0041-ss-08

Supporting Statement for Paperwork Reduction Act Submissions

30 CFR Part 250, Subpart K, Production Rates

Forms MMS-126, MMS-127, MMS-128, and MMS-140

OMB Control Number 1010-0041

Expiration Date: August 31, 2008

Terms of Clearance: None

General Instructions

A Supporting Statement, including the text of the notice to the public required by 5 CFR 1320.5(a)(i)(iv) and its actual or estimated date of publication in the Federal Register, must accompany each request for approval of a collection of information. The Supporting Statement must be prepared in the format described below, and must contain the information specified in Section A below. If an item is not applicable, provide a brief explanation. When employing statistical methods, then Section B of the Supporting Statement must be completed. The Office of Management and Budget (OMB) reserves the right to require the submission of additional information with respect to any request for approval.

Specific Instructions

A. Justification

1. Explain the circumstances that make the collection of information necessary. Identify any legal or administrative requirements that necessitate the collection. Attach a copy of the appropriate section of each statute and regulation mandating or authorizing the collection of information.

The Outer Continental Shelf (OCS) Lands Act, as amended (43 U.S.C. 1331 et seq. and 43 U.S.C. 1801 et seq.), authorizes the Secretary of the Interior (Secretary) to prescribe rules and regulations to administer leasing of the OCS. Such rules and regulations will apply to all operations conducted under a lease. Operations on the OCS must preserve, protect, and develop oil and natural gas resources in a manner that is consistent with the need to make such resources available to meet the Nation’s energy needs as rapidly as possible; to balance orderly energy resource development with protection of human, marine, and coastal environments; to ensure the public a fair and equitable return on the resources of the OCS; and to preserve and maintain free enterprise competition.

Section 5(a) of the OCS Lands Act requires the Secretary to prescribe rules and regulations “to provide for the prevention of waste, and conservation of the natural resources of the Outer Continental Shelf, and the protection of correlative rights therein” and to include provisions “for the prompt and efficient exploration and development of a lease area.”

Section 1334(g)(2) states “. . . the lessee shall produce such oil or gas, or both, at rates . . . to assure the maximum rate of production which may be sustained without loss of ultimate recovery of oil or gas, or both, under sound engineering and economic principles, and which is safe for the duration of the activity covered by the approved plan.”

These authorities and responsibilities are among those delegated to the Minerals Management Service (MMS). The regulations at 30 CFR part 250, subpart K, concern oil and gas production rates, and are the subject of this collection.

In addition, MMS also issues various Notices to Lessees (NTLs) and Operators to clarify and provide additional guidance on some aspects of the regulations, as well as various forms to capture the data and information. The current subpart K regulations specify the use of forms MMS-126 (Well Potential Test Report), MMS-127 (Sensitive Reservoir Information Report), and MMS-128 (Semiannual Well Test Report). Subpart K requirements also specify the use of form MMS-140 (Bottomhole Pressure Survey Report). Form MMS-140 is used in the Gulf of Mexico OCS Region (GOMR) for submitting the results of static bottomhole pressure surveys required under § 250.1104(c).

2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency has made of the information received from the current collection. [Be specific. If this collection is a form or a questionnaire, every question needs to be justified.]

The information collected under subpart K is used in our efforts to conserve natural resources, prevent waste, and protect correlative rights, including the Government’s royalty interest. Specifically, MMS uses the information to:

• evaluate requests to burn liquid hydrocarbons and vent and flare gas to ensure that these requests are appropriate;

• to determine if a maximum production or efficient rate is required; and,

• to review applications for downhole commingling to ensure that action does not result in harm to ultimate recovery.

The following forms are also submitted to MMS under subpart K.

Form 126 – Well Potential Test Report

The MMS uses this information for reservoir, reserves, and conservation analyses, including the determination of maximum production rates (MPRs) when necessary for certain oil and gas completions. This requirement implements the conservation provisions of the OCS Lands Act and 30 CFR 250. The information obtained from the well potential test is essential to determine if an MPR is necessary for a well and to establish the appropriate rate. It is not possible to specify an MPR in the absence of information about the production rate capability (potential) of the well. The form asks for, in either fill in the blanks or check marks:

• general information about the well and the company;

• pertinent information relating to the well test; and

• 24-hour rates pertaining to test production.

