American Oil and Gas Reporter - November 2016 - 90

ConventionCoverage: New Mexico Oil & Gas Association

Regulators Work Best When
Working With Industry
By Dan Holder
SANTA FE, N.M.-Oil and gas regulators work best when they work with industry to provide clean, safe energy to
consumers, argued Kent Hance. Hance,
a former Texas Railroad Commission
chairman and U.S. congressman, was the
opening speaker at the New Mexico Oil
& Gas Association's annual convention,
held Oct. 2-4 in Santa Fe.
"There are too many regulators in this
nation, especially at the federal level,
who think of the industry as an enemy.
That is the reason they don't accomplish
what they need to for the American
public," Hance said. "Government regulations mean higher gasoline prices, and
innovation in the oil and gas industry
means lower gasoline prices."
Many of the regulations targeting oil
and gas production have harmed consumers, he said, characterizing the oil
and gas industry as the best friend the
American consumer has ever had. Operators are confronting a range of opponents,
including supporters of alternative energy
sources who cannot compete in the marketplace unless government regulations
make oil and gas production more expensive, Hance indicated.
On the federal level, the polarization
of Congress exacerbates a tough regulatory
environment, he offered. Fewer than 35
members come from swing districts with
opponents from the other party, so their
only opposition comes from more extreme
members of their own party.

"So, if I am a Republican in a safe
district, I am going to get beat from the
right. I have to move further to the right.
If I am a Democrat and I am going to get
beat in the primary, I am going to move
to the left. It is hard to get legislators
closer together to get something done or
to reach a compromise," Hance posed.
The lack of support for the oil and gas
industry remains entrenched in the White
House, although Hance pointed out Republican control of the House and Senate
would derail many presidential gambits,
including a proposed $10 a barrel tax on
oil production.
"Just think how absurd that is," Hance
said. "If you had a $10 tax on each barrel
of crude oil, would it help industry? It
would hurt industry, but it really would
hurt the consumer. API did a study that
said over the next 20 years, $508 billion
would be saved for American consumers
if there were fewer regulations."
Federal Regulations
New Mexico operators on federal
leases are likely to be working online a
lot more as a result of the Bureau of
Land Management revising Onshore Order
No. 1, said Amy Lueders, BLM's state
director. Under the change, which went
into effect Aug. 31, the agency's Automated Fluid Minerals Support System II
will be the default method of filing federal
applications for permits to drill, she said.
According to BLM, the new e-filing
system automatically flags incomplete
applications and allows operators to track

Kent Hance (left), former
Texas Railroad Commission
chairman and U.S. congressman, stands with New Mexico Oil & Gas Association
Chairman Cliff Brunson prior
to his presentation at NMOGA's annual convention, held
Oct. 2-4 in Santa Fe.

90 THE AMERICAN OIL & GAS REPORTER

their permits through the review process.
The agency points out Onshore Order
No. 1 includes a waiver process that
allows operators to file a hard copy in
certain circumstances.
"BLM is working to get full implementation of AFMSS II by January or
February of next year," Lueders said. "I
appreciate everyone who was involved
in the training for the AFMSS II module.
We can get additional training. There is a
learning curve. BLM would love to work
to make sure anyone who needs training
on the new system gets it."
Lueders predicted the final versions
of BLM's Onshore Orders 3, 4 and 5-
relating to site security, oil measurement
and gas measurement, respectively-would
change from the draft versions published
in 2015. BLM also has issued a policy
instruction memorandum on idle wells,
she said, adding that Washington's target
was idle wells older than 25 years. Nationally, there were 645 idle wells older
than seven years, with 150 topping the
quarter-century mark. Lueders warned
those with older idle wells to anticipate
notices to plug in the near future.
There are several BLM initiatives specific
to New Mexico that involves temporarily
abandoned wells and Brack's cactus, she
said. In September, the agency posted its
new TA policy online, Lueders recounted.
"BLM has variations across the districts
and field offices, so it was important to
make sure we had a consistent and predictable process, in terms of requirements
for TAs and shut-in wells," she said.
Turning to Brack's cactus, Lueders said
BLM was working on developing guidance
for New Mexico, with an expected release
date of January. She pointed out New Mexico classified the cactus as endangered,
and the federal agency sought to ensure it
had consistent protocols in place for permitting wells near the plant. She added
BLM also was developing a long-term,
rangewide monitoring program to support
adaptive management of the species.
State Activities
Tony Delfin, secretary of the New
Mexico Energy, Minerals and Natural

American Oil and Gas Reporter - November 2016

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