Hilcorp applies to change well density rule in San Juan, Rio Arriba counties

Hannah Grover
Farmington Daily Times
Don Schreiber talks about the oil and gas facilities on his property, Monday, May 15, 2017, during an interview at his Devil's Spring Ranch in Gobernador.

FARMINGTON — Hilcorp Energy Company is asking the New Mexico Oil Conservation Commission for a rule change that would allow the company to increase the number of producing gas wells in San Juan County.

The company 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 will meet at 9 a.m. Thursday at Porter Hall, 1220 S. St. Francis Drive in Santa Fe.

The agenda does not include a public comment period, and only people involved in the case or interveners are permitted to speak during the hearing.

San Juan Citizens Alliance has asked the Oil Conservation Commission to delay making a decision on changing the rule.

“It really needs way more robust impact analysis,” said Mike Eisenfeld, San Juan Citizens Alliance energy and climate manager.

He said the Bureau of Land Management, other federal agencies and the public need opportunities to weigh in on the rule change.

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.

A caution sign is visible, Monday, May 15, 2017 at an oil and gas site at Devil's Spring Ranch in Gobernador.

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. “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.

Jane Schreiber drives past an oil and gas site, Monday, May 15, 2017 located near her ranch in Gobernador.

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 hgrover@daily-times.com.