Form MMS-127, Sensitive Reservoir Information Report

The MMS uses this information to determine whether a rate-sensitive reservoir is being prudently developed. This represents an essential control mechanism that MMS may use to regulate production rates from sensitive reservoirs. Occasionally, the information available on a reservoir, early in its producing life, may indicate it to be non-sensitive, while later and more complete information would establish the reservoir as being sensitive. Production from a well completed in the gas cap of a sensitive reservoir requires approval from the Regional Supervisor. The information submitted on this form provides reservoir parameters that are revised at least annually or sooner if reservoir development results in a change in reservoir interpretation. The engineers and geologists use the information for rate control and reservoir studies. The form requests, in either fill in the blanks or check marks:

• general information about the reservoir and the company;

• volumetric data;

• fluid analysis data; and

• production data.

Form MMS-128, Semiannual Well Test Report

The MMS uses this information to evaluate the results of well tests to determine if reservoirs are being depleted in a manner that will lead to the greatest ultimate recovery of hydrocarbons. This information is collected to determine the capability of hydrocarbon wells and to evaluate and verify an operator’s approved maximum production rate if assigned. The form was designed to present current well data on a semiannual basis to permit the updating of permissible producing rates, and to provide the basis for estimates of currently remaining recoverable gas reserves. The form asks, for in either fill in the blanks or check marks:

• general information about the well;

• volumes;

• choke size;

• pressures;

• production method;

• API oil/condensate gravity; and

• date of test.

Form MMS-140, Bottomhole Pressure Survey Report

The MMS uses the information to effectively manage reservoirs in our efforts to conserve natural resources, prevent waste, and protect correlative rights, including the Government's royalty interest. Specifically, MMS uses the information in reservoir evaluations to determine maximum production and efficient rates; and to review applications for downhole commingling to ensure that action does not result in harm to ultimate recovery or undervalued royalties. The form requests such information as:

• general information relating to the well and operator;

• test data information such as shut-in time, bottomhole temperature, KB elevation; and,

• bottomhole pressure points that consist of measured depth(s), true vertical depth(s), pressure(s), and pressure gradient(s).

3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses, and the basis for the decision for adopting this means of collection. Also describe any consideration of using information technology to reduce burden [and specifically how this collection meets GPEA requirements].

The MMS encourages respondents to use forms available on the website and submit them electronically. Currently, 25 percent of all information relating to subpart K in the Gulf of Mexico Region (GOMR) is submitted electronically by using computerized well files; information can be taken directly from that file to the form. Benefits include preparation time reduction, increased accuracy of submitted completion and test data, and overall cost reductions. There are no legal obstacles to reducing the burden on respondents. Currently, respondents in the Pacific OCS Region (POCSR) have not opted to submit reports electronically, and these reports are not yet submitted in the Alaska OCS Region.

4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.

The Department of the Interior has a Memorandum of Understanding (MOU) with the Department of Transportation that defines the responsibilities of each agency with respect to activities in the OCS. This MOU is effective in avoiding duplication of regulations and reporting requirements. In most cases, the information collected is unique and site specific to each operation and not available from other sources. Some respondents are under the control of local authorities, which require respondents to submit similar air-pollution information. When this is applicable, MMS will not require such reporting from those respondents, thereby avoiding duplication.

5. If the collection of information impacts small businesses or other small entities, describe any methods used to minimize burden.

This collection of information does not have a significant economic effect on a substantial number of small entities. In general, companies need large technical and financial resources and experience to conduct offshore activities safely. Approximately 70 percent of the lessees and operators may have less than 500 employees and would be considered small businesses. The burden on any small entity subject to these regulations cannot be reduced to accommodate them without sacrificing safe operations and pollution prevention.

