Decision delayed at Hilcorp's state hearing
FARMINGTON — Houston-based Hilcorp Energy Company's attempt to ask the New Mexico Oil Conservation Commission for a rule change to potentially increase the number of producing gas wells in San Juan and Rio Arriba counties hit a delay Sept. 13, but the commission will revisit the issue in mid-November.
The committee took some testimony, but, after a closed session discussion, decided to reconvene on Nov. 14 due to issues involving Hilcorp's duty to notify other oil and gas rig operators in San Juan and Rio Arriba counties about the correct date of the hearing.
"“The Commission made it clear today that the application has merit, but at the Commission’s request, Hilcorp will be re-notifying affected operators in the San Juan Basin to ensure that they are aware of the proposed change,” Hilcorp spokesman Justin Furnace said via email Sept. 13.
The state commission also ruled that the San Juan Citizens Alliance, which had asked the Oil Conservation Commission to delay changing the rule, has no standing to challenge Hilcorp's move, said Energy, Minerals, & Natural Resources Department spokesperson Beth Wojahn after the hearing.
Public notice concerns
The New Mexico Attorney General Office's Consumer and Environmental Protection chief sent a letter Sept. 10 listing public notice concerns to Bill Brancard, general counsel Energy, Minerals, & Natural Resources Department.
"Our understanding is that this would result in doubling the number of natural gas wells in San Juan and Rio Arriba counties, potentially adding up to 7,500 additional wells," Director of Consumer and Environmental Protection Cholla Khoury wrote.
She requested some documentation because "we were unable to locate the notice of hearing on the OCC website as required by NMAC 184.108.40.206(B)(1). Also, a cursory review of the documents provided on your public website appears incomplete."
The issue was still under state review by the day of the hearing.
"We are continuing to review the matter to ensure that the public was given a full opportunity to participate and all the proper information was available for consideration," Attorney General's Office spokesman David Carl said Sept. 14 via email.
No legal standing
Hilcorp is asking the commission to double the number of producing wells that will be allowed in a 320-acre area in the Blanco-Mesaverde gas deposit in San Juan and Rio Arriba counties.
The Oil Conservation Commission met in Santa Fe. The agenda did not include a public comment period, and only people involved in the case or interveners were permitted to speak during the hearing.
The commission ruled in closed session that the San Juan Citizens Alliance did not meet the standards for having standing before the commissission, meaning that the group would have to contribute to the protection of health and public safety in the area where the application was made.
The alliance, which believes ithas standing, has the option of trying again to become an intervenor due to the hearing delay, but the issue might eventually wind up in court if the group wants to push the matter.
"The San Juan Citizens Alliance is currently evaluating its legal options," the group told Energy magazine Sept. 14.
Alliance leaders plan to monitor the participation of the public and land managers in this process going forward as they plan their next move, the group said.
“It really needs way more robust impact analysis,” Mike Eisenfeld, San Juan Citizens Alliance energy and climate manager, told The Farmington Daily Times before the Sept. 13 hearing.
He said the Bureau of Land Management, other federal agencies and the public need opportunities to weigh in on the rule change.
Eisenfeld was unavailable for comment after the hearing.
Original guidelines issued in 1949
Guidelines for density and location of wells in the Blanco-Mesaverde deposit were first issued in 1949 and limited the number of wells to one well every 320 acres, according to a fact sheet from Hilcorp. This rule has been amended twice since then. The most recent amendment came about two decades ago and allowed four producing wells in the 320-acre area.
Hilcorp is asking this to be increased to eight producing wells. Hilcorp proposes allowing up to four wells in each quarter section of the 320 acres and eliminating the well location requirement.
“Over the last several months, Hilcorp has submitted and been granted, nearly 70 exceptions to the Blanco-Mesaverde Gas Pool Rule which demonstrates the need to update the existing rule,” said Hilcorp spokesman Justin Furnace in an email before the hearing. “Hilcorp’s proposed amendment to the current pool rule promotes new investment into northwest New Mexico communities and extends the life of the San Juan Basin.”
Hilcorp operates more than 5,000 producing wells in the Blanco-Mesaverde gas pool and has identified thousands of wells that are capable of production but are restricted due to the current pool rule, according to Hilcorp.
Currently, Hilcorp has to receive exceptions or waivers to begin production from those wells that it has identified. This is done on a well-by-well basis.
According to the fact sheet provided by Hilcorp, the company hopes to reinvest and upgrade existing well sites and production equipment. It is not applying for new wells.
Rancher raises concerns
Don Schreiber, a Gobernador-area rancher who has spoken out about methane emissions from the gas wells in the basin, decries the application as a way of bypassing the federal protections in place.
He predicts an estimated 7,500 new wells could be drilled if the rule is changed. While the new wells would be subject to the current permitting regulations, he said the Bureau of Land Management’s resource management plan developed in 2003 evaluated the impacts of the oil and gas wells based on the current density rule.
He said a new environmental impact statement, like the one done for the resource management plan, needs to be done before the rule changes.
“These wells are 30 years into their lives,” Schreiber said. “We’re making a rule that is going to last years and years into the future.”
In addition, Schreiber said Hilcorp is not the only operator that will be allowed to have more producing wells.
Schreiber said if Hilcorp begins producing from existing wells that are not currently producing it will increase the traffic, wastewater, leaks and vents from the wells.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at email@example.com.
Note: This is a modified and expanded version of a story that originally appeared in the Farmington Daily Times. Editor John R. Moses contributed to this report.