Archiv für das Monat: Oktober, 2020

No assignment or transfer of any working interest, royalty, or other interest subject hereto shall be binding upon Unit Operator until the first day of the calendar month after Unit Operator is furnished with the original, photostatic, or certified copy of the instrument of transfer. (c) Suspension of drilling or producing operations on all unitized lands pursuant to direction or consent of the AO shall be deemed to constitute such suspension pursuant to such direction or consent as to each and every tract of unitized land. A suspension of drilling or producing operations limited to specified lands shall be applicable only to such lands. (a) The development and operation of lands subject to this agreement under the terms hereof shall be deemed full performance of all obligations for development and operation with respect to each and every separately owned tract subject to this agreement, regardless of whether there is any development of any particular tract of this unit area.

For the final rule, the BLM updated paragraph (b)(3) to require the operator to have set the surface casing for the well and to have submitted a plan. This will ensure the operator is working towards developing its lease with a real effort to begin development. In addition, as noted above, one comment recommended the BLM accept reasonable plans to complete drilling any well to total depth if the operator has set surface casing prior to the APD expiring. Therefore, the BLM considered requiring surface casing for the BLM to consider a plan as a reasonable approach for paragraph (b)(3).

CFR Part 3110

Example – accounting for leases A lessee enters into a 20-year lease of one floor of a building, with an option to extend for a further five years. Lease payments are $80,000 per year during the initial term and $100,000 per year during the optional period, all payable at the end of each year. To obtain the lease, the lessee incurred initial direct costs at the commencement date of $25,000.

The BLM received a comment on paragraphs (a)(1) and (b)(1), suggesting that the BLM change the phrase “are subject to lease” to “may be subject to lease” to align with the discretion afforded the Interior Secretary under the MLA, 30 U.S.C. 226(a), that lands “may be leased.” The final rule does not adopt this recommendation. In 1920, Congress enacted the MLA to facilitate the exploration and development of oil and gas and other federally owned minerals. The MLA specifies the lands that are subject to the statute, and then provides discretion to the Secretary to determine which of those lands may be leased. The first step in exercising that discretion is making decisions in the BLM’s resource management plans under FLPMA. The BLM declines to change this phrase so as not to confuse this section on the authority to lease, including the exceptions listed under both public domain and acquired lands, where there is no discretion to lease ineligible lands.

The Federal Register

The decision to hold a lease sale and issue leases will be in conformance with the appropriate plan. (2) Will not afford the lessee a reasonable opportunity to continue operations under the lease, the authorized officer may extend the term of the reinstated lease for such period as determined reasonable, but in no event for more than 2 years from the date of the reinstatement and so long thereafter as oil or gas is produced in paying quantities. A lease in its extended term because of production (and lacking a well capable of production in paying quantities) will not expire upon cessation of production, if, within 60 calendar days of cessation of production, reworking or drilling operations on the leasehold are commenced and are thereafter conducted with reasonable diligence during the period of nonproduction. If these reworking or drilling operations fail to result in production in paying quantities, the lease will expire by operation of law, effective as of the date paying production ceased.

• Royalties due the United States shall be determined by the AO and the amount thereof shall be deposited, as directed by the AO, until a participating area is finally approved and then adjusted in accordance with a determination of the sum due as Federal royalty on the basis of such approved participating area.
• Comments that opposed the removal of nationwide bonding stated there are benefits to continuing the nationwide tier for companies.
• The contract specifies the goods to be transported on the truck and the dates of pickup and delivery.
• (b) The authorized officer will not, after the receipt of a petition for reinstatement, issue a new lease affecting any of the lands covered by the terminated lease until all action on the petition is final.
• To resolve some of the issues that led the BLM to propose eliminating the securities, the BLM made changes to the regulations for CDs and LOCs.

All costs over and above the normal plugging and abandonment expense will be paid by the party accepting the water well. A request or expression(s) of interest in tract(s) for competitive lease offerings must be submitted in writing to the proper BLM office. Prior to any lease sale for a combined hydrocarbon lease, the authorized officer will request an economic evaluation of the total hydrocarbon resource on each proposed lease tract exclusive of coal, oil shale, or gilsonite. (3) Within units of the National Park System, permits or leases for additional lands for any purpose will be issued only by the National Park Service. Applications for such permits or leases must be filed with the Regional Director of the National Park Service. (2) All of the provisions of 43 CFR parts 3160 and 3170 apply to operations on an oil and gas lease issued under this part.

Finance lease vs operating lease

The final rule will improve the BLM’s leasing process by ensuring proper stewardship of public lands and resources. One commenter stated the BLM properly issues the rule pursuant to a categorical exclusion. Other comments recommended that accounting for lease termination lessor the BLM use an environmental assessment for the rule. Commenters stated the rule affects decisions in RMPs, because the preference criteria would guide the BLM’s decision making and direct oil and gas leasing to appropriate locations.

• If the authorized officer determines that there is a legitimate future beneficial use for the well, the officer may allow the operator to delay permanent abandonment by 1 year.
• Where payments are made in advance, the non-current liability would be the subtotal for year two ($866,198) and not the total liability carried forward at the end of year two as is the case with payments in arrears.
• (iii) Provide the authorized officer with a detailed plan and timeline for future beneficial use of the well.
• Another comment stated that the proposed rule would have significant direct impacts on the States and local communities, and that, if the BLM does not offer Federal lands for lease, that omission will prevent State and private lessees from developing their leases due to the mixed ownership for horizontal wells.
• Fifth, the requirements to monitor royalty rate reductions or to send notice to States are better suited to be addressed through policy as these requirements would apply only to the BLM and not the regulated community.

The BLM cannot issue a protective lease, as proposed in the comment, under the MLA. The BLM may only issue a protective lease through a competitive lease sale based upon the law at 30 U.S.C. 226 and due to drainage of the Federal minerals (see 43 U.S.C. 1457; see also Attorney General’s Opinion of April 2, 1941 (Vol. 40 Op. Atty. Gen. 41)). Supportive comments recommended that the final rule address plans, specify criteria, or include a procedure for increasing the royalty rate after 2032. Supportive comments also requested a termination provision, similar to that for failure to pay rentals, for the failure to pay royalties.

CFR Part 3150

In this section of the regulations, the BLM may reject a bid if the BLM cannot issue the lease within 60 days as required under 30 U.S.C. 226(b)(1)(A). However, the BLM concurs that it should not reject the bid without the successful bidder confirming that it would prefer its bid to be rejected rather than waiting longer than 60-days for the lease to be issued. Based on this comment, the BLM has revised this section in the final rule by inserting the phrase “with the consent of the bidder” to clarify the BLM’s intent.