Proposal seeks to boost gas well density in New Mexico basin

Monday, Sept. 10, 2018 4:32 PM
A Houston-based oil and gas company wants New Mexico regulators to double the density of wells allowed in two counties, saying it will result in the capture of more natural gas.

ALBUQUERQUE – A Houston-based oil and gas company wants New Mexico regulators to double the density of wells allowed in two counties, saying it will result in the capture of more natural gas.

The request involving San Juan and Rio Arriba counties comes as an oil and gas boom has helped to refuel state coffers and power a record-breaking lease sale in the Permian Basin in the southeastern part of the state that promises nearly a half-billion dollars more in revenues for New Mexico.

But environmentalists and landowners are concerned about increasing well densities in the northwest as developers look to tap more reserves in the San Juan Basin.

The request by Hilcorp Energy Co. is set to be considered Thursday by the Oil Conservation Commission.

Critics want regulators to put off a decision until a thorough environmental review is done. They’re citing potential cumulative effects of the boom, saying more public scrutiny is needed before rules are changed.

Rancher Don Schreiber said the most pressing environmental questions in New Mexico is how many wells an energy company can drill. He has lived in the region for decades and remembers hunting deer as a boy across San Juan County’s high desert.

“I’ve watched it go in a fairly short lifetime from a place of incredible beauty to a borderline industrial site and certainly doubling the wells would put us over the edge,” he said.

An attorney for Hilcorp did not return a message seeking comment on the proposal.

The company stated in its application that it currently operates more than 5,300 producing wells in what is known as the Blanco-Mesaverde gas pool in San Juan Basin. It also has thousands of wells that are producing from other formations in the region.

Those additional wells are situated to recover reserves within the Blanco-Mesaverde formation that aren’t being tapped due to current density limits, the company said.

Since the beginning of 2018, the oil commission has granted Hilcorp dozens of exceptions to the density rules. The company contends that updating the rules to allow for eight wells – up from the current four – on 320 acres would prevent waste and boost the capture of natural gas.

Hilcorp’s request follows a previous proposal to seek a change that would have allowed Oil Conservation Division staff to make decisions about well spacing rather than go through a public hearing process. The proposal piqued the interest of the state attorney general’s office and it was ultimately withdrawn.

Environmentalists on Monday asked the attorney general’s office to weigh in this time, citing concerns over public notice as the announcement of the hearing was printed in the legal section of two local newspapers ahead of the Labor Day holiday and gave a seven-day deadline for anyone who wanted to intervene.

They argued that wasn’t enough time, given the importance of the proposed change.

Schreiber said granting the request would amount to a parting gift to industry as leadership at the state Energy, Minerals and Natural Resources Department and the oil commission is expected to change when a new governor takes office in January.

State Energy Secretary Ken McQueen and Oil Conservation Division director Heather Riley both used to work for WPX Energy, which operated in San Juan Basin for years before shifting its focus to places along the Texas-New Mexico border and elsewhere.