American Oil and Gas Reporter - July 2019 - 86

IPANM Annual Meeting - Albuquerque, N.M.
Wednesday, July 24
2-4 p.m. Board of Directors Meeting, Hotel
Chaco Gathering Room
Board Members Only
3 p.m. Check-In Begins, Hotel Chaco Lobby
4-7 p.m. Registration and Welcome Reception, Hotel Chaco Terrace Suite

2-4 p.m. Wine Tasting, Hotel Chaco Gathering Room
4:30-6 p.m. Golfers' Patio Reception, Albuquerque Country Club Ventana Room
and Patio
7-9 p.m. President's Reception, Hotel Albuquerque Casa Esencia

Thursday, July 25

Friday, July 26

6:30-8:30 a.m. Welcome Breakfast, Hotel
Albuquerque at Old Town Outdoor
Pavilion
7:30-11 a.m. Opening Session, Hotel Albuquerque Franciscan Ballroom
10-10:30 a.m. Exhibit Hall and Coffee
Break, Hotel Albuquerque Franciscan
Ballroom and Foyer
11:15 a.m.-Noon Golf Tournament Luncheon, Albuquerque Country Club Ventana
Room and Patio
Golfers Only
Noon-5 p.m. Golf Tournament, Albuquerque
Country Club

6:45-8:30 a.m. Breakfast and Live Podcast,
Hotel Albuquerque Franciscan Ballroom
8:15-10 a.m. General Session 1
Industry Round Table
10-10:30 a.m. Exhibit Hall and Coffee
Break, Hotel Albuquerque Franciscan
Ballroom and Foyer
10:30-11:30 a.m. General Session 2
Methane Round Table
11:30 a.m.-12:15 p.m. Awards Session,
Hotel Albuquerque Franciscan Ballroom
12:30-2 p.m. Keynote Luncheon, Hotel Albuquerque Alvarado ABCD Ballroom

it all into context at the annual meeting."
Further to the point, Thomas observes
that most small independent operators
do not have the regulatory expertise on
staff to process the rapid flow of regulatory
reviews, and potentially damaging and
expensive revisions under consideration.
"Most of us have an engineer, a couple
of technicians and an administrative assistant in the office," he remarks. "With
the level of work needed to keep up, we
have to turn to the association for direction.
That is what the board tasked IPANM
with doing."
Winchester credits Thomas' leadership
with making IPANM members the focus
of this year's annual meeting, noting that
the theme is "Addressing Operator Needs
in 2019."
The list of other significant changes of
which operators need be aware are a revised
framework for how penalties are levied,
reclassification of produced water, and a
new fee regime for everything from state
land-surface use to drilling applications.
New Permitting Fee
During the legislative session, state
officials argued that permit filings and
hearing applications at the Oil Conservation Division had increased 400% over
the past five years while its budget had
been cut by 44%.
Newly appointed OCD Director Adrienne Sandoval told a newspaper in Carlsbad that an early priority for her administration was reducing the staff vacancy
level from 40% to zero. Additionally, the
division struggled with "an antiquated
86 THE AMERICAN OIL & GAS REPORTER

IT system that has us doing much of our
work on paper," Sandoval said.
Lawmakers this session passed SB
553, which, for the first time, imposes
fees on filings with the OCD and apportions revenues collected to the division
for modernizing its permitting systems
and to defray administrative costs.
The entire industry followed SB 533's
movement through the legislature because
New Mexico had not had a permitting
fee previously, Winchester recalls.
"Independents had significant concerns
because they saw it as another tax on
their operations," he says.
He adds that operators also are concerned about concurrent fee increases at
the U.S. Bureau of Land Management,
although a memorandum of understanding
between the state and BLM precludes
double fees for the same well.
The $1.9 million in fee revenue generated for the nonreverting OCD fund created
by SB 553 does not address staffing at
OCD, Sandoval indicated in her newspaper
report. She added her appreciation for
the support the division received from
the governor and the legislature. The bill,
which passed both houses without a "no"
vote, was signed by the governor April 4
and became effective July 1.
According to the OCD, permit fees
under its new schedule include:
· Nonfederal, non-Indian applications
for permits to drill: $500;
· Administrative approvals: $150;
· Underground Injection Control
wells: $500;
· Surface waste management or land-

fill: $10,000;
· Administrative hearing: $500; and
· Request for rehearing: $150.
The agency points out that financial
assurance bonds and fees applied by the
State Land Office have remained unchanged since May 2017. The SLO road
right-of-way fee is $30 a rod for 35 years
for a new road, and $20 a rod for an existing road. Pipeline ROW fees remain
$40-$65 a rod, depending on quadrant,
for pipes up to 123⁄4 inches and $75 for all
pipes larger than that.
Produced Water Reuse
Another issue for discussion at
IPANM's annual meeting, Winchester
says, is the successful effort to encourage
companies to reuse produced water and
how that legislation got wedded to the
administrative penalties bill.
He says the Produced Water Act, HB
546, gives ownership of produced water
to the operator and working interest
owners for treatment, reuse and transfer.
Liability is likewise transferred to whomever takes possession of the water.
When a separate bill, SB 186, that
was aimed at revising the state's enforcement of violations of its Oil and Gas Act
languished, Winchester relates, legislative
leadership added it to the produced water
bill. After much give and take, the bill
passed late in the session.
He says IPANM opposed the newlycombined bill primarily because it allowed
the OCD to impose administrative penalties up to $200,000. "For fines at that
level, the operator should have the ability
to appeal to an impartial court," Winchester
noted at the time. "We would have preferred a much lower threshold (AOGR,
April 2019, pg. 26)."
Details of the framework for administrative penalties and a schedule of penalties
for various violations also will be worked
out in rule making, Winchester says,
adding, "We want to hear more about the
implementation and inspection portions
of the rules."
IPANM will participate in the rule,
and he notes that with HB 546 directing
the new penalties should go into effect
on Jan. 1, there is some urgency in getting
the rule-making process under way.
As a veteran of the political process,
Winchester says he is not surprised at
the rapid and complete change in heading
for New Mexico government.
"We expected to see a change in direction, and now that the administration
is settled in, we have seen (agencies)
pick up the pace for pushing out the
things they want to get done," he remarks.
"It is important for us to sort things out
for our members at the annual meeting."

American Oil and Gas Reporter - July 2019

Table of Contents for the Digital Edition of American Oil and Gas Reporter - July 2019