6. Describe the consequence to Federal program or policy activities if the collection is not conducted or is conducted less frequently, as well as any technical or legal obstacles to reducing burden.

If we did not collect the information, MMS could not carry out the mandate of the OCS Lands Act. Specifically:

Form MMS-126 – the result could be a waste of energy resources in the OCS by production at imprudent rates, jeopardizing the ultimate full recovery of hydrocarbons. If MMS did not require this information, respondents would still conduct initial potential tests for new completions to assess their producing capabilities and characteristics for use in well completion design evaluation, reservoir management, production equipment design, production allocation calculations, and other technical reviews and analyses. However, they might not report the results to MMS unless required to do so. Reports are submitted as a result of situations encountered. They are not submitted at any set frequency; therefore, the frequency is not applicable.

Form MMS-127 - we could not carry out the mandate of the OCS Lands Act, as amended, to assure maximum rate of production that may be sustained without loss of ultimate recovery of oil or gas (43 U.S.C. 1334(g)(2)) together with the waste prevention, natural resource conservation, and correlative rights protection provisions of the OCS Lands Act. Reports are submitted initially, and then annually or sooner at the option of the lessee. Reporting on less than an annual basis is not feasible and would not provide MMS with the current information to review the classification of producing reservoirs.

Form MMS-128 - the result could be a waste of energy resources in the OCS by production at imprudent rates, jeopardizing the ultimate full recovery of hydrocarbons. Reports are submitted on a semiannual basis. Less frequent reporting would not identify changes that can occur in the oil and gas reservoirs over a prolonged reporting period. This frequency of collection also conforms to the requirements of State regulatory agencies in the gulf coast producing areas.

Form MMS-140- MMS could not carry out the mandate of the OCS Lands Act. Respondents generally submit reports as a result of situations encountered and not at any fixed or prescribed interval.

7. Explain any special circumstances that would cause an information collection to be conducted in a manner:

(a) requiring respondents to report information to the agency more often than quarterly.

The collection of information is consistent with all requirements except for Form MMS-140. When required by the Regional Supervisor, monthly reports on flared or vented gas containing H₂S are necessary to ensure proper reservoir management.

(b) requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it.

Not applicable in this collection.

(c) requiring respondents to submit more than an original and two copies of any document.

Forms MMS-126 and MMS-127 - Respondents submit four copies of both forms: one for the file, one for the main vault, one copy to be returned to the company when appropriate, and one copy for the public. The copy for the public will not include proprietary data that is not subject to release.

(d) requiring respondents to retain records, other than health, medical, government contract, grant-in-aid, or tax records, for more than 3 years.

Not applicable in this collection.

(e) in connection with a statistical survey, that is not designed to produce valid and reliable results that can be generalized to the universe of study.

Not applicable in this collection.

(f) requiring the use of statistical data classification that has been reviewed and approved by OMB.

There are no special circumstances with respect to 5 CFR 1320.5(d)(2)(v) through (viii) as the collection is not a statistical survey and does not use statistical data classification.

(g) that includes a pledge of confidentiality that is not supported by authority established in statute or regulation, that is not supported by disclosure and data security policies that are consistent with the pledge, or which unnecessarily impedes sharing of data with other agencies for compatible confidential use.

This collection does not include a pledge of confidentiality not supported by statute or regulation.

(h) requiring respondents to submit proprietary trade secrets or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the information’s confidentiality to the extent permitted by law.

This collection does not require proprietary, trade secret, or other confidential information not protected by agency procedures.

8. If applicable, provide a copy and identify the date and page number of publication in the Federal Register of the agency’s notice, required by 5 CFR 1320.8(d), soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice [and in response to the PRA statement associated with the collection over the past 3 years] and describe actions taken by the agency in response to these comments. Specifically address comments received on cost and hour burden.

Describe efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed, or reported. [Please list the names, titles, addresses, and phone numbers of persons contacted.] Consultation with representatives of those from whom information is to be obtained or those who must compile records should occur at least once every 3 years – even if the collection of information activity is the same as in prior periods. There may be circumstances that may preclude consultation in a specific situation. These circumstances should be explained.

