This is the accessible text file for GAO report number GAO-11-34 
entitled 'Federal Oil And Gas Leases: Opportunities Exist to Capture 
Vented and Flared Natural Gas, Which Would Increase Royalty Payments 
and Reduce Greenhouse Gases' which was released on November 29, 2010. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

Report to Congressional Committees: 

United States Government Accountability Office:
GAO: 

October 2010: 

Federal Oil And Gas Leases: 

Opportunities Exist to Capture Vented and Flared Natural Gas, Which 
Would Increase Royalty Payments and Reduce Greenhouse Gases: 

GAO-11-34: 

GAO Highlights: 

Highlights of GAO-11-34, a report to congressional requesters. 

Why GAO Did This Study: 

The Department of the Interior (Interior) leases public lands for oil 
and natural gas development, which generated about $9 billion in 
royalties in 2009. Some gas produced on these leases cannot be easily 
captured and is released (vented) directly to the atmosphere or is 
burned (flared). This vented and flared gas represents potential lost 
royalties for Interior and contributes to greenhouse gas emissions. 

GAO was asked to (1) examine available estimates of the vented and 
flared natural gas on federal leases, (2) estimate the potential to 
capture additional gas with available technologies and associated 
potential increases in royalty payments and decreases in greenhouse 
gas emissions, and (3) assess the federal role in reducing venting and 
flaring. In addressing these objectives, GAO analyzed data from 
Interior, the Environmental Protection Agency (EPA), and others and 
interviewed agency and industry officials. 

What GAO Found: 

Estimates of vented and flared natural gas for federal leases vary 
considerably, and GAO found that data collected by Interior to track 
venting and flaring on federal leases likely underestimate venting and 
flaring because they do not account for all sources of lost gas. For 
onshore federal leases, operators reported to Interior that about 0.13 
percent of produced gas was vented or flared. Estimates from EPA and 
the Western Regional Air Partnership (WRAP) showed volumes as high as 
30 times higher. Similarly, for offshore federal leases, operators 
reported that 0.5 percent of the natural gas produced was vented and 
flared, while data from an Interior offshore air quality study showed 
that volume to be about 1.4 percent, and estimates from EPA showed it 
to be about 2.3 percent. GAO found that the volumes operators reported 
to Interior do not fully account for some ongoing losses such as the 
emissions from gas dehydration equipment or from thousands of valves—
key sources in the EPA, WRAP, and Interior offshore air quality 
studies. 

Figure: Vented Gas from Oil Storage Tank Visible through Infrared 
Camera: 

[Refer to PDF for image: 2 photographs] 

Source: EPA. 

[End of figure] 

Data from EPA, supported by information obtained from technology 
vendors and GAO analysis, suggest that around 40 percent of natural 
gas estimated to be vented and flared on onshore federal leases could 
be economically captured with currently available control 
technologies. According to GAO analysis, such reductions could 
increase federal royalty payments by about $23 million annually and 
reduce greenhouse gas emissions by an amount equivalent to about 16.5 
million metric tons of CO2—the annual emissions equivalent of 3.1 
million cars. Venting and flaring reductions are also possible 
offshore, but data were not available for GAO to develop a complete 
estimate. 

As part of its oversight responsibilities, Interior is charged with 
minimizing vented and flared gas on federal leases. To minimize lost 
gas, Interior has issued regulations and guidance that limit venting 
and flaring during routine procedures. However, Interior’s oversight 
efforts to minimize these losses have several limitations, including 
that its regulations and guidance do not address some significant 
sources of lost gas, despite available control technologies to 
potentially reduce them. Although EPA does not have a role in managing 
federal leases, it has voluntarily collaborated with the oil and gas 
industry through its Natural Gas STAR program, which encourages oil 
and gas producers to use gas saving technology, and through which 
operators reported venting reductions totaling about 0.4 percent of 
natural gas production in 2008. 

What GAO Recommends: 

To reduce lost gas, increase royalties, and reduce greenhouse gas 
emissions, GAO recommends that Interior improve its venting and 
flaring data and address limitations in its regulations and guidance. 
Interior generally concurred with these recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-11-34] or key 
components. For more information, contact Frank Rusco at (202) 512-
3841 or ruscof@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Available Estimates of Vented and Flared Natural Gas Vary, but Volumes 
Reported to OGOR Are Likely Underestimated because They Do Not Include 
Some Sources: 

Available Technologies Could Reduce About 40 Percent of Natural Gas 
Estimated to Be Lost to Venting and Flaring on Onshore Federal Leases, 
Potentially Increasing Federal Royalty Payments and Reducing 
Greenhouse Gas Emissions: 

Interior's Oversight Does Not Ensure That Operators Minimize Venting 
and Flaring on Federal Leases, While a Voluntary EPA Program Has 
Reduced Vented Gas According to EPA and Industry Participants: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department of the Interior: 

Appendix III: Volumes and Sources of Vented and Flared Gas Based on 
Analysis of 2006 WRAP Data: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: EPA's Estimates of Vented and Flared Natural Gas and Sources 
for Onshore Federal Leases: 

Table 2: Estimates of Vented and Flared Natural Gas based on 2006 WRAP 
Data for Federal Leases in the Piceance Basin (Colorado): 

Table 3: GOADS's Reported Vented and Flared Natural Gas and Sources 
for Offshore Federal Leases: 

Table 4: Potential Nationwide Reductions on Onshore Federal Leases 
from Increased Use of Venting and Flaring Reduction Technologies, 2008: 

Table 5: Volumes and Sources of Vented and Flared Gas from the Uinta 
Basin: 

Table 6: Volumes and Sources of Vented and Flared Gas from the North 
San Juan Basin: 

Table 7: Volumes and Sources of Vented and Flared Gas from the South 
San Juan Basin: 

Table 8: Volumes and Sources of Vented and Flared Gas from the Denver- 
Julesburg Basin: 

Figures: 

Figure 1: Illustrative Example of Onshore Production and Associated 
Sources of Vented and Flared Gas: 

Figure 2: Comparison of OGOR Reported Volumes to EPA's Estimates of 
Vented and Flared Natural Gas for Onshore Federal Leases: 

Figure 3: Comparison of 2006 OGOR-Reported Volumes to Estimates Based 
on 2006 WRAP Data of Vented and Flared Natural Gas for Onshore Federal 
Leases in Five Basins: 

Figure 4: Locations of Production Basins Included in WRAP Study: 

Abbreviations: 

Bcf: billion cubic feet: 

BLM: Bureau of Land Management: 

BOEMRE: Bureau of Ocean Energy Management, Regulation and Enforcement: 

EIA: Energy Information Administration: 

EPA: Environmental Protection Agency: 

GOADS: Gulfwide Offshore Activities Data System: 

Interior: Department of the Interior: 

MRM: Minerals Revenue Management: 

NTL: Notice to Lessees and Operators: 

OGOR: Oil and Gas Operations Report: 

WRAP: Western Regional Air Partnership: 

VOC: volatile organic compound: 

View GAO-11-34 key components: Video showing vented gas. 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

October 29, 2010: 

The Honorable Darrell Issa:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives: 

The Honorable Nick J. Rahall, II:
Chairman:
Committee on Natural Resources:
House of Representatives: 

Production of oil and natural gas on federal lands and waters is an 
important part of the nation's energy portfolio and a significant 
source of revenue for the federal government. The Department of the 
Interior (Interior) manages lands that account for nearly a quarter of 
domestic oil and gas production. In fiscal year 2009, companies that 
leased these lands paid about $6 billion in royalties to the federal 
government on the sale of oil and gas produced offshore in federal 
waters, and about $3 billion for production on federal lands, making 
revenues from federal oil and gas one of the largest nontax sources of 
federal government funds. Interior's Bureau of Land Management (BLM) 
is responsible for managing leases onshore, and its Bureau of Ocean 
Energy Management, Regulation and Enforcement (BOEMRE) is responsible 
for leases offshore.[Footnote 1] 

While most of the natural gas produced on leased federal lands and 
waters is sold, some is lost during production for various reasons, 
including leaks and releases for ongoing operational or safety 
procedures. This natural gas is either released directly into the 
atmosphere (vented) or burned (flared).[Footnote 2] The venting and 
flaring of natural gas is the potential loss of a valuable resource 
and, on leased federal lands or waters, the loss of federal royalty 
payments. In addition, venting releases methane, and flaring emits 
carbon dioxide (CO2), both greenhouse gases that contribute to global 
climate change. Methane is a particular concern since it is a more 
potent greenhouse gas than is CO2.[Footnote 3] 

In 2004, we reported that Interior, the department charged with 
managing federal oil and gas leases and regulating venting and 
flaring, collected and reported information on the extent of venting 
and flaring on leased federal lands and waters.[Footnote 4] We made 
two recommendations to Interior to improve the measurement of vented 
and flared gas and to reduce its impact, which the department 
implemented. Since that time, the Environmental Protection Agency 
(EPA) and the oil and gas industry identified sources of vented and 
flared gas that were releasing substantially more gas than previously 
thought possible, suggesting that the expanded use of available 
technologies could help capture additional gas. This report responds 
to your request that we review the extent of venting and flaring of 
natural gas on federal leases. Our objectives were to (1) examine 
available estimates of vented and flared natural gas on federal 
leases; (2) estimate the potential to capture additional vented and 
flared natural gas with available technologies and the associated 
potential increases in royalty payments and reductions in greenhouse 
gas emissions and; (3) assess the federal role in reducing venting and 
flaring of natural gas. 

To examine estimates of the volumes of vented and flared natural gas 
on federal leases, we analyzed data on venting and flaring that oil 
and gas producers submit to Interior's Minerals Revenue Management 
(MRM) program, which is responsible for collecting revenue from 
federal leases. MRM uses these data from its Oil and Gas Operations 
Report (OGOR) data system to account for monthly oil and gas 
production onshore and offshore. Separate regulations and guidance 
from BLM and BOEMRE guide operators in reporting to OGOR, and these 
data are the primary information source these agencies use to monitor 
overall venting and flaring. We also analyzed data from BOEMRE's 
Gulfwide Offshore Activity Data System (GOADS), which BOEMRE collects 
and publishes in a study every 3 years.[Footnote 5] BOEMRE uses its 
GOADS studies to estimate the impacts of offshore oil and gas 
exploration, development, and production on onshore air quality in the 
Gulf of Mexico region, which made up about 98 percent of federal 
offshore gas production in 2008. BOEMRE also uses GOADS as part of an 
impact analysis required by the National Environmental Policy Act. In 
addition, we analyzed EPA estimates of vented and flared gas onshore 
and offshore.[Footnote 6] We also analyzed data on vented and flared 
natural gas that the Western Regional Air Partnership (WRAP),[Footnote 
7] in conjunction with the Independent Petroleum Association of 
Mountain States,[Footnote 8] collected from the oil and gas industry 
to measure air quality in a number of large production basins in the 
mountain west.[Footnote 9] We had consultants from the Environ 
International Corporation, the firm that collected and analyzed the 
air quality data for WRAP, reconfigure these data to provide 
information on venting and flaring volumes on federal leases for a 
number of these onshore basins. Our sources of venting and flaring 
data were from 2006 to 2008, and we examined only the portions of 
these data related to federal leases in order to ensure comparability 
between them. We assessed the reliability of the data we used by 
analyzing the methods used to construct them and found them 
sufficiently reliable for the purposes of this report. 

To estimate the potential federal royalty increases and greenhouse gas 
reductions resulting from capturing additional vented and flared gas 
with available technologies, we met and spoke with officials from the 
oil and gas industry and to vendors of products designed to reduce 
vented and flared gas about how and under what conditions these 
technologies could reduce venting and flaring. We used analyses and 
data from EPA and WRAP to estimate potential reductions in volumes of 
vented and flared natural gas on federal leases, then converted these 
volumes into potential federal royalty increases and greenhouse gas 
reductions using methane to carbon dioxide equivalent conversion 
factors, average natural gas prices, and royalty rates from Interior. 
To assess the federal role in reducing vented and flared gas, we 
interviewed officials from BLM and BOEMRE, including officials from 
field offices that manage oil and gas leases in large onshore and 
offshore production basins; EPA; the Department of Energy; state 
agencies; and the oil and gas industry. We also reviewed BLM and 
BOEMRE regulations and other documentation, other studies related to 
federal management and oversight of the oil and gas industry, as well 
as a prior GAO report that described limitations in the systems 
Interior has in place to track oil and gas production on federal 
leases.[Footnote 10] See appendix I for more detailed information on 
our scope and methodology. 

We conducted this performance audit from July 2009 to October 2010 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

The Mineral Leasing Act of 1920 charges Interior with overseeing oil 
and gas leasing on federal lands and private lands where the federal 
government has retained mineral rights covering about 700 million 
onshore acres.[Footnote 11] Offshore, the Outer Continental Shelf 
Lands Act,[Footnote 12] as amended, gives Interior the responsibility 
for leasing and managing approximately 1.76 billion acres. BLM and 
BOEMRE are responsible for issuing permits for oil and gas drilling; 
establishing guidelines for measuring oil and gas production; 
conducting production inspections; and generally providing oversight 
for ensuring that oil and gas companies comply with applicable laws, 
regulations, and department policies. This oversight includes the 
authority to ensure that firms produce oil and gas in a manner that 
minimizes any waste of these resources. Together, BLM and BOEMRE are 
responsible for oversight of oil and gas operations on more than 
28,000 producible leases. 

