What a Waste

Oil Conservation Commission doubles density of wells in San Juan Basin

Is it a waste to leave oil and gas in the ground when it could be extracted and burned, creating jobs and tax revenue for the state—or is it a waste to see oil wells drilled every quarter mile through ranchland and sacred ancestral grounds?

On Monday Nov. 19, that question came before New Mexico's Oil Conservation Commission, a three-person panel tasked with overseeing oil and gas development in the state. Commissioners read their charge of "preventing waste" as ensuring that as much oil can be extracted as possible. So they approved an application from Hilcorp Energy to double the density of oil and gas wells in 1.3 million acres of the San Juan Basin in northwestern New Mexico. Operators can now drill up to eight wells per 320 acres.

The move ignored requests from multiple state and federal elected officials to delay the decision while the effects on public health and the environment of adding that many wells are investigated by federal agencies.

"If we leave it in the ground, it's not a waste. It's a resource for the future," Daniel Tso, Navajo Nation Council delegate-elect, testified to commissioners ahead of their decision.

The San Juan Basin's tangled and incongruous geology means horizontal drilling techniques that can bore underground for as far as 2 miles won't work well. So developers are hoping to sink many more vertical straws into the pools of oil and gas. The rule change allows the company to "recomplete" existing wells in the area, of which there are hundreds, Hilcorp engineer Michelle Sivadon said in her testimony to the commission. That method is also far less expensive, she said.

"We'll continue to focus on recompletions, initially," she said. Where that may not be an option, she said, "We'll look at new wells."

Development will proceed over coming years, if not decades. Asked if this would be the last effort from the company to increase the number and density of wells in that basin, Sivadon replied, "I wouldn't say that."

With this new flexibility, Sivadon said, the company projects it can obtain 62 percent of the oil and gas that is available. That's compared to 39 percent with current policies—though companies can secure exceptions to that rule with an application and public hearing. The difference could add $3 billion in revenue for the state of New Mexico, she said.

By the time public comments started during the special hearing on Monday Nov. 19, shortly after 3 pm, a room that had been overflowing with people when the meeting began at 9 am had mostly emptied. The Oil Conservation Division also received hundreds of written public comments; Commissioner Robert Balch estimated 200 arrived just on Friday.

The arguments broke along common lines. Those in favor of the change spoke about an economically depressed region in need of jobs and spending.

"Hilcorp can give the area a much-needed win," Jim Winchester, executive director of the Independent Petroleum Association of New Mexico, told commissioners.

Increasing the number of wells will not change the rules used to regulate those wells and mitigate their impacts to the environment, supporters argued.

But staffing limitations have already left land managers struggling with enforcement. Area residents say they're seeing more traffic, more fatal traffic accidents, air pollution, and millions of gallons of water used by the industry.

The commission approved the application despite requests from elected officials to wait until the environmental effects could be more thoroughly studied. US Representative and Governor-elect Michelle Lujan Grisham and New Mexico State Land Commissioner-elect Stephanie Garcia Richard were among those who sought delay.

"Without adequate time to evaluate the critical missing EPA and BLM environmental information and without input and analysis from the officials elected last week to guide the state for the next four years, it would be highly irresponsible for your agency to move forward on this far-reaching proposal," Garcia Richard wrote to the Energy, Minerals and Natural Resources Department legal counsel before the hearing.

Andrea Antillon, associate counsel for the State Land Office, said late notice of the hearing barred the office from assessing the impacts to 65,000 acres of state trust land.

Members of the state's congressional delegation wrote to the US Environmental Protection Agency and the Bureau of Land Management in October, asking for further study on whether increasing well density would negatively affect the air and water quality in the region. The lawmakers requested that information by Nov. 1 but were still awaiting a response as of Nov. 16.

The San Juan Citizens Alliance, through attorneys from the Western Environmental Law Center, also lost in its attempt to intervene in the matter on the basis of affects to public health and the environment.

Hilcorp representative Michael Feldewert countered that the Oil Conservation Commission only handles sub-surface concerns, and issues affecting surface owners would fall to other agencies.

"This decision is necessarily intertwined with surface protections," argued Erik Schlenker-Goodrich, executive director of the Western Environmental Law Center. "If Hilcorp is granted this change, it will assert to the BLM that they not only have the opportunity but the right to drill a certain number of wells."

Oil Conservation Division Director Heather Riley formerly worked for WPX Energy. As she began the meeting, Riley said, "Someone has raised the specter of impropriety. … The allegation of a conflict has been examined by counsel and they've determined there's not a conflict."

She was named to the job by EMNRD Secretary Ken McQueen, one of the positions up for re-appointment when Lujan Grisham takes office in January. Along with that new administration may come an effort to appeal this decision.

To some, it's simply too late for quibbling about how and where fossil fuels are developed.

"It's now widely understood that if we burn just the fossil fuels already out of the ground, that will take us over 1.5 C," commenter Marie Morgan of Santa Fe told commissioners, referencing the Intergovernmental Panel on Climate Change report released in October that called for massive and prompt societal changes to stave off the worst predictions for the planet. "We already have more oil and gas than we can afford to burn."

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