American Oil and Gas Reporter - May 2021 - 31

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IssuesUpdate: Independent Petroleum Association of New Mexico
Noncompliant operators will have to submit a compliance plan by March 30 of
2027, and the division says it may suspend
drilling for companies that fail to comply.
" Getting to 98% by 2026 will be challenging and it will be interesting to see
how that plays out, " he admits. " We have
to start advance reporting this fall to
begin setting the baseline. Throughout
the stakeholder engagement and rulemaking process, we stressed the lack of
a good industry baseline regarding some
sources to be regulated. It is important
that the volume measurements and estimates are accurate and consistent across
the state. "
With that in mind, Davis says IPANM
has pushed for the rule to exempt lowpressure, low-volume systems because
they are so challenging to measure and
estimate. Under the final rule's compliance
thresholds, sites that emit fewer than 15
tons a year methane or produce fewer
than 10 barrels of oil or 60 Mcf a day of
gas can avoid some of the rule's provisions.
" IPANM was very supportive of this to
help give marginal well operators the

ability to maintain production, " Davis
explains. " Although some environmentalists attack it as a loophole, it is aggressive compared with other states' requirements. "
Another aspect of the rule that he says
bears watching deals with a provision
that allows operators to deduct from their
capture percentages gas put to beneficial
uses. " It depends on your view, " Davis
comments. " There are concerns the industry and the division may differ over
what qualifies as beneficial use. "
Ultimately, he adds, although the OCD
regulation focuses on preventing the waste
of fugitive methane emissions, it also increases the risk of promoting a different
kind of waste. " It has the potential to
create downhole waste by forcing operators
to prematurely plug and abandon wells
if the cost of compliance becomes greater
than the future value of those wells' revenue generation, " he points out. " There
is a real possibility new compliance costs
could push many marginal wells past
their economic limits. "
And since those marginal wells often

belong to independents, Davis notes,
IPANM has worked to remind regulators
that small companies rarely have separate
compliance departments to tackle paperwork. Nor can they afford to ensure compliance with major capital expenditures.
" The rule's administrative burden
and recordkeeping has been one of
IPANM's biggest concerns, " he describes.
" There was also push to make the rule
as innovative as possible. For example,
it includes a provision dealing with advanced leak and repair monitoring, of
which bigger companies may take advantage. Most smaller operators, however, probably will not be able to implement novel leak detection and repair
techniques, such as aerial flyovers, that
are not part of existing leak detection
and repair programs. "
Winchester notes that smaller operators
already use routine well site visits to inspect equipment and implement repairs
as standard practice. " In-person sight,
smell and listening for leaks still proves
to be the cornerstone of good operations, "
he says.

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American Oil and Gas Reporter - May 2021

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