Interior's MRM program, which is managed under BOEMRE, is charged with 
ensuring that the federal government receives royalties from the 
operators that produce oil and gas from both onshore and offshore 
federal leases. MRM is responsible for collecting royalties on all of 
the oil and gas produced, with some allowances for gas lost during 
production. Companies pay royalties to MRM based on a percentage of 
the cash value of the oil and gas produced and sold. Currently, 
royalty rates for onshore leases are generally 12.5 percent, while 
rates for offshore leases range from 12.5 percent to 18.75 percent. 

The production of oil and gas on these federal leases involves several 
stages, including the initial drilling of the well; clearing out 
liquid and mud from the wellbore; production of oil and gas from the 
well; separation of oil, gas, and other liquids; transfer of oil and 
gas to storage tanks; and distribution to central processing 
facilities. Throughout this process, operators typically vent or flare 
some natural gas, often intermittently in response to maintenance 
needs or equipment failures. This intermittent venting may take place 
when operators purge water or hydrocarbon liquids that collect in well 
bores (liquid unloading) to maintain proper well function or when they 
expel liquids and mud with pressurized natural gas after drilling 
during the well completion process. BLM and BOEMRE permit operators of 
wells to release routine amounts of gas during the course of 
production without notifying them or incurring royalties on this gas. 
[Footnote 13] In addition, production equipment often emits gas to 
maintain proper internal pressure, or in some cases, the release of 
pressurized gas itself is the power source for the equipment, 
particularly in remote areas that are not linked to an electrical 
grid. This "operational" venting may include the continuous releases 
of gas from pneumatic devices--valves that control gas flows, levels, 
temperatures, and pressures in the equipment and rely on pressurized 
gas for operation--as well as leaks, or "fugitive" emissions.[Footnote 
14] It also includes natural gas that vaporizes from oil or condensate 
storage tanks or during the normal operation of natural gas 
dehydration equipment.[Footnote 15] Until recently, the industry 
considered these operational losses to be small, but recent infrared 
camera technology has shed new light on these sources of vented gas, 
particularly from condensate storage tanks.[Footnote 16] According to 
oil and gas industry representatives, the cameras helped reveal that 
losses from storage tanks and fugitive emissions were much higher than 
they originally thought (link to video).[Footnote 17] In addition, 
recent calculations from EPA suggest that emissions from completions 
and liquid unloading make larger contributions to lost gas than 
previously thought possible. Operators can use a number of techniques 
to estimate emissions based on gas and oil characteristics and well 
operating conditions, such as temperature and pressure, without taking 
direct measurements of escaping gas. 

While venting and flaring of natural gas is often a necessary part of 
production, the lost gas has both economic and environmental 
implications. On federal oil and gas leases, natural gas that is 
vented or flared during production, instead of captured for sale, 
represents a loss of royalty revenue for the federal government. 
[Footnote 18] Venting and flaring natural gas also adds to greenhouse 
gases in the atmosphere. In general, flaring emits CO2, while venting 
releases methane, both of which the scientific community agrees are 
contributing to global warming. Methane is considered particularly 
harmful in this respect, as it is roughly 25 times more potent by 
weight than CO2 in its ability to warm the atmosphere over a 100-year 
period and almost 72 times more potent over a 20-year period, 
according to the Intergovernmental Panel on Climate Change.[Footnote 
19] Other hydrocarbons and compounds in vented and flared gas can also 
harm air quality by increasing ground-level ozone levels and 
contributing to regional haze. Volatile organic compounds, present in 
vented gas, are contributors to elevated ozone and haze, and ozone is 
a known carcinogen, according to EPA analysis.[Footnote 20] In some 
areas in the western United States, the oil and gas industry is a 
major source of volatile organic compounds. According to EPA, in many 
western states, including in many rural areas where there is 
substantial oil and gas production and limited population, there have 
been increases in ozone levels, often exceeding federal air quality 
limits.[Footnote 21] Interior is required to conduct environmental 
impact assessments in advance of oil and gas leasing and generally 
works with state environmental and air quality agencies to ensure that 
oil and gas producers will comply with environmental laws such as the 
Clean Air Act or Clean Water Act and the related implementing 
regulations. However, the state agencies may be charged with 
maintaining the standards established by the federal government in law 
and regulation, and often have primary responsibility in this regard. 
[Footnote 22] 

While much of the natural gas that is vented and flared is considered 
to be unavoidably lost, certain technologies and practices can be 
applied throughout the production process to capture some of this gas 
according to the oil and gas industry and EPA. The technologies' 
technical and economic feasibility varies and sometimes depends on the 
characteristics of the production site. For example, some technologies 
require a substantial amount of electricity, which may be less 
feasible for remote production sites that are not on the electrical 
grid. However, certain technologies are generally considered 
technically and economically feasible at particular production stages, 
including the following:[Footnote 23] 

* Drilling: Using "reduced emission" completion equipment when 
cleaning out a well before production, which separates mud and debris 
to capture gas or condensate that might otherwise be vented or flared. 

* Production: Installing a plunger lift system to facilitate liquid 
unloading. Plunger-lift systems drop a plunger to the bottom of the 
well, and when the built-up gas pressure pushes the plunger to the 
surface, liquids come with it. Most of the accompanying gas goes into 
the gas line rather than being vented. Computerized timers adjust when 
the plunger is dropped according to the rate at which liquid collects 
in the well, further decreasing venting. 

* Storage: Installing vapor recovery units that capture gas vapor from 
oil or condensate storage tanks and send it into the pipeline. 

* Dehydration: Optimizing the circulation rate of the glycol and 
adding a flash tank separator that reduces the amount of gas that is 
vented into the atmosphere.[Footnote 24] 

* Pneumatic devices: Replacing pneumatic devices at all stages of 
production that release, or "bleed," gas at a high rate (high-bleed 
pneumatics) with devices that bleed gas at a lower rate (low-bleed 
pneumatics). 

Figure 1: Illustrative Example of Onshore Production and Associated 
Sources of Vented and Flared Gas: 

[Refer to PDF for image: 5 photographs and accompanying descriptive 
information] 

Drilling: 
Source: Clearing drilling debris from the well. 
Wells need to be cleared of mud and debris prior to production. In 
doing so, operators can vent or flare large amounts of gas. 

Production: 
Source: Liquid unloading – removing accumulated liquids from wells. 
Liquids can collect in the well, slowing or stopping the flow of gas. 
To re-establish flow, operators close the well to build pressure and 
then open the well to the atmosphere — the vented gas ejects the 
liquid. 

Storage: 
Source: Gas escapes from oil and condensate storage tanks. 
Crude oil and condensate are transferred to storage tanks. Pressure 
and temperature changes in the tank allow gas trapped in the oil to 
vaporize from the tank to the atmosphere. 

Dehydration: 
Source: Gas escapes with water vapor during dehydration of the gas. 
A dehydrator circulates the chemical glycol to absorb moisture in the 
gas, but also absorbs small volumes of gas. The absorbed gas vents to 
the atmosphere when the water vapor is released from the glycol. 

Pneumatic valves: 
Source: High bleed pneumatic valves. 
Natural gas powers switches that turn valves on and off in the 
production system. Each time a valve turns on or off, it “bleeds” a 
small amount of gas into the air. Some of these pneumatic valves vent 
gas continuously. 

Source: GAO; photos from Bureau of Land Management; Storage photo from 
Wyoming Department of Environment Quality. 

[End of figure] 

In 2004, we reported that information on the extent to which venting 
and flaring occurs was limited.[Footnote 25] Although BLM and BOEMRE 
require operators to report data on venting and flaring on a monthly 
basis, our 2004 report found that these data did not distinguish 
between gas that is vented and gas that is flared, making it difficult 
to accurately identify the extent to which each occurs. In 
implementing our recommendations for offshore operators, BOEMRE now 
requires operators to report venting and flaring separately and to 
install meters to measure this gas on larger platforms.[Footnote 26] 
The Energy Information Administration (EIA)[Footnote 27] also collects 
data from oil and gas producing states on venting and flaring, but our 
2004 work found that EIA did not consider these state-reported data to 
be consistent and, according to discussions with EIA officials, these 
data have not improved. 

Available Estimates of Vented and Flared Natural Gas Vary, but Volumes 
Reported to OGOR Are Likely Underestimated because They Do Not Include 
Some Sources: 

Available estimates of vented and flared natural gas on federal leases 
vary considerably, and we found that estimates based on data from 
MRM's OGOR data system likely underestimate these volumes because they 
include fewer sources of emissions than other estimates, including 
EPA's and WRAP's. For onshore federal leases, operators reported to 
OGOR that about 0.13 percent of the natural gas produced was vented 
and flared, while EPA estimates showed the volume to be about 4.2 
percent, and estimates based on WRAP data showed it to be as high as 5 
percent. Similarly, for offshore federal leases, operators reported to 
OGOR that 0.5 percent of the natural gas produced was vented and 
flared, while data in BOEMRE's GOADS system--a database that focuses 
on the impacts of offshore oil and gas exploration, development, and 
production on air quality in the Gulf of Mexico region--showed that 
volume to be about 1.4 percent, and estimates from EPA showed it to be 
about 2.3 percent.[Footnote 28] 

Onshore leases. Onshore leases showed the largest variation between 
OGOR data and others' estimates of natural gas venting and flaring. 
Operators reported to MRM's OGOR system that about 0.13 percent of the 
natural gas produced on onshore federal leases was vented or flared 
each year between 2006 and 2008.[Footnote 29] BLM uses guidance from 
1980, which sets limits on the amount of natural gas that may be 
vented and flared on onshore leases, requires operators to report 
vented and flared gas to OGOR, and in some cases to seek permission 
before releasing gas.[Footnote 30] Although the guidance states that 
onshore operators must report all volumes of lost gas to OGOR, it does 
not enumerate the sources that should be reported or specify how they 
should be estimated.[Footnote 31] Staff from BLM told us that the 
reported volumes were from intermittent events like completions, 
liquid unloading, or necessary releases after equipment failures; 
however, operators did not report operational sources such as venting 
from oil storage tanks, pneumatic valves, or glycol dehydrators. In 
general, BLM staff said that they thought that vented and flared gas 
did not represent a significant loss of gas on federal leases. In 
addition, we found a lack of consistency across BLM field offices 
regarding their understanding of which intermittent volumes of lost 
gas should to be reported to OGOR. For example, staff from some of the 
offices said that they thought that intermittent vented and flared gas 
was not to be reported if operators had advance permission or where 
volumes were under BLM's permissible limits, while others said that 
they thought that operators still needed to report this gas. Our 
discussions with operators reflected this lack of consistency from BLM 
field office staff. Operators we spoke with said that they generally 
did not report operational sources, and in some cases did not report 
intermittent sources as long as they were under BLM's permissible 
limits for venting and flaring.[Footnote 32] 

In contrast, EPA's estimate of venting and flaring was approximately 
4.2 percent of gas production on onshore federal leases for the same 
period and consistently included both intermittent and operational 
sources. EPA estimated these emissions using data on average 
nationwide oil and gas production equipment and their associated 
emissions (see table 1).[Footnote 33] As noted earlier, venting from 
operational sources had not previously been seen as a significant 
contributor to lost gas. With these additional sources, EPA's 
estimates are around 30 times higher than the volumes operators 
reported to OGOR. According to EPA's estimates, the amount of natural 
gas vented and flared on onshore leases totaled around 126 billion 
cubic feet (Bcf) of gas in 2008. This amount is roughly equivalent to 
the natural gas needed to heat about 1.7 million homes during a year, 
according to our calculations. See figure 2 for a comparison between 
EPA's estimated gas emissions and the volumes reported to OGOR as a 
percentage of gas production on federal onshore leases. 

Table 1: EPA's Estimates of Vented and Flared Natural Gas and Sources 
for Onshore Federal Leases: 

Sources (2008): Flared (variety of sources); 
Volume (Bcf): 28. 

Sources (2008): Pneumatic devices; 
Volume (Bcf): 16. 

Sources (2008): Gas well liquid unloading; 
Volume (Bcf): 17. 

Sources (2008): Well completions; 
Volume (Bcf): 30. 

Sources (2008): Oil and condensate storage tanks; 
Volume (Bcf): 18. 

Sources (2008): Glycol dehydrators; 
Volume (Bcf): 7. 

Sources (2008): Other; 
Volume (Bcf): 10. 

Sources (2008): Total; 
Volume (Bcf): 126. 

Source: GAO analysis of EPA data. 

Note: Volatile organic compounds accounted for 26 Bcf of these 
emissions and were mostly from storage tanks and dehydrators according 
to EPA. 

[End of table] 

Figure 2: Comparison of OGOR Reported Volumes to EPA's Estimates of 
Vented and Flared Natural Gas for Onshore Federal Leases: 

[Refer to PDF for image: vertical bar graph] 

Percentage of production: 

Year: 2006; 
Interior/OGOR: 0.13%; 
EPA: 4.31%. 

Year: 2007; 
Interior/OGOR: 0.13%; 
EPA: 4.32%. 

Year: 2008; 
Interior/OGOR: 0.12%; 
EPA: 4.10%. 

Source: GAO analysis of EPA and OGOR data for federal leases. 

