Well density change draws national, international attention to San Juan Basin
FARMINGTON — The San Juan Basin was put on a state, national and international stage this week as the Oil Conservation Commission approved an application to increase the number of active wells that could be extracting oil or gas from the Blanco-Mesaverde pool.
After going into closed session, the commission emerged Monday evening to tell the audience it had determined it was appropriate to increase the well density from four active wells on a 320-acre unit drawing from the pool to eight active wells, or one well for every 40 acres.
Supporters praised the decision while opponents say their voices and concerns were ignored.
More than 200 pages of public comments were submitted to the Oil Conservation Commission prior to the Monday hearing. Public comments opposing the application came in from across New Mexico as well as England and from California, Wisconsin, New York and various other states.
These opponents expressed concerns with the environmental impacts increased well density could have on air quality and the landscape. Supporting letters argued that the change would create new jobs and revenue.
Elected officials asked for hearing to be postponed
State and federal elected officials were among those who weighed in on the case, asking for a decision to be postponed.
Among these officials were Land Commissioner-elect Stephanie Garcia Richard and Governor-elect Michelle Lujan Grisham, who are both Democrats. The newly elected officials will take office in January and they asked for a decision to be postponed until they took office.
When she takes office in January, Lujan Grisham will be tasked with appointing new cabinet secretaries, including one who oversees the Energy, Minerals and Natural Resources Department. The Oil Conservation Commission falls within that department and could change with the new administration.
Activist Don Schreiber, who owns a ranch near Gobernador and opposed the rule change, said postponing the hearing may have led to a different result, however New Mexico Oil and Gas Association spokesman Robert McEntyre disagreed.
“This is ultimately a technical decision,” he said. “Any decision that is technically-based will have the same outcome.”
Among the local people who contacted the Oil Conservation Commission was Aztec Mayor Pro-tem Rosalyn Fry, who asked for the hearing to be postponed until Garcia Richard, Lujan Grisham and the new cabinet secretary “have the opportunity to fully review and analyze this proposal to double the drilling of the Blanco-Mesa Verde pool in San Juan and Rio Arriba counties.”
The Oil Conservation Commission also received a letter from New Mexico Senate Majority Leader Peter Wirth, D-Santa Fe, and a separate letter from five elected officials and representatives from more than 30 activist groups and more than 100 New Mexico residents asking for the hearing to be postponed.
Hilcorp plans to recomplete existing wells
Hilcorp plans to take existing wells that are drawing from the Dakota pool and recomplete them, allowing those wells to draw from the Blanco-Mesaverde pool instead. The Blanco-Mesaverde pool is closer to the surface than the Dakota pool.
McEntyre anticipates other operators could take advantage of the new pool rule to follow in Hilcorp’s footsteps and recomplete existing wells.
Hilcorp has argued the recompletion of existing wells will minimize the impacts that would otherwise occur if it had to drill costly new wells.
Opponents felt unheard during hearing
“I have a chestful of emotion about that, but mostly outrage,” Schreiber said about the decision to not postpone the hearing. He was also disappointed that the commission denied his request to provide testimony regarding the impacts of oil and gas wells on his ranch in rural Rio Arriba county.
McEntyre said the Oil Conservation Commission’s narrow scope led to opponents, such as Schreiber, being unable to offer testimony in the case. McEntyre said the activists were bringing up issues not within the scope of the Oil Conservation Commission’s authority or that were not related to the application to change the pool rule.
Schreiber disagreed. He said the Oil Conservation Commission’s mission statement and rules say it has an obligation to protect the environment and public health, which is what he wanted to address. He said the commission also refused to hear testimony from an expert witness brought to the hearing by the State Land Office, which oversees oil and gas leases on state lands.
McEntyre said there will be opportunities in the future for these activists to weigh in on the specific issues that they brought up during the hearing.
“Really this is one step,” McEntyre said. “One important step, but one step at the end of the day.”
He said Hilcorp and other operators will still need to go through air quality permitting processes as well as applications to drill and other regulatory processes. McEntyre said these processes will give activists additional chances to provide input.
Schreiber said arguing that the change merely had to do with well density and did not involve changes to allow new wells is “exactly like saying we just built a bomb, that doesn’t mean it’s going to go off.”
Change could have economic benefits for San Juan Basin
An analysis by New Mexicans for Economic Prosperity found the change could generate $29 million in additional tax revenue.
“This really gives the basin an opportunity to grow again,” McEntyre said.
He said the pool rule change will jumpstart activity in San Juan and Rio Arriba counties, benefiting both operators and contractors.
“Farmington has lost some people over the last couple of years because there hasn’t been these opportunities available,” McEntyre said.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at email@example.com.