FARMINGTON — Lt. Gov. John Sanchez on Wednesday criticized regulations he said impede the oil and gas industry's ability to create jobs.

"I will continue to fight to see the oil and gas industry is treated the way it should be, as a valuable and responsible partner in the state of New Mexico," he said.

Sanchez was the keynote speaker on the opening day of the 11th Four Corners Oil and Gas Conference at McGee Park. About 2,400 oil and gas industry workers are attending the two-day conference.

It comes as natural gas production in northwest New Mexico continues a five-year slide amid low prices that have discouraged new drilling projects. Producers are increasingly focusing on oil, but even the price of that commodity has dropped in recent weeks.

Meanwhile, Gov. Susana Martinez's administration is working to reverse many of the rules passed under Bill Richardson's direction, and industry officials anxiously await the federal Environmental Protection Agency's next move.

Sanchez, engaging in a little election-year messaging, urged conference-goers to vote for industry-friendly leaders.

"Elections matter," he said. "The country must decide if we're going to continue with the policies of the Obama administration, which are killing our ability to have domestic energy to create millions of jobs and to create security America needs."

President Obama recently has embraced natural gas production, and in April he announced a new interagency working group to support development.


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Sanchez said he will attend a meeting in Hershey, Pa., to form a national organization of oil- and gas-producing counties. San Juan and Lea counties are expected to take part.

Sanchez also criticized protections for endangered or threatened species that affect oil and gas production.

"We cannot have the sand dune lizard or the lesser prairie chicken dictate our economic future," he said.

Sanchez pointed to New Mexico's pit rule, which regulates how wastewater from drilling sites is disposed of, among other measures.

The state Oil Conservation Commission is set to meet beginning Monday to consider changes to the pit rule. Two industry groups, the New Mexico Oil and Gas Association and the Independent Petroleum Association of New Mexico, petitioned the commission to reconsider the rule.

State Rep. James Strickler, R-Farmington, said the pit rule stands in the way of oil and gas production. "It was the stupidest rule that ever was crafted by man."

Strickler said requirements such as cattle fencing only add costs that small producers cannot afford.

"The little guy is getting killed," he said.

An afternoon session on the pit rule filled one of the conference's classrooms with about 40 attendees. Myke Lane, environmental health and safety supervisor for WPX Energy Production's San Juan Basin operations, said the state's first pit rule came out of southeast New Mexico in 1958. That rule followed concern that chloride from drilling wastewater would pollute drinking water supplies.

Northwest New Mexico got its own pit rule in 1985. The two sets of rules later were combined into pit rule 17 under the Richardson administration.

"It's become a very politically driven rule instead of one that's providing predictability to our industry," Lane said.

John Bemis, state secretary of energy, minerals and natural resources, touched on the potential of the Mancos Shale, an oil-rich geologic layer.

Major firms including Encana Corp.

and ConocoPhillips are exploring the shale, often in partnership with local independent companies including Aztec Well Servicing, Dugan Production and Merrion Oil and Gas.

"There are companies that are coming into the San Juan Basin and they really think they might have oil here," Bemis said. "One company is predicting 1,000 wells, and that's just one company."

Bemis did not identify the company he was discussing.

Bemis said he's heard forecasts for natural gas prices to grow to $3 per 1,000 cubic feet in the short term, and to $4-6 within a year or two. On Wednesday, natural gas at the Henry Hub closed at $2.36 per 1,000 cubic feet.

"The future is fairly rosy for Farmington," he said. "Right now you have to hold tight because $2 prices are tough."

John Roe, a member of the conference's executive committee, said the conference gives industry workers a chance to keep up on changes in technology and regulation.

The sessions "provide good information on what people in the industry need to know about," said Roe, engineering manager at Dugan Production.

Exhibition halls were packed with 289 exhibitors, some of whom had reserved multiple booths. The conference sold out of exhibitor space in February and had a waiting list of more than 60 companies, organizers said.

"You can catch everybody in one place," said Dave Joiner, account manager at Pumps & Service, a Farmington oilfield equipment retailer. "Instead of going to everybody's office, they come to you."

Scheduled topics Thursday include a discussion of geothermal potential led by Colorado School of Mines Associate Professor Masami Nakagawa and a talk on shale gas from Dave Simpson of MuleShoe Engineering in Flora Vista.