[End of figure] 

Similarly, analysis of WRAP data for five production basins in the 
mountain west in 2006 indicated as much as 5 percent of the total 
natural gas produced on federal leases was vented and flared. WRAP 
based its estimates, in part, on a survey of the types of equipment 
operators were using,[Footnote 34] and provided a detailed list of 
sources to be reported. WRAP's data included similar sources as EPA's 
data, as well as estimates of emissions from fugitive sources like 
leaking seals and valves. Although estimates based on WRAP data varied 
from basin to basin--between 0.3 and 5 percent--they were consistently 
much higher than the volumes operators reported to OGOR. The average 
vented and flared gas as a percentage of production was 2.2 percent 
across the five basins.[Footnote 35] See table 2 for a list of the key 
sources in one of the five basins. 

Table 2: Estimates of Vented and Flared Natural Gas based on 2006 WRAP 
Data for Federal Leases in the Piceance Basin (Colorado): 

Sources from Piceance Basin: Well completions; 
Volume (Bcf): 2.4. 

Sources from Piceance Basin: Pneumatic devices; 
Volume (Bcf): 0.5. 

Sources from Piceance Basin: Gas well liquid unloading; 
Volume (Bcf): 0.4. 

Sources from Piceance Basin: Fugitive emissions; 
Volume (Bcf): 0.1. 

Sources from Piceance Basin: Condensate storage tanks; 
Volume (Bcf): 0.1. 

Sources from Piceance Basin: Other sources; 
Volume (Bcf): 0.4. 

Sources from Piceance Basin: Total; 
Volume (Bcf): 3.8. 

Source: Environ Corp. analysis of 2006 WRAP data for federal leases. 

Note: Flared gas is included throughout several source categories, 
including completions and storage tanks. We chose to present data from 
the Piceance basin because it was representative of the key sources 
common to the other basins. Volume figures in table do not sum to 3.8 
Bcf due to rounding. 

[End of table] 

In figure 3, which compares estimates based on WRAP data with the 
volumes operators reported to OGOR for 2006, for the Uinta basin, the 
WRAP estimate was about 20 times higher than the volumes reported to 
OGOR, and for two other basins (i.e., Denver-Julesburg and N. San 
Juan) no volumes of vented and flared gas were reported to OGOR. 
[Footnote 36] 

Figure 3: Comparison of 2006 OGOR-Reported Volumes to Estimates Based 
on 2006 WRAP Data of Vented and Flared Natural Gas for Onshore Federal 
Leases in Five Basins: 

[Refer to PDF for image: vertical bar graph] 

Percentage of production: 

Basin: Denver-Julesburg; 
Interior/OGOR: 0%; 
WRAP: 2.08%. 

Basin: Piceance; 
Interior/OGOR: 0.17%; 
WRAP: 2.50%. 

Basin: Uinta; 
Interior/OGOR: 0.24%; 
WRAP: 5.07%. 

Basin: N. San Juan; 
Interior/OGOR: 0%; 
WRAP: 0.34%. 

Basin: S. San Juan; 
Interior/OGOR: 0.25%; 
WRAP: 1.13%. 

Source: GAO analysis of 2006 WRAP and OGOR data for federal leases. 

Note: The Denver-Julesburg, North San Juan, and Piceance basins are in 
Colorado, the Uinta basin is in Utah, and the South San Juan is in New 
Mexico. See appendix I for a map of the basins. 

[End of figure] 

Offshore leases. Offshore leases showed less variation between OGOR 
data and others' estimates of natural gas venting and flaring than 
onshore leases, but the volumes that operators reported to MRM's OGOR 
were still much lower than the volumes they reported to BOEMRE's GOADS 
system and estimates from EPA. Operators reported to OGOR that between 
0.3 and 0.5 percent of the natural gas produced on offshore leases was 
vented and flared each year from 2006 to 2008; however, they reported 
to GOADS that they vented and flared about 1.4 percent--about 32 Bcf-- 
of the natural gas produced on federal leases in the Gulf of Mexico in 
2008.[Footnote 37] Although regulations require offshore operators to 
report all sources of lost gas to OGOR, BOEMRE officials said that 
this did not include fugitive emissions. Furthermore, these officials 
also said that operators likely reported volumes from some operational 
sources as "lease-use" gas instead of including it in the venting and 
flaring data, thus contributing to the differences between OGOR and 
GOADS.[Footnote 38] GOADS data included sources similar to those 
included in EPA's and WRAP's data for onshore production, including 
the same operational sources. Further, guidance to operators for 
reporting to GOADS explicitly outlines the sources to be reported and 
how they should be estimated, while guidance for OGOR does not. Table 
3 outlines the emission sources for volumes operators reported to the 
GOADS system for 2008. In addition, EPA's offshore estimates showed 
that around 2.3 percent of gas produced on offshore federal leases--as 
much as 50 Bcf--was vented and flared every year from 2006 to 2008. 
According to our analysis of EPA's work, additional venting from 
natural gas compressors, used to maintain proper pressure in 
production equipment, accounted for the majority of the difference 
between the offshore EPA and GOADS volumes.[Footnote 39] 

Table 3: GOADS's Reported Vented and Flared Natural Gas and Sources 
for Offshore Federal Leases: 

Sources from 2008 GOADS Study: Venting; 
Volume (Bcf): 12. 

Sources from 2008 GOADS Study: Flaring; 
Volume (Bcf): 7. 

Sources from 2008 GOADS Study: Fugitive emissions; 
Volume (Bcf): 6. 

Sources from 2008 GOADS Study: Pneumatic devices; 
Volume (Bcf): 3. 

Sources from 2008 GOADS Study: Glycol dehydrators; 
Volume (Bcf): 1. 

Sources from 2008 GOADS Study: Other sources; 
Volume (Bcf): 2. 

Sources from 2008 GOADS Study: Total; 
Volume (Bcf): 32. 

Source: GAO analysis of GOADS data. 

Note: Volume figures in table do not sum to 32 Bcf due to rounding. 
See appendix I for more information on these figures. 

[End of table] 

On several occasions BOEMRE has made comparisons between data on 
vented and flared volumes in the OGOR and GOADS systems, according to 
BOEMRE officials. In 2004, BOEMRE compared data from the 2000 GOADS 
study with data from OGOR for a subset of offshore leases and found 
reported vented and flared volumes were not always in agreement--
attributing this difference to different operator interpretations of 
GOADS and OGOR reporting requirements. BOEMRE officials said they 
revised reporting procedures for the 2005 GOADS study. More recently, 
BOEMRE made similar comparisons between data from the 2008 GOADS study 
and OGOR data for a subset of leases and found they were in closer 
agreement.[Footnote 40] BOEMRE officials told us they will continue to 
make such comparisons to try to ensure the accuracy of the data in 
each system. In reporting volumes of vented and flared gas to both 
systems, operators can choose from a broad array of software packages, 
models, and equations to estimate emissions, and these techniques can 
yield widely varied results. For example, one study found that various 
estimation techniques to determine emissions from oil storage tanks 
either consistently underestimated or overestimated vented volumes. 
[Footnote 41] OGOR reporting instructions for both onshore and 
offshore operators, as noted, do not specify how operators should 
estimate these volumes. 

As part of our review, we analyzed 2008 OGOR and GOADS data for the 
Gulf of Mexico and found that the OGOR data likely underestimated the 
volumes of vented and flared natural gas on federal offshore leases. 
To do this analysis, we compared 2008 data from GOADS's vent and flare 
source categories with OGOR data for the same categories--looking at 
these source categories allowed us to directly compare the two data 
systems. In doing this analysis, we accounted for OGOR's exclusion of 
fugitive emissions and the reporting of sources, like pneumatic 
valves, as lease-use gas. Our analysis found that the volumes 
operators reported to OGOR--about 12 Bcf--were much lower than the 
volumes operators reported to GOADS--about 18 Bcf. Neither we nor MRM 
and BOEMRE officials could account for or explain these differences in 
the two data systems. BOEMRE officials said that they are still 
working to improve reporting to OGOR and GOADS and expect these two 
data systems to converge in the future. 

To improve reported data, BOEMRE recently released a final rule, in 
response to the recommendations in our 2004 report, that requires 
operators on larger offshore platforms to route vented and flared gas 
from a variety of sources through a meter to allow for more accurate 
measurement, among other things.[Footnote 42] BOEMRE officials said 
that these meters would help to improve the accuracy of data reported 
to both OGOR and GOADS.[Footnote 43] However, BOEMRE officials said 
they have had to address questions from some operators who were not 
sure which sources of vented gas should be routed through the newly 
required meters. In this regard, these officials said it may be useful 
to enumerate the required emission sources for reporting to OGOR in 
future guidance to offshore operators. They also noted that BOEMRE is 
planning a workshop in October 2011 to stress to operators the need 
for accurate reporting on their submissions to both GOADS and OGOR 
systems. In a similar way, EPA has taken action to improve the 
reporting of emissions from the oil and natural gas industry. EPA 
recently proposed a greenhouse gas reporting rule that would require 
oil and gas producers emitting over 25,000 metric tons of carbon 
dioxide equivalent to submit detailed data on vented and flared gas 
volumes to allow EPA to better understand the contribution of venting 
and flaring to national greenhouse gas emissions. For onshore leases, 
the proposed EPA rule provides details on the specific sources of 
vented and flared gas to be measured and proposes standardized methods 
for estimating volumes of greenhouse gas emissions where direct 
measurements are not possible. For offshore leases, operators would 
use the GOADS system to report venting and flaring. Data collection 
would begin in 2011 if the rule becomes finalized in 2010. 

Available Technologies Could Reduce About 40 Percent of Natural Gas 
Estimated to Be Lost to Venting and Flaring on Onshore Federal Leases, 
Potentially Increasing Federal Royalty Payments and Reducing 
Greenhouse Gas Emissions: 

Data from EPA, supported by information obtained from technology 
vendors and our analysis of WRAP data, suggest that about 40 percent 
of natural gas estimated to be vented and flared on federal onshore 
leases could be economically captured with currently available control 
technologies, although some barriers to their increased use exist. 
Such captures could increase federal royalty payments and reduce 
greenhouse gas emissions. 

Available Technologies Could Reduce Venting and Flaring on Onshore 
Federal Leases, but According to EPA Officials and Technology Vendors, 
Some Barriers Exist: 

Available technologies could reduce venting and flaring at many stages 
of the production process. However, there are some barriers to 
implementing these technologies. 

Available Technologies Could Reduce Venting and Flaring on Onshore 
Federal Leases: 

EPA analysis and our analysis of WRAP data identified opportunities 
for expanded use of technologies to reduce venting and flaring. 
Specifically: 

* EPA's 2008 analysis, the most recent data available, indicates that 
the increased use of available technologies, including technologies 
that capture emissions from sources such as well completions, liquid 
unloading, or venting from pneumatic devices,[Footnote 44] could have 
captured about 40 percent--around 50 Bcf--of the natural gas EPA 
estimated was lost from onshore federal leases nationwide.[Footnote 
45] For instance, EPA found significant opportunities to add "smart" 
automation to existing plunger lifts, which tune plunger lifts to 
maximum efficiency and, in turn, minimize the amount of gas lost to 
venting. EPA estimated that using this technology where economically 
feasible could have resulted in the capture of more than 7 Bcf of 
vented and flared natural gas on federal leases in 2008--around 6 
percent of the total volume estimated by EPA to be vented and flared 
on onshore federal leases. Similarly, EPA estimated that additional 
wells on onshore federal leases could have incorporated reduced 
emission completion technologies in 2008, which could have captured an 
additional 14.7 Bcf of vented and flared natural gas. Table 4 outlines 
EPA's estimates of potential reductions in venting and flaring on 
onshore federal leases. 

Table 4: Potential Nationwide Reductions on Onshore Federal Leases 
from Increased Use of Venting and Flaring Reduction Technologies, 2008: 

Emission source: Gas well liquid unloading; 
Potential reduction (Bcf): 7.2--expand use of smart automated plungers; 
Percent of total volume EPA estimated vented and flared: 5.7%. 

Emission source: Well completions; 
Potential reduction (Bcf): 14.7--expand use of reduced emission 
completions; 
Percent of total volume EPA estimated vented and flared: 11.7. 

Emission source: Glycol dehydrators; 
Potential reduction (Bcf): 5.7--install vapor recovery devices; 
Percent of total volume EPA estimated vented and flared: 4.5. 

Emission source: Pneumatic devices; 
Potential reduction (Bcf): 9.7--use low-bleed devices; 
Percent of total volume EPA estimated vented and flared: 7.7. 

Emission source: Oil and condensate storage tanks; 
Potential reduction (Bcf): 12.9--install vapor recovery units; 
Percent of total volume EPA estimated vented and flared: 10.2. 

Emission source: Total; 
Potential reduction (Bcf): 50.2; 
Percent of total volume EPA estimated vented and flared: 39.8. 

Source: GAO analysis of EPA data. 

[End of table] 

* Our analysis of WRAP's 2006 data from certain onshore production 
basins also highlighted the possibility for additional venting and 
flaring reductions. We found significant regional differences in use 
of control technologies in oil and gas production basins in the 
mountain west and, subsequently, differences in vented and flared 
volumes, as a percentage of total basin production. For example, 
according to the WRAP data, most pneumatic devices in the Piceance 
basin in northwest Colorado were low-bleed in 2006, while high-bleed 
pneumatic devices were still predominant in the neighboring Uinta 
basin in northeast Utah. Although the Piceance and Uinta basins are 
part of the same geological formation and share many characteristics, 
including type of gas development and extraction methods, the WRAP 
data show that the venting and flaring volumes on federal leases in 
the Uinta basin are nearly double those in the Piceance basin as a 
percentage of total gas production. See appendix I for a map of these 
basins. 

