically driven pump rated for a discharge pressure and rate

that are compatible with the rating for meter used and be sized to

assure turbulent flow in the LACT main stream piping.

Violation: Major.

Corrective Action: Install properly designed pump and motor.

Abatement Period: Prior to sales or removal.

b. Sampler. The sampler probe shall extend into the center \1/3\

of the flow piping in a vertical run at least 3 pipe diameters

downstream of any pipe fitting. The probe shall always be in a

horizontal position.

Violation: Major.

Corrective Action: Install component properly.

Abatement Period: Prior to sales or removal.

c. Composite Sample Container. The composite sample container

shall be capable of holding the sample under pressure and shall be

equipped with a vapor proof top closure and operated to prevent the

unnecessary escape of vapor, and the container shall be emptied upon

completion of each sample withdrawal.

Violation: Major.

Corrective Action: Install component properly, and empty after

each sample withdrawal.

Abatement Period: Prior to sales or removal.

d. Mixing System. The mixing system shall completely blend the

sample into a homogeneous mixture before and during the withdrawal

of a portion of the sample for testing.

Violation: Major.

Corrective Action: Repair mixing system.

Abatement Period: Prior to sales or removal.

e. Strainer. The strainer shall be made of corrosion-resistant

material of a mesh size no larger than \1/4\ inch, shall be

constructed so that it may be depressurized, opened, and cleaned,

and shall be installed upstream of the meter.

Violation: Minor.

Corrective Action: Replace with properly designed strainer and/

or install properly.

Abatement Period: 30 days.

f. Positive Displacement Meter. The meter shall register the

volume of oil passing through it utilizing a system that constantly

and mechanically isolates the flowing oil into segments of known

volume, and be equipped with a non-resettable totalizer.

Violation: Major.

Corrective Action: Replace or repair meter or non-resettable

totalizer.

Abatement Period: Prior to sales or removal.

g. Meter Proving Connections. All meter proving connections

shall be installed downstream from the LACT meter, with the line

valve(s) between the inlet and outlet of the prover loop having a

double block and bleed design feature to provide for leak testing

during proving operations.

Violation: Major.

Corrective Action: Relocate the prover loop downstream from LACT

meter, and install block and bleed valve, as specified.

Abatement Period: Prior to proving LACT.

h. Back Pressure and Check Valves. The back pressure valve and

check valve shall be installed downstream from the LACT meter and

meter proving connections.

Violation: Major.

Corrective Action: Install back pressure valve and check valve

downstream from LACT and meter proving connections.

Abatement Period: Prior to sales or removal.

i. Air Eliminator. The air eliminator shall be installed and

prevent air/gas from entering the meter.

Violation: Minor.

Corrective Action: Install air eliminator.

Abatement Period: 30 days.

j. Diverter Valve/Shut-off Valve. The diverter valve/shut-off

valve shall be activated by the S&W monitor so that the valve moves

to divert flow to the clean oil discharge only when it receives a

positive signal, or provide a shut-off valve configured to shut off

oil delivery upon failure to receive a positive signal from the S&W

Monitor.

Violation: Minor.

Corrective Action: Install diverter/shut-off valve.

Abatement Period: 30 days.

k. Sediment and Water (S&W) Monitor. The S&W Monitor shall be an

internally plastic-coated capacitance probe, no smaller in diameter

than the skid piping, and shall be mounted in a vertical pipe

located upstream from the diverter/shut-off valve and the meter.

Violation: Minor.

Corrective Action: Install S&W monitor.

Abatement Period: 30 days.

l. Automatic Temperature/Gravity Compensators (ATC or ATG) and

Electronic Temperature Recorders. Automatic Temperature Compensators

shall be sized according to the characteristics of the fluid being

measured. If an Electronic Temperature Averager is used in lieu of

an ATC or ATG, it shall be installed in accordance with the

manufacturer's specifications and shall meet the following minimum

standards:

(1) The temperature shall be recorded at least once per barrel

put through the positive displacement meter.