As required in 5 CFR 1320.8(d), MMS provided a 60-day notice in the Federal Register on January 15, 2008 (73 FR 2522). Also, 30 CFR 250.199 and the Paperwork Reduction Act statement on all the forms explain that the MMS will accept comments at any time on the information collected and the burden. We display the OMB control number and provide the address for sending comments to MMS. We received no comments in response to the Federal Register notice or unsolicited comments from respondents covered under these regulations or who submit these forms.

During the comment period, MMS regional offices requested input from several lessees. The burden estimate in A.12 reflects their input. The following companies were contacted:

Taylor Energy Company, Debbie Malbrough, Regulatory Manager,

(504) 589-0562, One Lee Circle, New Orleans, LA 70130

Shell Exploration and Production Co., Sylvia Bellone, Sr. Regulatory Specialist, EP America,

(504) 728-7215, One Shell Square, Room 2948, P. O. Box 61933, New Orleans, LA 70161-1933

Anadarko Petroleum Corporation, Gaylene Reier, Regulatory Analyst II,

(832) 636-3096, 1201 Lake Robbins Dr., The Woodlands, TX 77380

Noble Energy, Inc., Phyllis Greer, Division Regional Coordinator,

(281) 876-6271, 100 Glenborough, Suite 100, Houston, TX 77067-3610

ExxonMobil Corporation, Elizabeth “Liz” Tindol, Staff Office Assistant,

(281) 654-1087, P. O. Box 4358, Houston, TX 77210-4358

Venoco Inc., Theresa Stiem, Staff Office Assistant,

(805) 745-2179, 5464 Carpinteria Ave., Suite #J, Carpinteria, CA 93013-1423

Arguello, Inc., Sheri Holm, Operation Technician

(805) 934-8240, 201 S. Broadway, Orcutt, CA 93455

9. Explain any decision to provide any payment or gift to respondents, other than remuneration of contractors or grantees.

We will not provide payment or gifts to respondents in this collection.

10. Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy.

We protect proprietary information according to the Freedom of Information Act (5 U.S.C. 552) and its implementing regulations (43 CFR 2), and 30 CFR 250.197, “Data and information to be made available to the public or for limited inspection,” 30 CFR part 252, “OCS Oil and Gas Information Program,” and the Freedom of Information Act (5 U.S.C. 552) and its implementing regulations (43 CFR 2). Proprietary information concerning geological and geophysical data will be protected according to 43 U.S.C. 1352.

11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private. This justification should include the reasons why the agency considers the questions necessary, the specific uses to be made of the information, the explanation to be given to persons from whom the information is requested, and any steps to be taken to obtain their consent.

The collection does not include sensitive or private questions.

12. Provide estimates of the hour burden of the collection of information. The statement should:

(a) Indicate the number of respondents, frequency of response, annual hour burden, and an explanation of how the burden was estimated. Unless directed to do so, agencies should not conduct special surveys to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than 10) of potential respondents is desirable. If the hour burden on respondents is expected to vary widely because of differences in activity, size, or complexity, show the range of estimated hour burden, and explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.

(b) If this request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens.

There are approximately 130 respondents (Federal oil and gas OCS lessees). We estimate the total annual burden is 43,065 hours. Refer to the chart below for a breakdown of the burden.