Differing rates of use of venting and flaring reduction technologies-- 
among states, oil and gas production basins, and individual operators--
can be attributed to two key factors based on our analysis. Variations 
in state air quality regulations are one factor, according to EPA and 
state agency officials and industry representatives. For example, 
Colorado has stricter requirements than Utah for emissions controls, 
according to officials, which partly explains the variation in levels 
of control technologies in use in these production basins. Similarly, 
over the last 5 years Wyoming has instituted many regulatory changes 
to address increases in ground-level ozone, including stricter 
emission-reduction requirements for storage tanks and reduced emission 
completions. 

The net economic benefit of installing equipment to capture vented and 
flared gas is the second key factor. The cost of implementing a given 
technology can be substantial--and may be especially burdensome for 
smaller operators. Nonetheless, in many cases, the costs are recovered 
quickly as the captured gas is sold, according to industry and EPA 
officials. According to documents from EPA's Natural Gas STAR program, 
a voluntary partnership with industry to encourage reductions in gas 
venting, in many cases, the cost of implementing these control 
technologies can be recovered in less than 1 year. According to EPA 
and industry representatives, for operators with sufficient resources--
including engineering and cost-estimation teams, as well as capital 
for infrastructure--decisions to potentially install capture equipment 
are easy to make based on simple economic considerations. For example, 
the cost of switching from high-bleed to low-bleed pneumatic devices 
ranges from $700 to $3,000 per device, which can be recovered in 2 to 
8 months, on average, according to EPA documents. Similarly, 
retrofitting an oil production storage tank with a vapor recovery unit 
can cost tens of thousands of dollars, but the gas saved can pay for 
the technology generally within 2 years. According to EPA and BLM 
officials, some operators have already implemented plunger-lift 
systems, vapor recovery units, reduced emission completions, and other 
technologies due to the economic benefit of doing so. However, these 
officials cautioned that the return-on-investment calculation can be 
complicated by a number of factors, including the geology and location 
of the production basin and the differences in the composition of 
extracted oil or gas. For instance, while some high-bleed pneumatic 
devices vent more gas than low-bleed devices, the higher bleed rates 
keep the equipment from freezing in cold conditions, according to 
industry officials. Similarly, reduced emission completions are not 
economically viable for conventional gas wells with low wellhead 
pressures, as the costs of reduced emission completion equipment can 
easily outweigh the benefits of capturing the gas, according to 
industry representatives. In addition, EPA and industry officials told 
us that installing these technologies may require other significant 
infrastructure investments, such as a new pipeline from an oil well 
where natural gas is currently being vented or flared to a gas sales 
line, which could make the investment in these technologies cost-
prohibitive. 

A number of industry representatives and EPA officials noted the 
potential for currently-developing carbon markets to influence the 
economics of venting and flaring control technologies. Carbon markets 
generally refer to real financial markets where carbon emission 
reductions, known as carbon offset credits, are bought and sold; 
companies that are emitting more than the amount of carbon allocated, 
or allowed by the government regulators, can buy credits to offset 
their excess emissions and companies that reduce emissions can sell 
those reductions as credits. Operators are increasingly able to 
document the carbon reductions achieved through installations of the 
technologies and, in turn, sell these offset credits on open carbon 
markets according to industry officials. Potential opportunities to 
claim and sell these carbon offset credits may add to the economic 
incentives for using these control technologies, according to some 
industry officials.[Footnote 46] Although there is some risk involved 
with claiming these offsets, as the markets are developing, pending 
federal legislation could make it more likely that a market for carbon 
will become increasingly relevant, according to industry officials. 

The experiences of some operators in implementing technologies to 
reduce venting and flaring show the economic advantages that can 
result. For example, BP installed smart-automated plunger lifts on its 
onshore wells throughout the San Juan Basin and reported achieving a 
99 percent reduction in vented volumes as a result, increasing 
production and profits, according to company representatives. In 
addition, according to company officials, the company has replaced all 
of its high-bleed pneumatic devices with low-bleed devices, saving 
approximately 3.4 Bcf of natural gas emissions annually. BP also 
reported investing $1.2 million in reduced emission completions since 
2000, which it credits with saving 1.5 Bcf of gas and almost 29,000 
barrels of condensate. These emissions savings prevented over 100,000 
metric tons of CO2 and 2,000 metric tons of methane from entering the 
atmosphere and increased revenues by almost $5.8 million, according to 
company documents. The results of BP's actions were likely a factor in 
the estimates of venting and flaring based on WRAP data for the North 
San Juan basin that we reported earlier; BP was the major operator in 
that basin, and it had the lowest estimates of venting and flaring. 
Similarly, Devon Energy recently took steps to expand its use of 
venting and flaring reduction technologies for some of its onshore 
wells that have resulted in significant successes, according to 
company representatives. In 2008, Devon representatives reported 10.4 
Bcf of methane emission reductions that they attribute to the 
replacement of high-bleed pneumatic devices, installation of vapor 
recovery units on storage tanks, use of automated plunger lift 
systems, and use of reduced emission completions, among other 
technologies. Overall, the company saved more than $125 million since 
1990 by implementing these technologies, according to Devon 
representatives. 

Vendors of these technologies also cited success stories. For example, 
one vendor cited an example where installation of two vapor recovery 
units onshore requiring capital investments of more than $20,000 
yielded a full return on investment in less than a month through the 
capture of otherwise vented gas. In addition, one operator replaced 
and retrofitted 400 high-bleed pneumatics on wells onshore, at a cost 
of more than $118,000, but found an annual savings in captured gas of 
nearly $149,000, for a payback on investment in less than 1 year. Each 
of these cases demonstrates that the venting and flaring reduction 
technologies can, under the right circumstances, add to an operator's 
bottom line. These results illustrate the potential multiple benefits 
of venting and flaring reduction technologies--benefits to industry in 
the form of additional revenues; benefits to the government in the 
form of increased royalty payments; and benefits to the environment in 
the form of reductions in vented and flared greenhouse gases. 

EPA Officials and Technology Vendors Identified Barriers to 
Implementing Available Technologies: 

Despite the potential economic benefits of using these technologies, 
there are barriers to their implementation for some operators, 
according to an EPA official and technology vendors. One key barrier 
is that many operators are unaware of the economic advantages. In 
part, this is because smaller operators often do not have the time or 
expertise to undertake the engineering analysis to understand whether 
and how they can benefit, according to EPA and technology vendors. 
Also, these officials said that smaller operators often do not have 
the capital to purchase equipment, regardless of whether they can 
recover the costs. According to officials, the voluntary nature of the 
EPA Natural Gas STAR program is not enough to spur industry to change, 
and one industry official stated that the sometimes contentious 
relationship between the federal government and private industry 
contributes to this lack of awareness. Private industry does not 
always take federal efforts to encourage industry to alter business 
practices at face value, according to officials. One industry 
representative cited reluctance to participate in EPA's Natural Gas 
STAR program as an example of this skepticism. 

A number of other factors can also contribute to operators not 
adopting venting and flaring reduction technologies. Officials that we 
spoke with said that overcoming "institutional inertia"--a company's 
tendency to do business and carry out operations as it always has--is 
key to adopting these technologies. In a similar vein, industry and 
EPA officials told us that upper management support is critical for 
these types of efforts to go forward, and many companies' management 
is focused on other efforts that are deemed more important than what 
are seen as incremental improvements in operations. For example, the 
operator may choose to invest its limited available capital in 
drilling a new well, which may have a larger return than investments 
in capturing vented or flared gas from an existing well, according to 
industry representatives. 

Reductions in Natural Gas Lost to Venting and Flaring Could Increase 
Federal Royalty Payments and Reduce Greenhouse Gas Emissions: 

Reductions in natural gas lost to venting and flaring from federal 
leases would increase the volume of natural gas produced and sold, 
thereby potentially increasing federal royalty payments. If, for 
instance, a total of 126 Bcf of natural gas was lost to venting and 
flaring on onshore federal leases in 2008, as EPA has estimated, that 
loss would equal approximately $58 million in federal royalty 
payments. If, as EPA estimates, 40 percent of this lost gas could have 
been economically captured and sold, federal royalty payments could 
increase by approximately $23 million annually, which represents about 
1.8 percent of annual federal royalty payments on natural gas. 
[Footnote 47] 

Reducing natural gas lost to venting and flaring from federal leases 
could also reduce greenhouse gases to the atmosphere according to our 
calculations. Because methane is about 25 times more potent as a 
greenhouse gas over a 100-year period, and almost 72 times more potent 
over a 20-year period according to the Intergovernmental Panel on 
Climate Change,[Footnote 48] reducing direct venting of natural gas to 
the atmosphere has a significantly greater positive effect, in terms 
of global warming potential, than does reducing flaring. Again using 
EPA's estimates, if a total of 98 Bcf of natural gas was vented and 28 
Bcf was flared annually, those releases would account for about 41 
million metric tons of carbon dioxide equivalent released to the 
atmosphere, which would be roughly equivalent to the emissions of 
almost 8 million passenger vehicles or about 10 average-sized coal-
fired power plants. Capturing 40 percent of this volume would result 
in emissions reductions of about 50 Bcf, which is equivalent to the 
emissions of 3.1 million passenger vehicles or about 4 average-sized 
coal-fired power plants, according to our analysis.[Footnote 49] 

Some EPA officials also told us that they believed that federal 
efforts to reduce venting and flaring could also have a spillover 
effect--that is, it could lead operators to use these technologies on 
state and private leases as well. Data from EPA and WRAP included 
vented and flared gas from nonfederal leases, and the data showed that 
there were similar percentages of gas being lost, suggesting that the 
potential greenhouse gas reductions from the expanded use of these 
technologies could go well beyond those from federal oil and gas 
production.[Footnote 50] 

We did not find complete quantitative data on reduction opportunities 
offshore from Interior, EPA, or others that could be used to fully 
identify the potential to reduce emissions offshore. However, EPA 
officials told us that opportunities for reducing emissions from 
venting and flaring from offshore production platforms likely exist. 
For instance, EPA found that various production components, including 
valves and compressor seals, contribute significant volumes of 
fugitive emissions, but that these emissions could be mitigated 
through equipment repair or retrofitting. One estimate based on EPA 
analysis of 15 offshore platforms in 2008, suggests that most of the 
gas lost through compressor seals could be recovered economically--
saving about 70 percent of the overall gas they estimated to be lost 
on those platforms. However, EPA's analysis warns that some mitigation 
strategies may be less cost-effective in the offshore environment 
because capital costs and installation costs tend to be higher. 

Interior's Oversight Does Not Ensure That Operators Minimize Venting 
and Flaring on Federal Leases, While a Voluntary EPA Program Has 
Reduced Vented Gas According to EPA and Industry Participants: 

Interior is responsible for ensuring that operators minimize natural 
gas venting and flaring on federal onshore and offshore leases; 
however, while both BLM and BOEMRE have taken steps to minimize 
venting and flaring on federal leases, their oversight of such leases 
has several limitations. Although EPA does not have a direct 
regulatory role with respect to managing federal oil and gas leases, 
its Natural Gas STAR program has helped to reduce vented gas on 
federal leases according to EPA and industry participants. 

BLM and BOEMRE Have Taken Steps to Minimize Venting and Flaring on 
Federal Leases, but Their Oversight Has Several Limitations: 

As part of their oversight responsibilities, Interior's BLM and BOEMRE 
are charged with minimizing the waste of federal resources, and, to 
that end, both agencies have issued regulations and guidance that 
limit venting and flaring of gas during routine procedures such as 
liquid unloading and well completions[Footnote 51]. However, their 
oversight has several limitations, namely (1) the regulations and 
guidance do not address new capture technologies or all sources of 
lost gas; (2) the agencies do not assess options for reducing venting 
and flaring in advance of oil and gas production for purposes other 
than addressing air quality; and (3) the agencies have not developed 
or do not use information regarding available technologies that could 
reduce venting and flaring. 

Regulations and Guidance Limit Venting and Flaring, but Do Not Address 
Newer Technologies or All Sources of Lost Gas: 

Onshore leases. BLM's guidance limits venting and flaring from routine 
procedures and requires operators to request permission to vent and 
flare gas above these limits.[Footnote 52] If operators request 
permission to exceed these limits, BLM is to assess the economic and 
technical viability of capturing additional gas and require its 
capture when warranted.[Footnote 53] Although BLM guidance sets limits 
on venting and flaring of natural gas and allows flexibility to exceed 
them in certain cases, it does not address newer technologies or all 
sources of lost gas. Specifically, BLM guidance is 30 years old and 
therefore does not address venting and flaring reduction technologies 
that have advanced since it was issued. For example, since the 
guidance was written, technologies have been developed to economically 
reduce emissions from well completions and liquid unloading--namely 
the use of reduced emission completion and automated plunger lift 
technologies respectively. These two sources of emissions were 
important contributors to vented and flared volumes that we discussed 
earlier. Despite this fact, the use of such technologies where it is 
economic to do so is not covered in BLM's current guidance. In 
general, BLM officials said that they thought the industry would use 
venting and flaring reduction technologies if they made economic 
sense. Similarly, new lower-emission devices could also reduce venting 
and flaring from other sources of emissions that are not covered by 
BLM's guidance, such as pneumatic valves or gas dehydrators--two 
sources that contribute to significant lost gas. In discussions with 
BLM staff about their guidance, staff acknowledged that existing 
guidance was outdated given current technologies and said that they 
were planning to update it by the second quarter of 2012. 

