American Oil and Gas Reporter - September 2018 - 122

New Mexico Energy, Minerals and Natural
Resources Department Secretary Ken McQueen gives the Independent Oil & Gas
Association of New Mexico an update on
how the state is working to improve its
reuse and recycling of produced water.

dum of understanding to clarify the regulatory and permitting framework related
to the reuse, recycling and beneficial use
of produced water.
"Getting government out of your way
is the best way we can serve you, making
sure that we are doing the right things
but also that we are not an impediment,"
Martinez concluded. "When you are successful, New Mexico succeeds. Investing
in oil and gas assets means more money
for schools and universities, and our
health care."
Produced Water
The MOU resulted from talks between
the New Mexico Energy, Minerals and
Natural Resources Department, state engineer and New Mexico Environment
Department and EPA, described EMNR
Secretary Ken McQueen.
"The intent is to make sure the state has
a regulatory framework in place and ready
to go in the event that operators want to explore alternatives other than downhole disposal for produced water," he said. "We
know that produced water is going to be an
increasing issue in New Mexico. Today,
the state produces 4.5 barrels of water for
every barrel of oil produced."
To ensure the oil and gas industry's
continued success, McQueen said New
Mexico must provide resources for produced water disposal. Technological improvements are likely to provide an economic alternative to downhole injections,
he offered, adding "New Mexico wants
to make sure that these relations align,
so that if and when it happens, there will
not be any regulatory issues in play."
In her seven and a half years in office,

including three meetings with President
Obama, McQueen recalled Governor Martinez continued her efforts to streamline
the federal permitting process in New
Mexico. He said Martinez sought to:
* Authorize either federal or state agencies, but not both, to conduct technical reviews for applications for permits to drill;
* Rule that wells drilled on state or
fee lands that penetrated federal mineral
estate did not have to go through a
National Environmental Policy Act review;
* Expand Section 390 categorical exclusions; and
* Change legislation to allow operators
who successfully completed the APD paperwork for a well to begin activities
without further agency review.
Martinez has been instrumental in
building a coalition of Western governors
to support those initiatives, McQueen reported. Late in 2017, five governors joined
Martinez in a letter to Interior Secretary
Ryan Zinke, with Wyoming electing to
send a separate letter of support. McQueen
said he and Martinez testified before
Congress on June 6 about the best way
to advance the proposals.
"The interesting thing was we met
with Secretary Zinke the day after we
had these hearings, and at that point BLM
approved the categorical exclusions, in
IB 2018-061," McQueen recounted. "So,
we have had some success with moving
these four parameters forward."
Record Sales
In 2017, the State Land Office had a
record year in bonus sales for both oil
and gas and nonindustry sales, and had a
good year regarding royalties, assessed
Aubrey Dunn, New Mexico state land
commissioner. Overall, the state received
$838 million, the most in its history.
"The state currently is producing more
oil and gas on state trust lands than ever,"
he described. "When you count what is
coming out of the Permanent Fund, the
state is distributing $830 million this
year. I was hoping we could get $1 billion,
but we didn't quite get there."
Converting the SLO's computer network
from ONGARD to New Mexico's TRD
Tax system continues, and Dunn said he
recognized the hardships operators faced
in dealing with two computer systems. He
noted the office secured an additional $5
million to support the conversion process,
which will integrate three tax programs-
oil and gas production, ad valorem equipment and natural gas processors-and royalty
payments into the Taxation and Revenue
Department's computer system.
As part of that process, Dunn noted
SLO was converting its computers and

122 THE AMERICAN OIL & GAS REPORTER

The New Mexico State Land Office received $838 million, the most in its
history, in 2017, State Land Commissioner
Aubrey Dunn tells the Independent Oil
& Gas Association of New Mexico's annual convention.

record storage from a COBOL-based system to a doc.net one.
"We can do a lot more with the reporting," he said. "Now, you have to
write code when you do changes. One of
our last code writers just left the office
because he had a family health issue. We
have code writers in India who work on
our system by phone. It will be really
good to have a stable platform."
The SLO filed suit against the state
engineer over livestock well permits, and
Dunn said he expected positive results.
The lawsuit involves the engineer granting
permits to allow landowners to convert
their well permits and the associated three
acre-feet draws to industrial uses. State
law allows such conversions once a year.
"When we started looking at where
this has become an issue, especially Eddy
County, the state engineer was issuing
three-acre-feet permits up to nine times
in some cases, without going through a
process or protests," Dunn described.
"What we are after is to make sure that
the water is accounted for correctly, and
so we filed a writ of mandamus. The
state engineer has not answered it yet."
According to Dunn, many renewable
energy advocates claim shifting state land
use to wind and solar projects will generate
as much income as oil and gas wells.
"The State Land Office calculated if
five wind turbines were installed on every
piece of good wind land, that would give
the state close to 3,000 turbines," he said.
"The most you would generate a year, if
you put all those turbines up today and got
money from them today, is $23 million a
year .That compares with the $830 million
that oil and gas generated last year."
r



American Oil and Gas Reporter - September 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - September 2018

Contents
American Oil and Gas Reporter - September 2018 - Intro
American Oil and Gas Reporter - September 2018 - 1
American Oil and Gas Reporter - September 2018 - 2
American Oil and Gas Reporter - September 2018 - Contents
American Oil and Gas Reporter - September 2018 - 4
American Oil and Gas Reporter - September 2018 - 5
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