(2) The accuracy of the temperature probe shall be at least

0.5 deg.F. over the probe's operating range.

(3) The temperature shall be recorded to the nearest 0.1 deg.F.

with a count accuracy of 1 percent.

(4) A backup power source shall be available to preserve all

data in case of a failure of the primary power source.

(5) The reset switch and internal circuitry shall be encased in

a boxed enclosure having the capability of being sealed.

(6) The temperature averager shall be equipped with a printer

output for maintaining permanent records.

Violation: Major.

Corrective Action: Install properly sized ATC or ATG or properly

sized electronic temperature averager.

Abatement Period: Prior to sales or removal.

3. Sales Meter Proving Requirements. LACT positive displacement

meters shall be proved periodically. Meter provings shall follow API

Manual of Petroleum Measurement Standards, Chapter 4--Proving

Systems, 1978, and shall meet the following minimum standards.

a. The types of meter provers to be used and the calibration

requirements are as follows:

(1) The acceptable types of meter provers are pipe provers, tank

provers, master meters, or other API-recognized meter provers.

Violation: Minor.

Corrective Action: Prove again with acceptable meter prover.

Abatement Period: 30 days.

(2) If a pipe or tank prover is used, the operator shall provide

documentation to demonstrate that the prover has been calibrated

within the last 12 months. The documentation shall include the

unique number assigned to and inscribed on the prover. The

calibration documentation for a pipe or tank prover shall show the

certified volume as determined by the water draw method. The

allowable tolerance for calibrating a pipe or tank prover shall be

within 0.0002 (0.02 percent).

If a master meter is used, the operator shall provide

documentation of the most recent calibration report for said master

meter. The calibration report shall show that the master meter has

been calibrated in accordance with API requirements within the last

90 days, demonstrate that the master meter has an operating factor

within the range from 0.9900 to 1.0100, and that 5 consecutive runs

were matched within a tolerance of 0.0002 (0.02 percent).

Violation: Minor.

Corrective Action: Provide required calibration certification.

Abatement Period: Prior to proving.

b. Minimum Proving Frequency: For all sales and allocation

meters, the accuracy of the measuring equipment at the point of

delivery or allocation shall be tested following initial meter

installation or following repair, and if proven adequate, at least

quarterly thereafter unless a longer period is approved in writing

by the authorized officer.

Violation: Minor.

Corrective Action: Notify authorized officer of scheduled

proving and prove meter.

Abatement Period: Within 10 business days.

(1) In the event that the total throughput of a meter exceeds

100,000 bbls. per month, then proving shall be accomplished monthly.

Violation: Minor.

Corrective Action: Prove meter on a monthly basis.

Abatement Period: By the 10th business day after notification by

the authorized officer.

(2) The operator shall notify the authorized officer at least 10

business days prior to proving a sales or allocation meter.

Violation: Minor.

Corrective Action: Notify authorized officer prior to the next

scheduled proving.

Abatement Period: At least 10 business days prior to the next

scheduled proving.

c. Establishing the Operating Meter Factor. (1) At least five

consecutive runs shall match within a tolerance of 0.0005 (0.05

percent) between the highest and lowest readings. This required

repeatability shall be achieved prior to establishing a meter factor

and completing the meter proving report.

Violation: Major.

Corrective Action: Notify authorized officer and re-prove the

meter.

Abatement Period: 10 business days.

(2) The arithmetic average of these 5 consecutive runs shall be

used for computation of the meter factor.

Violation: Minor.

Corrective Action: Compute meter factor using arithmetic average

of the 5 consecutive runs.

Abatement Period: Prior to completion of proving.

(3) If the LACT is equipped with an electronic temperature

averager, the accuracy of the averager shall be compared with a

mercury thermometer over the operating range of the averager.

Violation: Major.

Corrective Action: Conduct the required temperature recording

accuracy comparison.

Abatement Period: Prior to the completion of proving.