Offshore leases. Like BLM, BOEMRE has regulations that limit the 
allowable volumes of vented and flared gas from offshore leases to 
minimize losses of gas from routine operations. Operators can also 
apply for permission to exceed these limits and, like BLM, BOEMRE 
would evaluate the economic and technical viability of capturing 
additional gas. Further, BOEMRE inspects offshore platform facilities 
each year and, as part of these inspections, reviews on-site daily 
natural gas venting records.[Footnote 54] BOEMRE officials told us 
that the agency requires operators to keep these venting records and 
that it uses them to, among other things, identify any economically 
viable opportunities for an operator to install control equipment. 
Overall BOEMRE officials said that operators were required to install 
venting and flaring reduction equipment where economic, even if they 
would make as little as $1 in net profit from the captured gas. 
According to agency officials, due to the type of production and 
operations offshore, reduction opportunities mostly consist of 
installing vapor recovery units, and these officials said that they 
generally believe that companies have installed such equipment where 
it is economic to do so. Although BOEMRE conducts regular inspections, 
the daily venting records do not include all sources of vented gas. 
For example, emission estimates from sources of gas such as pneumatic 
valves and glycol dehydrators are not included, and therefore 
inspectors are not able to make assessments of the potential to reduce 
emissions from these sources. Both of these sources were contributors 
to lost gas offshore from the 2008 GOADS study, suggesting potential 
reduction opportunities. BOEMRE officials said that the agency 
considers these sources lease-use gas, and as a result, believed that 
they could not legally consider the economic and technical viability 
of this gas and require its capture when warranted. However, based on 
our review of BOEMRE regulations and authorizing legislation, it 
appears that BOEMRE has the authority to require operators to minimize 
the loss of this gas, including requiring its capture where 
appropriate. BOEMRE officials agreed with our assessment. 

The Agencies Do Not Assess Options for Reducing Venting and Flaring in 
Advance of Oil And Gas Production: 

Onshore leases. While BLM regulations authorize and direct BLM 
officials to offer technical advice and issue orders for specific 
lease operations to minimize waste,[Footnote 55] BLM does not 
explicitly assess options to minimize waste from vented and flared gas 
before production. For example, we identified two phases in advance of 
production where BLM could assess venting and flaring reduction 
options--during the environmental review phase and when the operator 
applies to drill a new well. However, the agency does not explicitly 
assess these options, or discuss them with operators, during either 
phase. For example, during the environmental review phase, BLM works 
with states to assess emissions from oil and gas production, and that 
air quality assessment may include venting and flaring reduction 
requirements. According to BLM officials, since states generally have 
primary responsibility to implement and enforce air quality standards, 
the standards drive these requirements, and states focus only on the 
role venting and flaring plays in air pollution, rather than the 
minimization of waste. Therefore in production basins where air 
quality standards are being met, or where only minimal use of 
technology is required to meet them, BLM would not assess venting and 
flaring reduction technologies to the full extent that they could 
economically reduce vented and flared gas.[Footnote 56] One official 
noted that some BLM officials felt constrained in their ability to 
consider the use of venting and flaring reduction technologies because 
of this. Similarly, during the phase when operators apply to drill new 
wells, BLM assesses detailed technical and environmental aspects of 
the project, but BLM officials told us their assessment does not 
include a review of options to reduce venting and flaring.[Footnote 57] 

Offshore leases. Similar to BLM, BOEMRE assesses venting and flaring 
reduction options in advance of production to determine whether vented 
and flared gas from offshore platforms would harm coastal air quality, 
but again, the focus is on meeting air quality standards rather than 
assessing whether gas can be economically captured. Therefore, when 
BOEMRE does not anticipate harm to coastal air quality, as is often 
the case according to officials, the agency does not further consider 
venting and flaring reduction options at this phase. Further, while 
the application operators submit in advance of drilling must include a 
description of the technologies and recovery practices that the 
operator will use during production,[Footnote 58] venting and flaring 
reduction options are not included in that submission. 

Agencies Have Not Developed or Do Not Use Information Regarding 
Available Technologies That Could Reduce Venting and Flaring: 

Onshore leases. We found that BLM does not maintain a database 
regarding the extent to which available venting and flaring reduction 
technologies are used on federal oil and gas leases.[Footnote 59] As 
such, it could be difficult for BLM to identify opportunities to 
reduce venting and flaring or estimate the potential to increase the 
capture of gas that is currently vented or flared. For example, while 
BLM guidance provides that the natural gas vaporizing from storage 
tanks must be captured if BLM determines recovery is warranted, BLM 
does not collect data on the use of control technologies and available 
OGOR data do not contain the volumes of lost gas from storage tanks. 
Thus BLM may be overlooking circumstances where recovery could be 
warranted. In addition, according to BLM officials we spoke with, 
although infrared cameras can be used to identify sources of lost gas, 
BLM has not used them during inspections of production facilities. 
Although relatively expensive, infrared cameras allow users to rapidly 
scan and detect vented gas or leaks across wide production areas. BLM 
officials cited budgetary constraints and challenges in developing a 
policy and protocols for why the cameras have not been used regularly 
by the agency. 

Offshore leases. Although the GOADS data system contains some 
information on the types of equipment operators use, BOEMRE has not 
analyzed this information to identify emission-reduction opportunities 
according to officials. GOADS contains information about the use of 
equipment such as vapor recovery systems. These data have not been 
used by BOEMRE to identify venting and flaring reduction opportunities 
because the agency has not considered using these data for purposes 
other than addressing air quality, according to a BOEMRE official. 
Nonetheless, based on our review of the GOADS data system, by not 
analyzing such data, BOEMRE is not able to identify emission-reduction 
opportunities. As a case in point, we found that emissions from 
pneumatic valves in the 2008 GOADS study made noticeable contributions 
to overall lost gas, which might suggest the potential to expand the 
use of low-bleed pneumatics in some cases. BOEMRE officials also noted 
that, unlike BLM, its inspectors had used infrared cameras to look for 
obvious sources of vented and flared gas in a few sample locations 
close to shore. In this regard, they said expanded use of infrared 
cameras could be useful to help enforce their new rule that requires 
the use of meters for vented and flared gas. Specifically, they said 
that the cameras could identify sources of gas that operators may have 
not routed through the meter as required. They also noted that 
expanded use of the cameras could help to identify and potentially 
reduce fugitive gas emissions that currently go undetected.[Footnote 
60] 

EPA's Voluntary Natural Gas STAR Program Has Helped Reduce Vented Gas, 
According to EPA and Industry Participants: 

Although Interior has the primary role in federal oil and gas leasing, 
EPA's Natural Gas STAR program has encouraged some operators to adopt 
technologies and practices that have helped to reduce methane 
emissions from the venting of natural gas, according to EPA and 
industry participants. Through this program, industry partners 
evaluate their emissions and consider ways to reduce them, although 
the reductions are voluntary. The program also maintains an online 
library of technologies and practices to reduce emissions that 
quantify the costs and benefits of each emission-reduction option. 
Natural Gas STAR also sponsors conferences to facilitate information 
exchange between operators regarding emissions reductions 
technologies. Partner companies report annually about their efforts to 
reduce emissions along with the volumes of the emission reductions. 
[Footnote 61] 

According to the Natural Gas STAR Web site, domestic oil and gas 
industry partners reported more than 114 Bcf of methane emission 
reductions in 2008, which amounts to about 0.4 percent of the total 
natural gas produced that year. However, one industry representative 
said that, while large and midsize operators were aware of the Natural 
Gas STAR program, smaller operators were not aware and, even if some 
smaller operators were aware of the program, they may not have the 
environmental staff to implement the technologies and practices. 
Despite the potential usefulness of information from the Natural Gas 
STAR program to oil and gas producers on federal leases, some of the 
BLM officials that we spoke with were unfamiliar with Natural Gas STAR. 

Conclusions: 

Fulfilling its responsibility to ensure that the country's oil and 
natural gas assets are developed reasonably and result in fair 
compensation for the American people requires Interior to have 
accurate and complete information on all aspects of oil and natural 
gas leases. Interior has collected some information on vented and 
flared gas through MRM's OGOR system, but without a full understanding 
of these losses Interior cannot fully account for the disposition of 
taxpayer resources or identify opportunities to prevent undue waste. 
MRM's OGOR data system does not provide information on all sources of 
lost gas, which is the primary source of data that BLM uses to measure 
overall vented and flared gas onshore. Therefore, OGOR data present an 
incomplete picture of venting and flaring onshore, leading BLM 
officials to believe that vented and flared gas volumes do not 
represent a significant loss of gas on federal leases. Similarly, data 
in BOEMRE's GOADS data system differ considerably from data in OGOR, 
and have not been reconciled--raising questions about the accuracy of 
offshore data sources. 

Regarding Interior's oversight of operators venting and flaring gas, 
because current guidance and regulations from BLM and BOEMRE do not 
require the minimization of all sources of vented and flared gas-- 
although legislation exists authorizing them to require that waste on 
federal leases be minimized--operators may be venting and flaring more 
gas than should otherwise be allowed. In fact, we found that operators 
are not using available technologies in all cases to economically 
reduce vented and flared gas. BLM guidance has not kept pace with the 
development of economically viable capture technologies for a number 
of sources of lost gas, and BOEMRE has been reluctant to consider the 
economic and technical viability of minimizing the waste of "lease-
use" gas because officials had believed they were legally constrained 
from doing so. 

In addition to the limitations of these regulations, BLM and BOEMRE 
have not used their authority in two situations where they could 
potentially further reduce venting and flaring. First, neither agency 
has used its authority to minimize waste beyond relevant air quality 
standards by assessing the use of venting and flaring reduction 
technologies before production. Second, because BLM lacks data about 
the use of venting and flaring technologies for onshore leases and 
BOEMRE does not analyze its existing information for offshore leases 
in its GOADS data system, these agencies are not fully aware of 
potential opportunities to use available technologies. Further, 
neither agency takes full advantage of newer infrared camera 
technology that can help to identify sources of lost gas--as BOEMRE 
officials have acknowledged, this technology could help reveal 
additional sources of lost gas. 

Ultimately, a sharper focus by BOEMRE and BLM on the nature and extent 
of venting and flaring on federal leases could have multiple benefits. 
Specifically, increased implementation of available venting and 
flaring reduction technologies, to the extent possible, could increase 
sales volumes and revenues for operators, increase royalty payments to 
the federal government, and decrease emissions of greenhouse gases. In 
addition, our analysis of WRAP and EPA data showed as much or more 
vented and flared gas on nonfederal leases, and we share the 
observation with EPA officials that a spillover effect may occur, 
whereby oil and gas producers, seeing successes on their federal 
leases, take similar steps on state and private leases. 

Recommendations for Executive Action: 

To ensure that Interior has a complete picture of venting and flaring 
on federal leases and takes steps to reduce this lost gas where 
economic to do so, we are making five recommendations to the Secretary 
of the Interior. 

To ensure that Interior's data are complete and accurate, we recommend 
that the Secretary of the Interior direct BLM and BOEMRE to take the 
following action: 

* Take additional steps to ensure that each agency has a complete and 
accurate picture of vented and flared gas, for both onshore and 
offshore leases, by (1) BLM developing more complete data on lost gas 
by taking into consideration additional large onshore sources and ways 
to estimate them not currently addressed in regulations--sources that 
EPA's newly proposed greenhouse gas reporting rule addresses--and (2) 
BOEMRE reconciling differences in reported offshore venting and 
flaring volumes in OGOR and GOADS data systems and making adjustments 
to ensure the accuracy of these systems. 

To help reduce venting and flaring of gas by addressing limitations in 
their regulations, we recommend that the Secretary of the Interior 
direct BLM and BOEMRE to take the following four actions: 

* BLM should revise its guidance to operators to make it clear that 
technologies should be used where they can economically capture 
sources of vented and flared gas, including gas from liquid unloading, 
well completions, pneumatic valves, and glycol dehydrators. BOEMRE 
should consider extending its requirement that gas be captured where 
economical to "lease-use" sources of gas; 

* BLM and BOEMRE should assess the potential use of venting and 
flaring reduction technologies to minimize the waste of natural gas in 
advance of production where applicable, and not solely for purposes of 
air quality; 

* BLM and BOEMRE should consider the expanded use of infrared cameras, 
where economical, to improve reporting of emission sources and to 
identify opportunities to minimize lost gas; and: 

* BLM should collect information on the extent that larger operators 
use venting and flaring reduction technology and periodically review 
this information to identify potential opportunities for oil and gas 
operators to reduce their emissions, and BOEMRE should use existing 
information in its GOADS data system for this same purpose, to the 
extent possible. 

Agency Comments and Our Evaluation: 

We provided a copy of our draft report to Interior and EPA for review 
and comment. Interior provided written comments that concurred with 
four of the five recommendations and partly concurred with the 
remaining recommendation. Its comments are reproduced in appendix II 
and key areas are discussed below. EPA did not provide formal comments 
on the report, but the agency's Office of Air and Radiation provided 
written comments to GAO staff, which we summarize and discuss below. 
Interior and EPA also provided other clarifying or technical comments, 
which we incorporated as appropriate. 

