A measurement rule can protect accounting accuracy without freezing the approved technology forever. BLM’s November 17, 2016 final oil rule includes a mechanism to review and approve new measurement systems alongside performance standards and recordkeeping. It applies to oil from federal and Indian leases, excluding the Osage Tribe, and becomes effective January 17, 2017. The framework replaces Onshore Order 4. [2016-25405][2015-24008]

The September 30, 2015 proposal explains the mechanism’s economic relevance. BLM contemplated objective performance criteria for assessing requests involving meters, systems and procedures not expressly addressed. It also considered developing an uncertainty calculator. For a supplier with a different technical approach, the significant idea was evaluation against performance criteria rather than relying only on a list of existing methods. That is an interpretation of the design, not proof of market entry. [2016-25405][2015-24008]

The final rule provides for reviewing new technology, but implementation must not be confused with an already available calculator or completed approvals. Existing equipment also gets a different transition from the proposal: one to four years, linked to production volumes and facility measurement point application schedules, instead of the proposed 180 days. Lower-volume producers receive more time to comply. [2016-25405][2015-24008]

Our market reading is that technical flexibility and accountability need not be opposites. A review route can accommodate change while retaining measurement requirements. These two sources, however, are one BLM rulemaking chain, not independent evidence of lower compliance costs or stronger competition. Whether the framework actually makes innovation easier while protecting royalty accounting remains a question for implementation evidence. [2016-25405][2015-24008]

Source documents

  1. Onshore Oil and Gas Operations; Federal and Indian Oil and Gas Leases; Measurement of Oilhttps://www.govinfo.gov/content/pkg/FR-2016-11-17/html/2016-25405.htm
  2. Onshore Oil and Gas Operations; Federal and Indian Oil and Gas Leases; Measurement of Oilhttps://www.govinfo.gov/content/pkg/FR-2015-09-30/html/2015-24008.htm