(4) Meter factor computations shall also include the correction

factor for the effect of pressure on steel (Cps.) for provers; the

correction factor for the effect of temperature on steel (Cts.) for

provers; the correction factor for the effect of temperature on

liquid (Ctl.); and the correction factor for the effect of pressure

on liquid (Cpl.). The Cps. and Cts. correction factors shall be

determined using the API Manual of Petroleum Measurement Standards,

Chapter 12, Section 2, 1981, or latest revised API standard. The

Ctl. correction factor shall be obtained from the API Standard 2540,

Chapter 11.1, Volume I (ASTM D 1250-80), Table 6A, 1980, or latest

revised API standard, and the Cpl. correction factor shall be

obtained from the API Manual of Petroleum Measurement Standards,

Chapter 11.2.1, or the latest revised API standard.

Violation: Minor.

Corrective Action: Include proper correction factors.

Abatement Period: Prior to the completion of meter proving.

(5) The initial meter factor for a new or repaired meter shall

be within the range from 0.9950 to 1.0050, unless the deviation can

be justified to the satisfaction of the authorized officer.

Violation: Minor.

Corrective Action: Replace/repair/re-prove meter or justify to

authorized officer deviation from the specified range of 0.9950 to

1.0050.

Abatement Period: Prior to the completion of meter proving.

4. Excessive Meter Factor Deviation. Excessive meter factor

deviation may be evidence of meter malfunction, and corrective

action shall be taken upon discovery of a meter malfunction.

However, if the operator determines that the meter did not, in fact,

malfunction, the operator shall submit, for approval by the

authorized officer, a report of the findings and reasons for the

excessive meter factor deviation and the determination of no meter

malfunction. In the event a malfunction occurred, the meter shall be

immediately removed from service, checked for damage or wear,

adjusted and/or repaired, and re-proven prior to return to service.

The arithmetic average of the malfunction factor and the previous

factor shall be applied to the production measured through the meter

between the date of the previous factor and the date of the

malfunction factor.

Malfunction meter factors shall be clearly indicated on the

proving report, and the report shall also contain all appropriate

remarks regarding subsequent repairs and/or adjustments. The minimum

standards for evidence of a meter malfunction, and corrective action

required, are as follows:

a. Deviation in the meter factor shall not exceed

0.0025 since the last proving of the meter unless

explained by changed conditions, i.e., temperature, gravity, or

flow-rate.

Violation: Minor.

Corrective Action: Replace or repair the meter and make

appropriate volume adjustments. If the operator determines that no

meter malfunction occurred, a report stating the reasons supporting

that determination shall be submitted to the authorized officer for

approval. If a malfunction did occur, the meter shall remain out of

service until repaired or replaced and a new meter factor is

established. Applicable volume adjustments, reports, and other

information shall be submitted to the authorized officer.

Abatement Period: Within 10 business days after the initial

proving of the repaired or new meter.

b. A meter factor shall not exceed 1 percent above or below

unity, i.e., outside of the range from 0.9900 to 1.0100.

Violation: Minor.

Corrective Action: Make proper adjustments and note on proving

report.

Abatement Period: Prior to the completion of meter proving.

5. Meter Reporting Requirements. All meter provings, meter

failures, and volume adjustments following a meter malfunction shall

be reported to the authorized officer, as follows:

a. Meter Proving Reports. The meter proving report shall be

filed on one of the forms set out in API Manual of Petroleum

Measurement Standards, Chapter 12--Calculation of Petroleum

Quantities, Section 2--Calculation of Liquid Petroleum Quantities

Measured by Turbine or Displacement Meters, 1981 (Reaffirmed August

1987). Any similar format is acceptable provided all required data

are included and a proper calculation sequence is maintained.

Each meter proving report shall be identified by lease number,

communitization agreement number, or unit participating area name,

and the location of the facility.

Each meter proving report shall be filed with the authorized

officer no later than 10 business days following the meter proving.

Violation: Minor.

Corrective Action: Submit proper proving report to authorized

officer.

Abatement Period: File with authorized officer no later than the

10th business day following notification by the authorized officer.

b. Meter Factor Effective Date. The date on which a meter is

proved shall be used as the effective date of the meter factor until

the next factor is established.

Violation: Minor.

Corrective Action: Apply the effective meter factor to the

appropriate run ticket sales volume.

Abatement Period: Within 10 business days.

E. Documentation of the Removal of Crude Oil From Storage

Facilities

1. Transfers by Tank Gauging

The run ticket, as a minimum, shall include the following:

a. The name of the seller.

b. The Federal or Indian lease number or Indian agreement number

or, if appropriate, the communitization agreement number, or unit

agreement name and number and the participating area

identification.*

c. The location of the tank by quarter-quarter section, section,

township, and range, or other location description methods

acceptable to the authorized officer.

d. The unique tank number and capacity.

e. The unique run ticket number.

f. The date(s) of the transaction.

g. The opening gauge and opening oil temperature.*

h. The closing gauge and closing oil temperature.*

i. The API gravity at 60 deg.F or observed gravity and

temperature.*

j. The observed sediment and water (S&W) percentage.*

k. The number of each seal removed.

l. The number of each seal installed.

m. The signature of the purchaser's representative.

n. The signature of the operator's representative made within 2

business days after the sale or removal.

Violation: Minor (unless marked by asterisk).

Corrective Action: Submit the missing information.

Abatement Period: Within 7 business days of notice.

Violation: Major (if marked by asterisk).

Corrective Action: Submit a complete, correct run ticket.

Abatement Period: Within 3 business days of notice.

2. Transfers by LACT

The run ticket, at a minimum, shall include the following:

a. The name of the seller.

b. The Federal or Indian lease number or Indian agreement number

or, if appropriate, the communitization agreement number, or unit

agreement name and number and the participating area

identification.*

c. The location of the tank(s) by quarter-quarter section,

section, township, and range, or other location description methods

acceptable to the authorized officer.

d. The meter's unique identification number.

e. The opening and closing dates.

f. The opening and closing meter readings.*

g. Effective meter factor(s).

h. The observed sediment and water (S&W) percentage.*

i. The API gravity at 60 deg.F or observed gravity and

temperature.*

j. The signature of the purchaser's representative.

k. The signature of the operator's representative made within 2

business days after the sale or removal.

Violation: Minor (unless marked by asterisk).

Corrective Action: Submit the missing information.

Abatement Period: Within 7 business days of notice.

Violation: Major (if marked by asterisk).

Corrective Action: Submit a complete, correct run ticket.

Abatement Period: Within 3 business days of notice.

3. Transfers by Truck

When a single truckload constitutes a complete sale or removal,

the minimum information required to be in the driver's possession

includes the following:

a. The name of the seller.

b. The Federal or Indian lease number or Indian agreement number

or, if appropriate, the communitization agreement number, or unit

agreement name and number and the participating area identification.

c. The location of the tank(s) by quarter-quarter section,

section, township, and range, or other location description methods

acceptable to the authorized officer.

d. The unique tank number(s) if by tank gauging and/or the

unique identification number of the LACT meter(s) involved.

e. The date(s) of the transaction.

f. The approximate volume of oil on board.

g. The name of the first purchaser or destination.

When multiple truckloads are involved in a sale or removal, only

the driver of the last truck is required to have the documentation

listed in paragraphs a. through g. on board. All other drivers shall

have in their possession appropriate documentation in the form of a

trip log or manifest.

Violation: Major.

Corrective Action: Discontinue trucking operation until the

required documentation is provided.

Abatement Period: Immediately.

F. Oil Measurement by Other Methods or at Other Locations

Acceptable to the Authorized Officer

Any method of oil measurement other than tank gauging or

positive displacement metering system requires the prior approval of

the authorized officer based on applicable API standards. Other

measurement methods include, but are not limited to, turbine

metering systems, measurement by calibrated tank truck, measurement

by weight, and net oil computer.

The requirements and minimum standards for oil measurements by

an alternate method on the lease, unit, unit participating area, or

communitized area, or by either an authorized or an alternate method

of measurement at a location off the lease, unit, unit participating

area, or communitized area, are as follows:

1. Measurement on the Lease, Unit, Unit Participating Area or

Communitized Area.

An application for approval of an alternate oil measurement method

shall be submitted to the authorized officer, and written approval

obtained, before any such alternate oil measurement method is utilized.

An operator requesting approval of any alternate oil sales measurement

system shall submit performance data, actual field test results, or any

other supporting data or evidence acceptable to the authorized officer

to demonstrate that the proposed alternate oil sales measurement system

will meet or exceed the objectives of the applicable minimum

standard(s) or will not adversely affect royalty income or production

accountability.

Violation: Major.

Corrective Action: Shut in operations. Submit application for

approval of desired alternate method of oil measurement.

Abatement Period: Prior to sales or removal.

2. Measurement and/or storage at a Location off the Lease, Unit,

Unit Participating Area, or Communitized Area. a. An application for

off-lease measurement and/or storage shall be submitted to the

authorized officer and written approval obtained before any such

off-lease oil measurement and/or storage facilities are installed or

operated. The application for written approval of off-lease

measurement and/or storage shall justify the intended off-lease

location of the measurement and/or storage facilities before

approval will be granted. No additional approval as to the oil

measurement method is required, provided that measurement is to be

accomplished by tank gauging or positive displacement metering

system, pursuant to the requirements and minimum standards of this

Order.

Applications for off-lease measurement and/or storage of oil

produced from the same formation and same source (lease, or unit

area, or unit participating area, or communitized area) shall be

justified by valid environmental, topographic, or economic concerns,

or any combination thereof (e.g., environmental problems that

preclude the cost effective construction of an on-lease measurement

and/or storage facility; better access to all weather roads,

pipeline connections, and truck loading points; or increased

production value through reduction of transportation costs). In

addition to the above justification, the application shall be

accompanied by the following:

(1) A map showing the single source (the lease, unit area, unit

participating area, or communitized area), and the well(s) thereon

producing from the same formation, for which approval is sought for

an off-lease measurement and/or storage facility; and

(2) A schematic diagram that clearly shows and identifies all

equipment and piping that will be used for this purpose, both on and

off the source.

No additional wells from the same source shall be added to an

approved off-lease measurement and/or storage facility without the

authorized officer's prior concurrence. Oil produced from wells

located on other sources or produced from different formations on

the same source may not be combined with the oil production at an

approved off-lease measurement and/or storage facility without the

prior written approval of the authorized officer to commingle the

production pursuant to Section III.H.

Violation: Minor.

Corrective Action: Submit application for written approval of

off-lease measurement.

Abatement Period: Within 20 business days.

b. If oil measurement and/or storage is to be accomplished at a

location off the lease, unit, unit participating area, or

communitized area by an alternate measurement method (any method

other than tank gauging or positive displacement metering system),

then the application, in addition to justifying the location of the

off-lease measurement and/or storage facilities, shall also

demonstrate the acceptability of the proposed alternate measurement

method, pursuant to Section III.F.1.

Violation: Major.

Corrective Action: Include in the application for approval of

off-lease measurement justification of the desired method of

measurement.

Abatement Period: Prior to sales or removal.

G. Determination of Oil Volumes by Methods Other Than Measurement

Pursuant to 43 CFR 3162.7-2, when production cannot be measured

due to spillage or leakage, the amount of production shall be

determined in accordance with the methods approved or prescribed by

the authorized officer. This category of production includes, but is

not limited to, oil that is classified as slop oil or waste oil. No

slop or waste oil may be sold or otherwise disposed of without prior

approval from the authorized officer.

The minimum standards for determining the volume of oil that

cannot be measured are as follows:

1. No oil located in an open pit or sump, in a stock tank, in a

production vessel, or elsewhere, may be classified or disposed of as

waste oil unless it can be shown, to the satisfaction of the

authorized officer, that it is not economically feasible to put the

oil into marketable condition.

Violation: Major.

Corrective Action: Put oil into marketable condition or

demonstrate the economic infeasibility thereof.