Interior's comments reflected the views of BLM and BOEMRE. BLM 
concurred with all five recommendations and noted that it plans to 
incorporate recommended actions into its new Onshore Order in order to 
improve the completeness and accuracy of its data and help address 
limitations in its current regulations. 

BOEMRE concurred with four of the recommendations and partly concurred 
with our second recommendation that they consider enforcing the 
economical capture of "lease-use" gas. It stated that we 
misapprehended the scope of the regulations governing "lease-use" 
sources of gas in that BOEMRE does not have current regulations to 
require the capture of "lease-use" gas. In response to this comment, 
we reworded our recommendation to clarify that BOEMRE should consider 
extending its existing requirements for the economical capture of gas 
to "lease-use" gas. In a related point, BOEMRE also noted that we were 
unable to quantify the potential volumes of additional gas that could 
be captured by holding operators to this same economic standard for 
"lease-use" gas. While current data have limitations, BOEMRE's GOADS 
data suggest potential opportunities to capture additional gas from 
lease-use sources, namely glycol dehydrators and pneumatic devices. As 
such, we support BOEMRE's efforts to further evaluate this issue and 
take action through new guidance or regulations, as it believes 
appropriate. 

EPA's Office of Air and Radiation commented on three areas of the 
report: 

* First, EPA emphasized the significant air quality impacts from the 
volatile organic compounds (VOC) associated with vented gas and 
provided us with estimates of the potential volumes of these 
emissions. While we recognize that the impacts of VOC emissions on air 
quality are important, these impacts were largely beyond the scope of 
our work. Nonetheless, we incorporated an estimate of these VOC 
emissions into supporting notes to table 1 that reflected EPA's 
estimates of vented and flared gas. We also added additional 
information to the background regarding VOC emissions. 

* Second, EPA suggested that we recommend to BLM and BOEMRE that they 
require the use of the best available venting and flaring control 
measures during leasing or drilling permitting. We continue to believe 
that BLM and BOEMRE should require the use of these technologies where 
economical, and recognize that requiring the use of such controls when 
the economics of capturing gas are unfavorable is not required by 
current EPA greenhouse gas regulations. 

* Third, EPA provided us with its revised emission estimates for 
vented and flared gas based on updated analysis for its proposed rule 
on the reporting of greenhouse gases by industry. It also provided us 
with revised estimates for the use of additional control technologies 
to reduce the emissions of vented and flared gas. In both cases, we 
incorporated these revised estimates in our report where applicable. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the appropriate congressional committees, Secretary of the 
Interior, Administrator of the Environmental Protection Agency, and 
other interested parties. In addition, the report will be available at 
no charge on the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made major contributions 
to this report are listed in appendix IV. 

Signed by: 

Frank Rusco: 
Director, Natural Resources and Environment: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Our objectives were to (1) examine available estimates of vented and 
flared natural gas on federal leases; (2) estimate the potential to 
capture additional vented and flared natural gas with available 
technologies and the associated potential increases in royalty 
payments and reductions in greenhouse gas emissions and; (3) assess 
the federal role in reducing venting and flaring of natural gas. 

To examine available estimates of vented and flared natural gas on 
federal leases, we collected data from the Department of the 
Interior's (Interior) Bureau of Land Management (BLM), Bureau of Ocean 
Energy Management, Regulation and Enforcement (BOEMRE), including 
BOEMRE's Minerals Revenue Management (MRM) program; the Environmental 
Protection Agency (EPA); and the Western Regional Air Partnership 
(WRAP). We also interviewed staff from these agencies and oil and gas 
producers operating on federal leases regarding venting and flaring 
data collection, analysis, and reporting. We obtained data from four 
key sources: MRM's Oil and Gas Operations Report (OGOR) database, 
BOEMRE's Gulfwide Offshore Activity Data System (GOADS), EPA's Natural 
Gas STAR Program, and WRAP's analysis of air emissions for a number of 
western states. We assessed the quality of the data from each of these 
sources and determined that these data were sufficiently reliable for 
the purposes of our report. 

MRM provided OGOR data on vented and flared volumes and production for 
both onshore and offshore federal leases for calendar years 2006 to 
2008. MRM uses the OGOR data, in part, to ensure accurate federal 
royalty payments.[Footnote 62] The OGOR data are operator-reported, 
and reported venting and flaring volumes are a mix of empirical 
measurements and estimates from operators. MRM was unable to provide 
complete estimates of vented and flared gas on all federal leases 
because a portion of federal leases are managed as part of lease 
agreements--collections of leases that draw from the same oil or gas 
reservoir, which may include federal and nonfederal leases. MRM was 
unable to determine the share of reported vented and flared gas from 
the federal portion of those lease agreements; it reported venting and 
flaring from (1) lease agreements that included only federal leases 
and (2) all lease agreements, which included some nonfederal leases. 
In this report, we discuss the vented and flared volumes from the 
agreements that contain only federal leases. As a result, we report 
vented and flared gas volumes from the OGOR data as a percentage of 
total production on these leases, rather than as absolute volumes, in 
order to compare the OGOR estimates to estimates from other data 
sources. 

A second source of venting and flaring data was BOEMRE's 2008 GOADS 
data, which contained estimates of gas lost to venting and flaring on 
federal leases in the Gulf of Mexico--which accounted for 98 percent 
of federal offshore gas production in 2008. BOEMRE collects GOADS data 
every 3 years and uses these data to estimate the impacts of offshore 
oil and gas exploration, development, and production on onshore air 
quality in the Gulf of Mexico region. BOEMRE also uses GOADS as part 
of an impact analysis required by the National Environmental Policy 
Act. GOADS data capture specific information on a variety of sources 
of air pollutants and greenhouse gases resulting from offshore oil 
production. BOEMRE provided us with actual volumes of natural gas 
released from the vented and flared source categories. For the other 
sources, we used the emissions that were reported in GOADS in tons of 
methane per year, and we converted these to volumes of methane and 
then to natural gas, assuming a 78.8 percent methane content for 
natural gas.[Footnote 63] In the GOADS study, fugitive emissions are 
estimated by looking at the number of valves and other components on a 
given production platform and then assuming an average leak rate. 
BOEMRE's data contractor performs a series of quality checks on the 
data after collection. 

A third source of data on vented and flared volumes was a nationwide 
analysis performed by officials from EPA's Natural Gas STAR program, a 
national, voluntary program that encourages oil and gas companies, 
through outreach and education, to adopt cost-effective technologies 
and practices that improve operational efficiencies and reduce methane 
emissions. EPA's nationwide venting and flaring volumes were based on 
publicly available empirical data on national oil and gas production 
for 2006, 2007, and 2008, combined with knowledge of current industry 
practices, including usage rates and effectiveness of venting and 
flaring reduction technologies. For example, EPA used data on the 
number of well completions per year and data on the average venting 
per completion to estimate a yearly nationwide total from that source, 
with similar approaches used for estimating total venting and flaring 
from other key sources.[Footnote 64] EPA adjusted its estimates to 
account for the industry's efforts to control some venting and flaring 
emissions. EPA's analysis was limited in some ways, however. For 
instance, lacking empirical data on actual nationwide rates of use of 
certain control technologies, EPA based its analysis on anecdotal 
information in some cases. In order to be able to compare these data 
with the OGOR data, we scaled EPA's national estimates to federal 
leases based on the proportion of natural gas production on federal 
leases over total U.S. natural gas production using data from MRM and 
the Department of Energy's Energy Information Administration (EIA). 
[Footnote 65] EPA also made estimates of offshore venting and flaring 
based on BOEMRE's 2005 GOADS data. EPA officials adjusted volumes 
reported to GOADS based on publicly available information on current 
industry practices, including usage rates and effectiveness of venting 
and flaring reduction technologies. 

A fourth source of venting and flaring data was based on analysis 
conducted by WRAP, a collaborative arrangement between tribal and 
state governments and various federal agencies set up to develop the 
technical and policy tools needed by western states and tribes to 
comply with the EPA's regional air quality regulations. As part of its 
efforts to better understand the oil and gas industry's impact on 
regional air quality, WRAP, through its contractor, the Environ 
International Corporation, collected data for 2006 on the volumes and 
sources of key air pollutants such as volatile organics and nitrogen 
oxides, which are associated with vented and flared gas. WRAP 
collected these data with backing from the Independent Petroleum 
Association of Mountain States, an industry group representing oil and 
gas producers in the western United States. We used Environ to 
reconfigure the data from the WRAP air quality analysis in order to 
estimate the overall volumes of vented and flared gas. The WRAP 
analysis focused on five specific production basins in the mountain 
west: the Piceance, Denver-Julesburg, and North San Juan Basins in 
Colorado; the Uinta Basin in eastern Utah; and the South San Juan 
Basin in northern New Mexico (see figure 4). The WRAP analysis was 
based primarily on empirical data from operators in these basins, 
including drilling and production volume data, as well as data from a 
survey of operators. This survey asked operators to report actual 
vented and flared volumes, as well as to provide information on other 
aspects of their operations, including the emission control 
technologies they had in place. Similar to the EPA venting and flaring 
analysis, however, Environ did not have complete data from all 
operators in each basin and thus estimated some information based on 
survey data from a subset of operators.[Footnote 66] In addition, the 
original WRAP data did not distinguish between federal and nonfederal 
oil and gas operations, so we provided federal well numbers to Environ 
so that they could identify the federal lease component of vented and 
flared gas. 

Figure 4: Locations of Production Basins Included in WRAP Study: 

[Refer to PDF for image: map] 

Map depicts the following basin locations: 

Uinta Basin: Utah; 
Piceance Basin: Colorado; 
Denver-Julesburg Basin: Colorado; 
North San Juan Basin: Colorado; 
South San Juan Basin: New Mexico. 

Source: WRAP/Environ. 

[End of figure] 

To estimate the magnitude of potential increases in royalty payments 
and reductions in greenhouse gas emissions resulting from capturing 
additional vented and flared gas with available technologies, we had 
EPA provide us with estimates of the onshore expansion potential of a 
number of key technologies and associated venting and flaring volume 
reductions. For simplicity, EPA developed these estimates by focusing 
on the expansion potential of a subset of technologies considered to 
provide the largest emission reductions. These estimates may be 
conservative, however, because they did not incorporate reductions 
from a number of other potential venting and flaring opportunities 
cataloged by the Natural Gas STAR program.[Footnote 67] These 
estimates were not based entirely on comprehensive usage data 
collected from the oil and gas industry, but were based, in part, on 
publicly available evidence collected through years of experience with 
the oil and gas industry. In addition, circumstances are constantly 
changing, and more technological innovations are potentially being 
used as time goes on, so there is some uncertainty in how much lost 
gas can be captured. We also compared venting and flaring volumes and 
the types of emission-reduction technologies used in each of the 
basins from the WRAP data, allowing us to draw conclusions about the 
impact of different levels of technology on venting and flaring 
volumes. We did not identify similar data on reduction opportunities 
offshore. We also interviewed officials from BLM, BOEMRE, EPA, and 
state agencies, as well as representatives from private industry, 
including technology vendors and an environmental consultant regarding 
the expanded use of available technologies to capture additional 
vented and flared gas. We conducted background research on venting and 
flaring reduction technologies, including from publicly available EPA 
Natural Gas STAR case studies. Finally, we obtained royalty 
information from MRM to calculate the royalty implications of the 
onshore venting and flaring reductions, and used conversion factors 
from EPA to calculate the greenhouse gas impacts of the vented and 
flared natural gas.[Footnote 68] 

To assess the federal role in reducing vented and flared gas, we 
conducted interviews with officials from Interior, EPA, the Department 
of Energy, state agencies, and members of the oil and gas industry. We 
also reviewed agency guidance and documentation, other studies related 
to federal management and oversight of the oil and gas industry, as 
well as prior GAO work that described limitations in the systems 
Interior has in place to track oil and gas production on federal 
leases.[Footnote 69] We conducted interviews with officials in six BLM 
field offices (Farmington and Carlsbad in New Mexico; Vernal, Utah; 
Glenwood Springs, Colorado; Pinedale, Wyoming; and Bakersfield, 
California) and staff from BLM headquarters. We also interviewed 
BOEMRE staff in Denver, Colorado, and New Orleans, Louisiana. 

We conducted this performance audit from July 2009 to October 2010 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of the Interior: 

United States Department of the Interior: 
Office Of The Secretary: 
Washington, D.C. 20240: 

October 12, 2010: 

Mr. Frank Rusco: 
Director, Natural Resources and Environment: 
Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Mr. Rusco: 

Thank you for the opportunity to review and comment on the Government 
Accountability Office (GAO) draft report entitled, Federal Oil and Gas 
Leases: Opportunities Exist to Capture Vented and Flared Gas, Which 
Would Increase Royalty Payments and Reduce Greenhouse Gases (GA0-11-
34). The draft GAO report includes five recommendations for the 
Secretary of the Interior that are intended to augment the present 
capability to capture vented and flared gas, potentially increase 
royalty payments, and reduce greenhouse gas emissions. More 
specifically, the GAO's recommendations address emissions data 
collection; the reconciliation of conflicting data; providing new 
emission reporting guidance to operators; and the need to explore 
using new technologies to identify and reduce volumes of flared and 
vented natural gas. 

The Department of the Interior (DOI) concurs or partially concurs with 
all five recommendations. Within DOI, the Bureau of Land Management 
(BLM) and Bureau of Ocean Energy Management, Regulation and 
Enforcement (BOEMRE) have the major responsibilities for leasing 
Federal oil and gas and accounting for fluid mineral revenues. 
Responses to each recommendation are provided in the attached 
Enclosure. In addition, for your consideration, technical comments are 
being provided in a separate electronic transmission. 

