Decision results in shake-up on New Mexico oil and gas panel

Published 11-27-2018

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ALBUQUERQUE, N.M. (AP) - A decision by New Mexico oil and gas regulators to ease restrictions on well locations for a Texas-based company operating in one of the nation's oldest producing basins has resulted in a shake-up on the regulatory panel and more questions from elected officials about the approval process.

New Mexico Land Commissioner Aubrey Dunn removed his agency's appointee to the state Oil Conservation Commission after that staffer voted in favor of the request by Hilcorp Energy Co. during a Nov. 19 hearing.

Dunn told The Associated Press he's concerned about Hilcorp's plans to redevelop thousands of existing wells in the San Juan Basin as the company looks to target a formation known as the Blanco-Mesaverde gas pool.

Density limits that had been in place for years prevented the company from tapping more of the pool without first seeking exceptions for individual wells. In the last year, the three-member commission granted dozens of exceptions for Hilcorp.

The commission is expected in December to finalize its recent decision to allow for potentially double the density of wells in some parts of the basin.

Environmentalists, landowners and some elected politicians have accused the commission of being concerned only about the technical aspects of what happens below ground rather than any surface disturbances.

"My concern is that you're changing well spacing in an already sensitive area," Dunn said.

More than 100 square miles (263 square kilometers) of state trust land could be affected in the San Juan Basin.

The State Land Office, one of the most powerful agencies in New Mexico, oversees oil and gas drilling, renewable energy projects and other development on millions of acres of state trust land. Revenues from monthly oil and gas lease sales, and other activities help fund public schools, higher education, hospitals, the state penitentiary and infrastructure projects.

Dunn has asked the state Attorney General's Office to look into the process to ensure the commission is following the law. The State Land Office also is concerned an attorney for the state Energy, Minerals and Natural Resources Department is acting as the commission's legal counsel. Dunn contends that duty legally belongs to the state attorney general.

The Attorney General's Office has raised its own questions. Agency spokesman David Carl said Monday that the office "remains highly concerned that this process has not allowed for full transparency and adequate public input."

Heather Riley, commission chair and head of the state Oil Conservation Division, said in a statement the division was not required to notify surface owners or agencies that manage the surface land, only operators who are developing the Blanco-Mesaverde pool.

Riley said the order to increase well density has not been drafted yet and she wasn't aware of any formal appeals.

Supporters, including economic development officials from the Four Corners region, have said the change will boost business in the oilfield and result in more revenue for the area.

Hilcorp has argued that its application did not seek to drill more wells or change the way new wells are permitted. But environmentalists and others argue the commission should have considered air quality and other data from federal agencies on the potential cumulative effects.

The concerns were outlined in more than 200 pages of public comments submitted to the commission. Those included letters from members of New Mexico's congressional delegation, Land Commissioner-elect Stephanie Garcia Richard and Democrat Michelle Lujan Grisham, who will take the reins as governor Jan. 1.

Rancher Don Schreiber said the decision should not have been rushed, given a new administration will be in place in the coming weeks. The transition will mean new commission members.

"We are realists," Schreiber said, acknowledging that drilling will continue. "Our interest is that that valuable natural resource comes out of the ground responsibly and that everyone has full participation in that process and we can preserve a multi-use landscape up here."

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