US DOI Proposes Easing Regulations on Onshore Commingled Production

The United States Department of the Interior (DOI) is proposing updates to land regulations to promote combined production from multiple leases, saying the practice “reduces environmental impacts, lowers operating costs and increases overall efficiency”.

The proposed changes to the Bureau of Land Management oil and gas regulations “will implement the One Big Beautiful Bill’s directive to the Secretary of the Interior to approve onshore commingling applications”, the DOI said in an online statement.

Commingling is currently restricted to license areas that have “identical mineral ownership, royalty rates and revenue distribution”, the DOI said. “These requirements create unnecessary barriers in many areas of the West where mineral ownership is complex and varied.

“The proposed changes would allow commingling even when these conditions differ, unlocking energy potential that is currently tied up in regulatory red tape”.

“Thanks to major advancements in metering and measurement technologies, operators can now accurately track production and allocate royalties even at the individual wellhead”, the DOI added. “These technologies meet the precision standards required by the Bureau of Land Management and ensure that all mineral owners receive their fair share”.

It estimates up to $1.8 billion in industry savings annually under the updated regulations. “Those savings would give operators the ability to reinvest in new energy production, helping drive domestic energy development while reducing the need for duplicative infrastructure”, the DOI said.

“This rule would also allow for greater flexibility in how production is combined and measured, which will not only increase efficiency but also reduce surface disturbance, benefiting both industry and the environment”.

“The Bureau of Land Management intends to move quickly to update the relevant regulations under 43 CFR Subpart 3173, with a formal rulemaking process to follow, including opportunities for public comment”, the DOI said.

Interior Secretary Doug Burgum commented, “This is about common sense and catching up with today’s technology. The current rules were written for a different era”.

The American Petroleum Institute welcomed the proposal. “We look forward to engaging with Interior to leverage new technologies to support more efficient and responsible oil and natural gas production on federal lands”, the lobby group’s upstream policy vice president, Holly Hopkins, said in a statement.

Earlier this year the Interior expanded the allowable pressure differential to produce from multiple reservoirs using a single wellbore in the deep waters of the Gulf of America. The pressure differential limit for downhole commingling in the Paleogene Wilcox deepwater play has been raised from 200 pounds per square inch (psi) to 1,500 psi.

“Under the updated rules, operators can now safely produce from multiple reservoirs with greater pressure differences, provided they meet new conditions including fluid compatibility certification, pressure monitoring and regular performance reporting to BSEE”, the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) said April 24.

“This change, the result of extensive technical consultation with offshore industry leaders, could increase production output by roughly 10 percent, which would translate into over 100,000 barrels per day production increase over the next 10 years”, the BSEE said. “Additional gains are possible as operators provide further data”.

It cited a study by researchers at the University of Texas’ Petroleum and Geosystems Engineering Department that claimed commingled production maximizes per-well production compared to sequential schemes. Over 30 years, commingling improves oil recovery by 61 percent, and by 21 percent over 50 years, according to the study published September 2023 in the Energy Exploration & Exploitation journal.

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