The DOI acknowledges GAO's concerns about the potential impacts from 
uncaptured vented and flared gas. As noted in your draft report, both 
BLM and BOEMRE took steps to minimize venting and flaring on Federal 
oil and gas leases following the 2004 GAO report on BLM and BOEMRE 
venting and flaring processes (GAO-04-809). Since the 2004 GAO report, 
both BLM and BOEMRE have issued guidance and regulations to limit 
venting and flaring of gas during routine operations. Current 
initiatives demonstrate the Department's continued efforts to improve 
its monitoring and reduction of vented and flared gas. For example, 
BLM is revising Onshore Orders, which will address use of new 
technology to reduce gas emissions. The BOEMRE published a final rule 
in the Federal Register on April 19, 2010, requiring operators on 
larger offshore platforms to route vented and flared gas from a 
variety of sources through a meter. This will enable operators to 
report flared gas separately from vented gas and allow better tracking 
of greenhouse gas emissions. Additionally, both BOEMRE and BLM will
track the Environmental Protection Agency's greenhouse gas rulemaking 
and use venting and flaring reduction technology where it is economic. 

As GAO reported in 2004, the Federal lands and waters already have 
among the best venting and flaring records in the world. The DOI is 
committed to managing venting and flaring from onshore and offshore 
Federal oil and gas leases to the extent of our authority and will 
continue to improve our programs to remain a world leader in oversight 
of venting and flaring. 

We appreciate your suggestions for improving the regulatory oversight 
of Federal oil and gas. If you have any questions, please contact 
Andrea Nygren, BOEMRE Audit Liaison Officer, at 202-208-4343, or 
LaVanna Stevenson-Harris, BLM Audit Liaison Officer, at 202-912-7077. 

Sincerely, 

Signed by: 

William A. Lewis: 
Assistant Secretary: 
Land and Minerals Management: 

Enclosure: 

[End of letter] 

Enclosure: 

DOI Response to Government Accountability Office (GAO) Draft Report
Federal Oil and Gas Leases: Opportunities Exist to Capture Vented and 
Flared Gas, Which Would Increase Royalty Payments and Reduce 
Greenhouse Gases (GAO-11-34): 

To help ensure that Interior's data is complete and accurate, the GAO 
recommends that the Secretary of the Interior direct the Bureau of 
Land Management (BLM) and the Bureau of Ocean Energy Management, 
Regulation and Enforcement (BOEMRE) to: 

Recommendation 1: Take additional steps to ensure that each agency has 
a complete and accurate picture of vented and flared gas, for both 
onshore and offshore leases, by (1) BLM developing more complete data 
on lost gas by raking into consideration additional large onshore 
sources and ways to estimate them not currently addressed in 
regulations — sources that EPA's newly proposed greenhouse gas 
reporting rule addresses and (2) BOEMRE reconciling differences in 
reported offshore venting and flaring volumes in OGOR and GOADS data 
systems and making adjustments to ensure accuracy of these systems. 

BLM: Concurs. 
BOEMRE: Concurs. 

The BLM will track the content and timing of the Environmental 
Protection Agency's (EPA) greenhouse gas rulemaking. The BLM will 
analyze options for new standards to track additional sources of 
natural gas released during drilling, testing, and production. The new 
standards will be incorporated in the new Onshore Order on waste 
prevention and beneficial use. 

In the current BOEMRE environment, it is difficult to compare the 
volumes of gas vented and flared in Oil and Gas Operations Reports 
(000R) to the Gulfwide Offshore Activity Data System (GOADS), but 
reconciling the database differences may be feasible in the future. 
The functions and structure of the BOEMRE OGOR and the GOADS differ. 
The ODOR is a lease-based report that historically did not require 
vented and flared gas volumes to be separately reported. The GOADS is 
facility-based, and data collected and reported to GOADS separates 
venting and flaring volumes. In May 2010, the agency published new 
regulations requiring companies to install flare/vent meters on 
facilities that process more than 2,000 barrels of oil per day (BOPD), 
on average. The regulations also require all venting and flaring to be 
reported separately on the OGOR (even facilities processing less than 
2,000 BOPD). As recommended in the 2004 GAO report (GAO-04-809), the 
Minerals Management Service (now BOEMRE) performed a cost-benefit 
analysis to determine the proper threshold at which companies should 
be required to use venting and flaring meters based on economic 
feasibility. The agency determined that it would be economically 
feasible for facilities that meet the 2,000 BOPD threshold. We expect 
that the new regulations requiring meters on these facilities will 
allow us to compare facility volumes reported on the OGOR and GOADS 
system, reconcile data on larger facilities, and improve the accuracy 
of data in both systems. 

An important component for improving data accuracy will be educating 
the operators and reporters collecting and entering data into each 
system. The BOEMRE recently issued a Notice to Lessees (NTL) and 
Operators in the Gulf of Mexico announcing the GOADS 2011 effort. The 
NTL provided a GOADS users' guide and answers Frequently Asked 
Questions. It also announced a GOADS workshop, scheduled for October 
2010, to discuss and explain the information collection and reporting 
procedures. In addition, the BOEMRE's Minerals Revenue Management 
program—now the Office of Natural Resources Revenue (ONRR)—issued a 
Dear Reporter letter in May 2010 to all operators, instructing them on 
how to report flaring and venting separately on the OGOR. The ONRR 
also conducts an average of four reporter training sessions a year. 
The ONRR will continue to educate operators on the flaring and venting 
reporting requirements, and in particular the new regulations, 
disposition codes, and meters needed to report correctly. This 
training will emphasize the need to accurately report flaring and 
venting on the ODOR and in the GOADS systems. The next reporter 
training will be held in February 2011. This will be a joint effort 
between the BOEMRE offshore and revenue management programs. 

Once sufficient data are available and analyzed, BOEMRE can determine 
if additional reconciliation efforts are needed. 

To help reduce venting and flaring of gas addressing limitations in 
its regulations [GAO] recommend[s] that the Secretary of the Interior 
direct BLM and BOEMRE to take the following four actions: 

Recommendation 2: BLM should revise its guidance to operators to make 
it clear that technologies should be used where they can economically 
capture sources of vented and flared gas, including gas from liquid 
unloading, well completions, pneumatic valves, and glycol dehydrators. 
BOEMRE should consider enforcing its requirement that gas be captured 
where economical for "lease-use" sources of gas. 

BLM: Concurs. 
BOEMRE: Partially concurs. 

The BLM will develop new standards to require use of new technologies 
that can economically capture vented and flared natural gas used in 
lease operations. The new standards will be incorporated in the new 
proposed Onshore Order on waste prevention and beneficial use. 

With respect to BOEMRE, the GAO's recommendation 2 misapprehends the 
scope of the regulations governing "lease-use" sources of gas. Because 
BOEMRE has no present requirement to capture "lease-use" sources of 
gas where economic, new regulations would have to be implemented 
before such a requirement could be imposed and enforced. As mentioned 
in your report, GAO was unable to quantify the volume of natural gas 
that would be saved by such a regulatory change. It is highly 
uncertain at this time if the volume of gas saved would be large 
enough to make a capture requirement economic. Thus, BOEMRE will 
evaluate the issue further and determine if new regulations are 
warranted. 

Recommendation 3: BLM and BOEMRE should assess the potential use of 
venting and flaring reduction technologies to minimize the waste of 
natural gas in advance of production where applicable, and not solely 
for purposes of air quality. 

BLM: Concurs. 
BOEMRE: Concurs. 

The BLM will analyze options for new standards to require use of 
venting and flaring reduction technologies, where applicable. The new 
standards will be incorporated in the new Onshore Order on waste 
prevention and beneficial use. 

The BOEMRE diligently addresses air quality in advance of production. 
The meter requirement stemming from new regulations will provide data 
on the extent of venting and flaring. Once sufficient data exist, 
BOEMRE will use the data collected from the new meters to analyze the 
need and feasibility of requiring venting and flaring reduction 
technologies on facilities in advance of production, for purposes 
other than air quality. 

Recommendation 4: BLM and BOEMRE should consider the expanded use of 
infrared cameras where economic to improve reporting of emission 
sources and to identify opportunities to minimize lost gas. 

BLM: Concurs. 
BOEMRE: Concurs. 

The BLM agrees that infrared cameras can be a useful tool for 
detecting natural gas emissions as part of a directed inspection 
program. The BLM will implement the use of infrared cameras during 
inspections to spot check emission sources and minimize lost gas.
The BOEMRE will expand its use of infrared cameras where economic. 

Recommendation 5: BLM should collect information on the extent that 
larger operators use venting and flaring reduction technology and 
periodically review this information to identify potential 
opportunities for oil and gas operators to reduce their emissions, and 
BOEMRE should use existing information in its GOADS data system for 
this same purpose, to the extent possible. 

BLM: Concurs. 
BOEMRE: Concurs. 

The BLM will analyze options to collect information on how larger 
operators use venting and flaring reduction technology on Federal 
onshore leases, and periodically review this information
to identify potential opportunities for oil and gas operators to 
reduce their emissions. The options adopted will be incorporated in 
the new Onshore Oil and Gas Order on waste prevention and beneficial 
use. 

The BOEMRE will use the meters required by the new regulations to 
gather data on offshore venting and flaring volume, and periodically 
review and identify potential opportunities for oil and gas operators 
to reduce their emissions. The BOEMRE will also evaluate the 2008 data 
in GOADS to identify potential opportunities where reduction 
technology could be economically applied under the Outer Continental 
Shelf Lands Act conservation mandate. The BOEMRE will track EPA's 
greenhouse gas rulemaking and use venting and flaring reduction 
technology where it is economic. 

[End of section] 

Appendix III: Volumes and Sources of Vented and Flared Gas Based on 
Analysis of 2006 WRAP Data: 

Table 5: Volumes and Sources of Vented and Flared Gas from the Uinta 
Basin: 

Sources from Uinta Basin: Pneumatic devices; 
Volume (Bcf): 4.3. 

Sources from Uinta Basin: Glycol dehydrators; 
Volume (Bcf): 4.3. 

Sources from Uinta Basin: Fugitive emissions; 
Volume (Bcf): 0.4. 

Sources from Uinta Basin: Oil and condensate storage tanks; 
Volume (Bcf): 0.2. 

Sources from Uinta Basin: Other sources; 
Volume (Bcf): 0.1. 

Sources from Uinta Basin: Total; 
Volume (Bcf): 9.2. 

Source: Environ Corp. analysis of 2006 WRAP data. 

Note: Volume figures in table may not sum to totals due to rounding. 

[End of table] 

Table 6: Volumes and Sources of Vented and Flared Gas from the North 
San Juan Basin: 

Sources from North San Juan Basin: Glycol dehydrators; 
Volume (Bcf): 0.053. 

Sources from North San Juan Basin: Gas well liquid unloading; 
Volume (Bcf): 0.004. 

Sources from North San Juan Basin: Flaring; 
Volume (Bcf): 0.003. 

Sources from North San Juan Basin: Pneumatic devices; 
Volume (Bcf): 0.001. 

Sources from North San Juan Basin: Fugitive emissions; 
Volume (Bcf): 0.001. 

Sources from North San Juan Basin: Total; 
Volume (Bcf): 0.062. 

Source: Environ Corp. analysis of WRAP data. 

Note: Volume figures in table may not sum to totals due to rounding. 

[End of table] 

Table 7: Volumes and Sources of Vented and Flared Gas from the South 
San Juan Basin: 

Sources from South San Juan Basin: Well completions; 
Volume (Bcf): 5.3. 

Sources from South San Juan Basin: Glycol dehydrators; 
Volume (Bcf): 3.2. 

Sources from South San Juan Basin: Gas well liquid unloading; 
Volume (Bcf): 1.9. 

Sources from South San Juan Basin: Fugitive emissions; 
Volume (Bcf): 0.6. 

Sources from South San Juan Basin: Pneumatic devices; 
Volume (Bcf): 0.4. 

Sources from South San Juan Basin: Other sources; 
Volume (Bcf): 0.1. 

Sources from South San Juan Basin: Total; 
Volume (Bcf): 11.6. 

Source: Environ Corp. analysis of WRAP data. 

Note: Volume figures in table may not sum to totals due to rounding. 

[End of table] 

Table 8: Volumes and Sources of Vented and Flared Gas from the Denver- 
Julesburg Basin: 

Sources from Denver-Julesburg Basin: Oil and condensate storage tanks; 
Volume (Bcf): 0.035. 

Sources from Denver-Julesburg Basin: Pneumatic devices; 
Volume (Bcf): 0.030. 

Sources from Denver-Julesburg Basin: Fugitive emissions; 
Volume (Bcf): 0.019. 

Sources from Denver-Julesburg Basin: Gas well liquid unloading; 
Volume (Bcf): 0.006. 

Sources from Denver-Julesburg Basin: Well completions; 
Volume (Bcf): 0.002. 

Sources from Denver-Julesburg Basin: Other sources; 
Volume (Bcf): 0.004. 

Sources from Denver-Julesburg Basin: Total; 
Volume (Bcf): 0.095. 

Source: Environ Corp. analysis of WRAP data. 

Note: Volume figures in table may not sum to totals due to rounding. 

