Section 3178.3 - Production on which royalty is not due(a) To the extent specified in §§ 3178.4 and 3178.5 , royalty is not due on: (1) Oil or gas that is produced from a lease or communitized area and used for operations and production purposes (including placing oil or gas in marketable condition) on the same lease or communitized area without being removed from the lease or communitized area; or(2) Oil or gas that is produced from a unit PA and used for operations and production purposes (including placing oil or gas in marketable condition) on the unit, for the same unit PA, without being removed from the unit.(b) For the uses described in § 3178.5 , the operator must obtain prior written BLM approval for the volumes used for operational and production purposes to be royalty free.