BURDEN TABLE

Citation 30 CFR 250 Subpart K	Reporting & Recordkeeping Requirement	Hour Burden	Average No. of Annual Responses	Annual Burden Hours
		Non-Hour Cost Burdens
Requests
1101(b)	Request approval to produce within 500 feet of a lease line.	5	33 requests	165
		$3,300 fee x 33 requests = $108,900
1101(c)	Request approval to produce gas cap of a sensitive reservoir.	12	51 requests	612
		$4,200 fee x 51 requests = $214,200
1102(b)(6)	Request extension of time to submit results of semi­annual well test.	.5	37 requests	19
1103(a)	Request approval of test periods of less than 4 hours and pretest stabiliza­tion periods of less than 6 hours.	.5	37 requests	19
1105(a), (b)	Request special approval to flare or vent oil-well gas.	.5	1,007 requests	504
1105(c)	Request approval to burn produced liquid hydro­carbons.	.5	60 requests	30
Subtotal			1,225 responses	1,349 hours
			$323,100 non-hour cost burden
Submittals
1102	Submit form MMS-126.	3	1,325 forms	3,975
	Submit form MMS-127.	2.2	2,189 forms	4,816
	Submit form MMS-128.*	0.5 - 3	13,000 forms in GOM	1,336*
			600 forms in POCS
1102(a)(5)	Submit alternative plan for overproduction status—MMS is not currently collecting this information – this is minimal burden requirement.	1	1 plan	1
1103(c)	Provide advance notice of time and date of well tests.	.5	10 notices	5
1104(c)	Submit results of all static bottomhole pressure surveys obtained by lessee. Information is submitted on form MMS-140 in the Gulf of Mexico Region.	14	1,270 surveys	17,780
1105(f)	Submit monthly reports of flared or vented gas containing H2S.	2	3 operators x 12 mos. = 36	72
1105(f)	H2S Contingency, Exploration, or Development and Production Plans—burden covered under 1010-0141 and 1010-0049.			0
1106	Submit application to downhole commingle hydrocarbons.	6	48 applications	288
		$4,900 fee x 48 applications = $235,200
1107(b)	Submit proposed plan for enhanced recovery operations.	12	14 plans	168
1107(c)	Submit periodic reports of volumes of oil, gas, or other substances injected, produced, or reproduced.	2	77 reports	154
1100-1107	General departure or alternative compliance requests not specifically covered elsewhere in subpart K, including bottomhole pressure survey waivers and reservoir reclassification requests.	1	120 survey waivers	120
		6	20 requests	120
Subtotal			18,710 responses	28,835 hours
			$235,200 non-hour cost burden
Recordkeeping
1105(d), (e)	Maintain records for 2 years detailing gas flaring or venting.	13	869 platforms	11,297
1105(d), (e)	Maintain records for 2 years detailing liquid hydrocarbon burning.	.5	60 occurrences	30
Subtotal			929 responses	11,327 hours
TOTAL BURDEN			20,864 Responses	41,511 Hours
			$558,300 Non-Hour Cost Burdens

*Reporting burden for this form is estimated to average 0.5 to 3 hours per form depending on the number of well tests reported, including the time for reviewing instructions, gathering and maintaining data, and completing and reviewing the form. See breakdown for form MMS-128 above.

(c) Provide estimates of annualized cost to respondents for the hour burdens for collections of information, identifying and using appropriate wage rate categories. The cost of contracting out or paying outside parties for information collection activities should not be included here. Instead, this cost should be included in Item 14.

The average respondent cost is $79/hour. This cost is broken out in the below table using the Bureau of Labor Statistics data for the Houston, TX area. See BLS website: http://www.bls.gov/bls/wages.htm.

Position	Level	Hourly Pay rate ($/hour estimate*)	Hourly rate including benefits (1.4** x $/hour)	Percent of time spent on collection	Weighted Average ($/hour)
General Office Clerk	7	$20	$28	5%	$1
Petroleum Engineer	12	$55	$77	60%	$46
Supv. Petroleum Engineer	15	$66	$92	35%	$32
Weighted Average ($/hour)					$79

* Please note that this BLS source reflects their last update from July 2004.

**A multiplier of 1.4 (as implied by BLS news release USDL 07-1883, December 11, 2007) was added for benefits.

Based on a cost factor of $79 per hour, we estimate the total annual cost to industry is $3,279,369 ($79 x 41,511 hours = $3,279,369).

13. Provide an estimate of the total annual [non-hour] cost burden to respondents or recordkeepers resulting from the collection of information. (Do not include the cost of any hour burden shown in Items 12 and 14).

(a) The cost estimate should be split into two components: (1) a total capital and start-up cost component (annualized over its expected useful life) and (2) a total operation and maintenance and purchase of services component. The estimates should take into account costs associated with generating, maintaining, and disclosing or providing the information [including filing fees paid]. Include descriptions of methods used to estimate major cost factors including system and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over which costs will be incurred. Capital and start-up costs include, among other items, preparations for collecting information such as purchasing computers and software; monitoring, sampling, drilling and testing equipment; and record storage facilities.

(b) If cost estimates are expected to vary widely, agencies should present ranges of cost burden and explain the reasons for the variance. The cost of purchasing or contracting out information collection services should be a part of this cost burden estimate. In developing cost burden estimates, agencies may consult with a sample of respondents (fewer than 10), utilize the 60-day pre-OMB submission public comment process and use existing economic or regulatory impact analysis associated with the rulemaking containing the information collection, as appropriate.

(c) Generally, estimates should not include purchases of equipment or services, or portions thereof, made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance with requirements not associated with the information collection, (3) for reasons other than to provide information or keep records for the government, or (4) as part of customary and usual business or private practices.

We have identified three non-hour cost burdens. Section 250.1101(b) requires a fee for a gas cap production request. Section 250.1101(c) requires a fee to produce within 500 feet of a lease line. Section 250.1106 requests a fee for a downhole commingling request. We have not identified any other “non-hour cost” burdens associated with this collection of information, and we estimate a total reporting “non-hour cost” burden of $558,300. Refer to the chart in Section A.12 of this supporting statement for the specific fee breakdown.

14. Provide estimates of annualized cost to the Federal Government. Also, provide a description of the method used to estimate cost, which should include quantification of hours, operational expenses (such as equipment, overhead, printing, and support staff), and any other expense that would not have been incurred without this collection of information. Agencies also may aggregate cost estimates from Items 12, 13, and 14 in a single table.

The average Federal cost is $52/hour. This cost is broken out in the below table using the Office of Personnel Management pay schedule for New Orleans, LA, as of October 2007.

Position	Grade	Hourly Pay rate ($/hour estimate)	Hourly rate including benefits (1.5 x $/hour*)	Percent of time spent on collection	Weighted Average ($/hour)
Clerical	GS-7/5	$18	$27	5%	$1
Petroleum Engineer	GS-12/5	$31	$47	76%	$36
Supv. Petroleum Engineer	GS-15/5	$52	$78	18%	$14
Executive	SES ($140K)	$68	$102	1%	$1
Weighted Average ($/hour)					$52

* A multiplier of 1.5 (as implied by BLS news release USDL 07-1883, December 11, 2007) was added for benefits.

To analyze and review the informa­tion, the Government spends an average of 1 hour for each hour spent by respondents for a total of 41,511 hours. Based on a cost factor of $52 per hour, the total annual estimated burden on the Government is $2,158,572 (41,511 hours x 1 hour = 41,511 hours x $52 = $2,158,572).

15. Explain the reasons for any program changes or adjustments reported.

The current OMB inventory includes 43,065 burden hours for this collection of information. This submission requests 41,511 burden hours. The adjustment decrease of 1,554 hours is due to decreases in the average number of annual responses based on consultations.

The current OMB non-hour cost burden inventory is $1,273,220. This submission requests $558,300. The adjustment decrease of $714,920 is a result of re-estimating the number of annual responses. This decrease is based upon our actual experience during the 1^st year in which these fees were collected.

16. For collections of information whose results will be published, outline plans for tabulation and publication. Address any complex analytical techniques that will be used. Provide the time schedule for the entire project, including beginning and ending dates of the collection of information, completion of report, publication dates, and other actions.

The MMS will not tabulate or publish the data.

17. If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reasons that display would be inappropriate.

The MMS will display the OMB approval expiration date on forms MMS-126, MMS-127, MMS-128, and MMS-140. The remainder of this collection concerns regulatory requirements.

18. Explain each exception to the certification statement.

To the extent that the topics apply to this collection of information, we are not making any exceptions to the “Certification for Paperwork Reduction Act Submissions.”

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