[End of table] 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Frank Rusco, (202) 512-3841 or rucsof@gao.gov: 

Staff Acknowledgments: 

In addition to the individuals named above, Daniel Haas (Assistant 
Director), Michael Kendix, Michael Krafve, Robert Marek, Alison 
O'Neill, David Reed, Rebecca Sandulli, and Barbara Timmerman made 
important contributions to this report. 

[End of section] 

Footnotes: 

[1] In June 2010, the Secretary of the Interior changed the name of 
the Minerals Management Service to BOEMRE. 

[2] For the purposes of this report, we use the term "natural gas" to 
mean the mixture of gas resulting from oil and gas production 
activities. This natural gas will vary in content but, on average, is 
approximately 80 percent methane, with the remaining 20 percent a mix 
of other hydrocarbons and nonhydrocarbons, such as carbon dioxide and 
nitrogen. 

[3] Major greenhouse gases include carbon dioxide (CO2); methane 
(CH4); nitrous oxide (N2O); and synthetic gases such as 
hydrofluorocarbons (HFC), perfluorocarbons (PFC), and sulfur 
hexafluoride (SF6). 

[4] GAO, Natural Gas Flaring and Venting: Opportunities to Improve 
Data and Reduce Emissions, [hyperlink, 
http://www.gao.gov/products/GAO-04-809] (Washington D.C.: July 14, 
2004). 

[5] Much of our information and data about offshore leases from BOEMRE 
came from its Offshore Energy and Minerals Management program. 

[6] EPA developed these estimates to support a proposed rule in 2010 
to require the reporting of greenhouse gas emissions from the oil and 
gas industry. These estimates were for 2006 to 2008. 

[7] WRAP is a collaborative effort of tribal governments, state 
governments, and various federal agencies to address western air 
quality concerns. It is administered by the Western Governors' 
Association and the National Tribal Environmental Council. 

[8] Independent Petroleum Association of Mountain States is an 
industry association representing oil and gas producers in the western 
United States. 

[9] Production basins are land formations with subsurface oil and 
natural gas reservoirs, often covering hundreds of square miles. 

[10] GAO, Oil and Gas Management: Interior's Oil and Gas Production 
Verification Efforts Do Not Provide Reasonable Assurance of Accurate 
Measurement of Production Volumes, [hyperlink, 
http://www.gao.gov/products/GAO-10-313] (Washington D.C.: Mar. 15, 
2010). 

[11] Pub. L. No. 66-146, 41 Stat. 437 (1920). 

[12] 67 Stat. 462 (1953) codified at 43 U.S.C. § 1331 et seq. 

[13] These routine amounts are laid out in BLM and BOEMRE regulations 
and guidance and allow certain volumes from a number of operations, 
such as well completions. Operators are required to notify these 
agencies if they plan to intentionally vent and flare beyond routine 
amounts. BLM and BOEMRE then classify the gas as either unavoidably or 
avoidably lost based on their judgment of the technical or economic 
feasibility of capturing the gas, and royalties are due on losses 
deemed avoidably lost. 

[14] While not considered "vented" gas by Interior, we include 
fugitive emissions in this report as a relevant source of lost gas. 

[15] Condensates are hydrocarbon liquids that are byproducts of 
natural gas production. Unprocessed natural gas normally contains a 
small amount of water vapor, and dehydration equipment is used to 
remove this moisture prior to pipeline transportation. 

[16] Older detection technology consisted of using manual probes, 
which need to be very close to the venting source. 

[17] This video shows vented gas, which appears to be smoke, billowing 
from the top of cylindrical metal oil storage tanks and from a 
pneumatic valve. Video clips courtesy of EPA and a private emission 
detection firm. 

[18] The meters used by BOEMRE and BLM to establish production 
volumes, upon which royalty payments are based, are generally located 
downstream of the production site, at the point where the oil and gas 
enter the sales pipeline or other distribution network. 

[19] The Intergovernmental Panel on Climate Change is the body for the 
assessment of climate change, established by the United Nations 
Environment Programme and the World Meteorological Organization to 
provide a scientific view on the current state of climate change and 
its potential environmental and socio-economic consequences. 

[20] EPA defines volatile organic compounds as certain carbon 
compounds that participate in atmospheric chemical reactions. 

[21] EPA is responsible for the regulation of such air pollutants and 
has been recently charged with regulating greenhouse gas emissions 
under the Clean Air Act. 

[22] BOEMRE has primary regulatory responsibility over air emissions 
from offshore sources in the central and western Gulf of Mexico. 

[23] See EPA's Natural Gas STAR Web site for more information on these 
technologies [hyperlink, http://www.epa.gov/gasstar/]. 

[24] Triethylene glycol is the active chemical in the operation of 
this equipment. A flash tank separator is a device that captures 
additional gas from glycol dehydrators. 

[25] [hyperlink, http://www.gao.gov/products/GAO-04-809]. 

[26] BLM determined that requiring thousands of onshore operators to 
install meters would be prohibitively expensive. 

[27] The Department of Energy's EIA is responsible for producing 
independent, unbiased research that helps the public, the federal 
government, industry, and the Congress better understand energy 
markets and promote sound policy making. EIA collects and analyzes 
data on the supply, consumption, and prices of oil and gas. 

[28] EPA's estimates were based on publicly available oil and gas 
production data and information collected from industry participants 
in the Natural Gas STAR program, a nationwide, voluntary effort 
spearheaded by EPA aimed at reducing methane emissions from the oil 
and gas industry. 

[29] Operators are required to report the sum of their vented gas and 
flared gas; they are not required to identify individual sources of 
lost gas. 

[30] BLM's guidance was included in Notice to Lessees and Operators 
(NTL) 4A. Interior issues NTLs to clarify existing regulations. 
Operators need permission to vent or flare above routine amounts. In 
dealing with vented and flared gas, BLM's key guidance is in the form 
of an NTL. Offshore, BOEMRE uses regulations to guide operators in 
addressing vented and flared gas. 

[31] Additional guidance from MRM explains how operators should submit 
data to the OGOR system, but does not provide detail on which sources 
to report, or on how they should be estimated. 

[32] These limits generally allow operators to vent and flare gas 
required for routine well operations. 

[33] See appendix I for more detail on how EPA developed its estimates. 

[34] It is possible to estimate venting and flaring based on known 
emission rates of equipment type or production method. For example, if 
a pneumatic device is known to vent 10 cubic feet per hour, an 
operator would multiply that rate by the number of hours the piece of 
equipment operates each day. 

[35] See appendix III for more details on the volumes and sources from 
the other four basins. 

[36] See appendix I for more detail on the development of the 
estimates based on WRAP data. 

[37] Offshore gas production in the Gulf of Mexico made up about 98 
percent of total federal offshore natural gas production in 2008. 

[38] Lease-use, or beneficial use, gas refers to natural gas that BLM 
and BOEMRE allow operators to use to power oil and gas production 
equipment on the lease. Emissions from pneumatic devices and glycol 
dehydrators would have been reported as lease-use gas, according to 
BOEMRE officials, and we determined it was not possible to extract 
these volumes from OGOR because they were combined with a number of 
other nonvented sources. 

[39] The GOADS study included estimates of losses from natural gas 
compressors, although EPA's estimates were greater because of higher 
assumed losses from the compressor seals. 

[40] BOEMRE officials told us that they did not draw conclusions from 
comparisons between 2005 GOADS and OGOR data because of the effect 
Hurricane Katrina and Rita had on offshore production in that year. 

[41] Texas Commission for Environmental Quality (TCEQ), Upstream Oil 
and Gas Storage Tank Project Flash Emissions Model Evaluation (July 
16, 2009). 

[42] [hyperlink, http://www.gao.gov/products/GAO-04-809]. 

[43] 75 Fed. Reg. 20291-20293 (April 19, 2010). The rule also requires 
vented gas and flared gas to be reported separately. 

[44] For simplicity, EPA developed this estimate by focusing on the 
expansion potential of a subset of technologies considered to provide 
the largest emission reductions. The estimates may be conservative, 
however, because they did not incorporate reductions from a number of 
other potential venting and flaring opportunities cataloged by EPA's 
Natural Gas STAR program. 

[45] Although there is likely some chance for similar reductions 
offshore, EPA did not estimate this amount. 

[46] For more detail on carbon offsets see GAO, Carbon Offsets: The 
U.S. Voluntary Market Is Growing, but Quality Assurance Poses 
Challenges for Market Participants, [hyperlink, 
http://www.gao.gov/products/GAO-08-1048] (Washington, D.C.: Aug. 29, 
2008). 

[47] For these calculations, we assumed average onshore royalty 
payments of 11.45 percent, the average onshore royalty rate in 2009. 
See appendix I for more details. 

[48] Methane breaks down in the atmosphere more quickly than CO2 and 
lasts an average of 12 years in the atmosphere. This accounts for its 
greater impact over the shorter time frame. 

[49] This statement assumes that venting and flaring are reduced in 
proportional volumes. 

[50] Overall, according to EPA's analysis, in addition to the total 
potential federal reductions of 50 Bcf, nonfederal wells could have 
added an additional 252 Bcf in reductions with more widespread use of 
venting and flaring reduction technologies. 

[51] For onshore leases, see 43 C.F.R. § 3161.2. For offshore leases, 
see 30 C.F.R. § 250.106. 

[52] BLM guidance is in the form of a Notice to Lessees and Operators 
(NTL). According to the NTL, the operator can vent or flare gas during 
operations such as clearing the drilling waste or removing liquid from 
the well for 24 hours without obtaining permission from BLM to vent 
gas. The operator may also flare or vent any gas vapors released from 
storage tanks or low pressure production vessels unless BLM determines 
that the recovery of the gas would be warranted. The vented or flared 
gas is considered to be "unavoidably lost." 

[53] If an operator does not exceed these limits--which is almost 
always the case according to BLM staff--BLM does not consider the 
economic and technical viability of further reducing venting and 
flaring. BLM inspectors also note obvious signs of vented and flared 
gas during their inspections, which occur at least every 3 years, and 
try to verify that operators have permission for the release. 

[54] In a previous report, we found that BOEMRE had not met these 
annual inspection goals. See GAO, Oil and Gas Management: Interior's 
Oil and Gas Production Verification Efforts Do Not Provide Reasonable 
Assurance of Accurate Measurement of Production Volumes, [hyperlink, 
http://www.gao.gov/products/GAO-10-313] (Washington D.C.: Mar. 15, 
2010). 

[55] 43 C.F.R. § 3161.2. 

[56] So far there has been only one rural oil and gas production 
basin, the Jonah-Pinedale basin in Wyoming, that is not meeting EPA 
standards for ground-level ozone. 

[57] Applications include detailed information on plans for drilling 
and completing wells, such as the amounts and types of cement used, 
the construction materials, the methods for handling waste, the plans 
for surface reclamation, and multiple other subjects for BLM to 
consider. In addition, the operator submits a diagram of existing or 
proposed production facilities. 

[58] 30 C.F.R. § 250.246. 

[59] According to one BLM official we spoke with, an inspector may 
note whether or not operators use particular types of venting and 
flaring equipment, but the field office does not keep specific records 
about equipment use. 

[60] One consulting firm we spoke with used infrared cameras to detect 
leaks on clients' offshore oil platforms and found, on average, 21 gas 
leaks per facility, totaling an estimated 127,000 cubic feet of gas 
per day. 

[61] In addition to the Natural Gas STAR program, EPA's Office of 
Research and Development is developing specialized measurement 
approaches to remotely detect and quantify air emissions, including 
methane, from the oil and gas industry and other sources. 

[62] Operators report royalties using a separate data collection form 
that operators are required to report to BOEMRE monthly. 

[63] We combined the pneumatic pump and pressure/level controller 
categories into our "pneumatic devices" category. We combined all the 
other source categories from GOADS into our "other sources" category. 

[64] Due to incomplete data on oil storage tank emissions and 
reductions for 2008, the tank emissions from 2007 serves as an 
approximation for the emissions in 2008. EPA also included workovers 
with its estimates of venting and flaring from well completions. 
Workovers are remedial procedures designed to increase production on 
existing oil and gas wells. 

[65] EPA's initial estimates of venting and flaring were for the 
methane component of natural gas. These volumes were converted to 
reflect overall natural gas emissions by assuming, for most sources, 
an average 78.8 percent methane content for the gas. 

[66] BP provided most of the data for the North San Juan basin, and 
Environ was not able to verify its accuracy to the extent that it did 
for data reported in the other basins. 

[67] It is difficult to estimate the extent to which the use of each 
control technology can be increased. Reductions may not always be 
feasible and depend on site-specific conditions. EPA's estimates of 
potential reductions from oil and condensate storage tanks also 
involved valve inspection and repair in addition to installing vapor 
recovery units. 

[68] The conversion factor we used was .4045 million metric tons of 
carbon dioxide equivalent per billion cubic feet of vented natural 
gas, and 0.06 million metric tons of carbon dioxide per billion cubic 
feet of flared natural gas. We used a royalty rate of 11.45 percent 
and an average natural gas price of $4.01 per thousand cubic feet. 

[69] GAO, Oil and Gas Management: Interior's Oil and Gas Production 
Verification Efforts Do Not Provide Reasonable Assurance of Accurate 
Measurement of Production Volumes, [hyperlink, 
http://www.gao.gov/products/GAO-10-313] (Washington D.C.: Mar. 15, 
2010). 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site, 
[hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional 
information. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: