American Oil and Gas Reporter - September 2016 - 110

ConventionCoverage: Independent Petroleum Association of New Mexico

Regulatory Onslaught Keeps
Association Hopping
By Bill Campbell
SANTA FE, N.M.-Regulatory overreach by the federal government has made
the past year one of the busiest for the
Independent Petroleum Association of
New Mexico, Executive Director Karin
Foster noted in her report delivered at
the association's 2016 annual convention.
But there has been no dearth of issues at
the state level, either.
Foster, and several state and federal
agency representatives, discussed issues
ranging from groundwater protection and
shut-in wells to royalty rates and resource
management planning during IPANM's
annual meeting, held Aug. 1-3 at the
Hilton Santa Fe Historic Plaza.
One of the top issues for the New
Mexico Oil Conservation Division, advised
Director David Catanach, is protecting
freshwater in the Roswell groundwater
basin. Alerted by a state representative
who had received complaints of potential
water-well contamination, Catanach recalled that in February, the OCD issued
an emergency order suspending all drilling
permits in the basin.
He explained that the Roswell groundwater basin spanned approximately 105
miles north-south and 33 miles east-west,
running from just north of Carlsbad to
well north of Roswell in Chavez and
Eddy counties, N.M. The eastern portion
of the basin has two freshwater zones: a
shallow aquifer at about 450 feet and an
artesian aquifer at 1,200-1,400 feet.
"The issue is whether a single string
of casing cemented through the twoaquifer system is adequate to protect the
aquifers and prevent communication,"
Catanach told IPANM.
Following public meetings conducted
by the Pecos Valley Conservancy District
in Roswell and a May 10 OCD hearing,
he said the emergency order was extended
and the question of establishing special
field rules was set for hearing before the
full Oil Conservation Commission. The
hearing date was expected to be set at an
Aug. 8 meeting, but "we probably are
looking at November," Catanach advised.
For its part, Foster said, IPANM is

opposed, contending there is no scientific
basis for requiring an intermediate casing
string in the basin. "It will be a fight,"
she vowed.
Shut-In Well Policies
An area where state and industry interests may be more closely aligned is
the shut-in well policy for marginal wells
during periods of low prices, which
Catanach said OCD instituted earlier this
year. Thus far, he reported, a dozen operators have enrolled 400-500 wells.
"We are asking operators to execute
an agreed compliance order and demonstrate some economic need," he detailed.
"Our current rules allow you to shut in a
well for 15 months. Under the new program, you can keep that well shut in for
an additional three years.
"We are asking the operator to demonstrate mechanical integrity by conducting
a Bradenhead test at month 27 and annually thereafter," Catanach went on, adding,
"We probably are going to ask you to
provide additional financial assurance for

110 THE AMERICAN OIL & GAS REPORTER

The New Mexico State Land Office is
proposing to create the Early Childhood
Education Land Grant Permanent Fund
by seeking permission to lease mineral
rights owned by the federal Bureau of
Land Management that lie beneath privately-owned surface lands in the state,
Land Commissioner Aubrey Dunn advises the Independent Petroleum Association of New Mexico.

the shut-in well."
The New Mexico State Land Office
also is preparing a shut-in well rule, expected to be finalized by Oct. 31, State
Land Commissioner Aubrey Dunn offered
during a later presentation. He said SLO's
rule would require shut-in approval by
the NMOCD, timely notification to SLO,
and shut-in wells would have to pay the
greater of twice their annual rental fee or
$320.
Foster pointed out that state code
19.2.100.68 already allowed operators to
petition SLO for a reduced royalty rate
on marginal oil or gas wells during difficult
economic times.
Foster was less sanguine about a federal
shut-in well policy being formulated by
the Bureau of Land Management. Whereas
BLM now learns of shut-in wells when
the Office of Natural Resources Revenue
reports a cessation of royalties, she said
the proposed BLM policy would require
notification within 90 days.
And she warned, "If you want to temporarily abandon the well, a Bradenhead
test is not going to suffice to prove mechanical integrity."
Amy Lueders, BLM state director for
New Mexico, told IPANM the draft policy
was being reviewed by the agency's field
offices. "I anticipate it will be finalized
soon," she imparted.
OCD Initiatives
Another OCD initiative, Catanach
went on, is upgrading its historical guidance on spill and leak delineation and remediation to a formal rule making. He
said the OCD had been approached by a
group of operators who contended the
current guidance was not followed uniformly across the state.
While disputing that, Catanach said,
"We do like the idea of putting this in a
rule."
He said OCD was preparing to form
an industry advisory committee and that
the rule would include timelines for compliance.
Foster noted that OCD's guidance
considered spills of five barrels or greater
to be releases that must be reported and

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