Abatement Period: Within 10 business days.

2. Following the approved sale or disposal of slop or waste oil,

the operator shall notify the authorized officer within 20 days as

to the volume sold or disposed, and the method used to compute the

volume.

Violation: Major.

Corrective Action: Submit complete report of sale or disposal.

Abatement Period: Within 24 hours of the notification by the

authorized officer that the report has not been received.

H. Commingling of Production

Pursuant to 43 CFR 3162.7-2, oil production from different

formations on the same source (lease, unit area, unit participating

area, communitized area), or from the same formation but from a

different source, may not be commingled with one another on the

surface without the prior written approval of the authorized

officer.

1. Application for approval to commingle oil production on the

surface shall provide a detailed explanation of the proposed

operation and the necessity for doing so, and be accompanied by:

a. A map showing, as appropriate, all leases, unit areas, unit

participating areas, communitized areas, and the wells thereon that

will contribute oil production to the commingled storage facility;

b. A schematic diagram that clearly shows and identifies all

equipment and piping to be used for this purpose;

c. The estimated monthly quantity and quality of the oil to be

contributed by the well(s) on each source;

d. Details of the method proposed for allocating production and

related revenues back to each contributing source;

e. A statement that all working and basic royalty owners in the

involved sources have been notified of the proposed commingling;

f. Calculations showing that the royalty value attributable to

the involved Federal and/or Indian lease(s) will not be reduced if

the commingling is approved; and

g. If the reason for the application is to avoid the premature

abandonment of all or a majority of the wells involved, a detailed

economic evaluation supporting that reason shall be included.

No additional wells or sources may be added to an approved

commingled facility without the prior written approval of the

authorized officer.

Violation: Major.

Corrective Action: Submit application for approval to commingle

or to add wells, formations, or sources to an approved commingled

facility.

Abatement Period: Prior to sales or removal.

2. Applications for approval to commingle oil production from

different formations in a single wellbore shall provide a detailed

explanation as to the necessity for doing so and shall include:

a. A map showing all wells for which approval is sought for

wellbore commingling and the source (lease, unit area, unit

participating area, communitized area) on which each such well is

located;

b. The estimated monthly quantity and quality of the oil to be

contributed by each formation in each well;

c. Details of the method proposed for allocating the production

and related revenues back to each formation in each well; and

d. Calculations showing that the royalty value attributable to

the Federal and/or Indian leases involved will not be reduced if the

wellbore commingling is approved.

Violation: Minor.

Corrective Action: Submit application for approval of wellbore

commingling.

Abatement Period: 20 days.

IV. Variances From Minimum Standards

An operator may request the approval of the authorized officer

for a variance from any of the minimum standards prescribed in

Section III. All such requests shall be submitted in writing to the

appropriate authorized officer and shall provide information as to

the circumstances that warrant approval of the variance(s) requested

and the proposed alternative means by which the related minimum

standard(s) will be satisfied. The authorized officer, after

considering all relevant factors, shall approve the requested

variance(s) on making a determination that the proposed

alternative(s) meet or exceed the objectives of the applicable

minimum standard(s), or will not adversely affect royalty income or

production accountability. In addition, approval may be given orally

by the authorized officer before the operator initiates actions that

require a variance from minimum standards. The oral request, if

granted, shall be followed by a written request not later than the

fifth business day following oral approval, and written approval

will then be granted.

The authorized officer, on his/her motion, also may issue NTLs

(Notices to Lessees) that establish modified standards or variances

for specific geographic areas of operations.

After notice to the operator, the authorized officer also may

require compliance with standards that exceed those contained in

this Order whenever such additional requirements are necessary to

achieve protection of royalty income or production accountability.

The rationale for any such additional requirements shall be

documented in writing to the operator.

Attachment

I. Sections from 43 CFR subparts 3163 and 3165 (not included

with the Federal Register publication).

[FR Doc. 94-5316 Filed 3-8-94; 8:45 am]

BILLING CODE 4310-84-P