Rehearing scheduled in Blanco-Mesaverde well density case

Staff and wire report
New Mexico's first female state land commissioner, Stephanie Garcia Richard, pictured here after taking the oath of office on Jan. 1 in Santa Fe, attended today's rehearing on Hilcorp's well density application.

SANTA FE — As a Democratic administration took charge of the state's Oil Conservation Commission, New Mexico oilfield regulators suspended an order today that relaxed restrictions on Four Corners natural gas well locations — over the objections of a Texas-based company.

The commission scheduled a rehearing of an application Hilcorp Energy Co. submitted in August asking to double the well density in the Blanco-Mesaverde oil and gas pool in San Juan and Rio Arriba counties.

The application was granted in November despite backlash from the State Land Office and environmental advocates.

A special meeting took place today in Santa Fe to discuss rehearing the case. The commission decided to rehear the case on May 9 and suspended the previous approval of the application.

The nonprofit San Juan Citizens Alliance issued a press release praising the decision while a Hilcorp official was critical.

"We are obviously disappointed in the outcome of today’s hearing," Hilcorp spokesman Justin Furnace said. "The OCC's original decision was based on a careful review of the facts and was grounded in law. We look forward to the opportunity to make that clear in the coming weeks. Hilcorp is seeking to increase its investment in the San Juan Basin and in its communities by improving existing infrastructure and increasing local production."

Well density change approved by OCC

The application would increase well density from four wells for every 320-acre unit to eight wells for every 320-acre unit.

Opponents of increasing well density say it could have lasting environmental and health consequences. Proponents argue that it could spur development and have positive economic impact, both in the basin and throughout the state.

Previous decision reversed

A Hilcorp Energy Company executive said last year that the firm looks forward to decades of work in the San Juan Basin.

The increase in well density originally was approved late last year. Oversight of wells shifted Jan. 1 to the Democratic administration of Gov. Michelle Lujan Grisham and Land Commissioner Stephanie Garcia Richard.

Newly appointed Oil Conservation Commission Chairman Gabriel Wade said the rehearing is needed to ensure a full review by state regulators at the Oil Conservation Division, where he serves as acting director, and provide adequate opportunities for public comment.

Commissioner Allison Marks of the State Land Office emphasized the need for consultation with federal government agencies and Native American tribes in the vicinity, including the Jicarilla Apache Nation — a major natural gas developer in its own right.

Hilcorp Energy has defended its application as legally and scientifically sound as it seeks to draw more natural gas from a formation known as the Blanco-Mesaverde gas pool through existing and potential new well locations.

A well owned by Hilcorp Energy Co. is pictured in Berg Park in Farmington.

An attorney for Hilcorp, Michael Feldewert, today alleged political interference with the application and challenged Wade's qualifications to preside over a commission that makes precedent-setting decisions about rules for oil, gas and geothermal development, arguing he does not have prerequisite engineering education.

"Political shenanigans that are going on here are a low point for this commission," Feldewert said.

During the meeting, the Oil Conservation Commission asked Mario Atencio, a member of the Torreon Chapter, about outreach to the affected Navajo Nation chapters.

"Protecting a community isn't shenanigans," Atencio said.

Approval drew some rebukes

The approval of the well-density application in the final months of the administration of Republican Gov. Susana Martinez was followed by an outcry from conservationists and ranchers, along with a rebuke by departing Land Commissioner Aubrey Dunn, a Libertarian who ousted his appointee to the Oil Conservation Commission.

Aubrey Dunn

Garcia Richard, the elected successor to Dunn, attended today's meeting and applauded the decision for a rehearing of Hilcorp's application. The State Land Office oversees energy leases across some 14,000 square miles (36,000 square kilometers) of state trust land and additional underground resources to help fund schools, universities and hospitals.

"I do acknowledge the importance of the natural gas industry in this region in particular to the financial stability and longevity of the state and the State Land Office," she said. "I don't see any reason why we can't balance increased revenues with responsible development, and that's what this hearing is really about."

Garcia Richard later issued a formal statement.

“I want to thank Secretary-designate Sarah Cottrell Propst for bringing this precedent setting case back into the forefront for review," she said. "While it is critical to encourage natural gas production, it is imperative that we remember the San Juan Basin has the 2nd largest natural gas field in the United States and we need to closely evaluate the impacts of doubling wells in the region.

"These resources are essential to our state’s financial viability and I believe we can ensure long-term sustainability and make more money for New Mexico’s school children while increasing responsible production,” she said.

Daily Times reporter Hannah Grover and Associated Press reporter Morgan Lee contributed to this report.