All week, we look for stories that help New Mexicans better understand what’s happening with water, climate, energy, landscapes and communities around the region. Thursday morning, that news goes out via email. To subscribe to that weekly email, click here. Here’s some of what subscribers read this week:
Like many news outlets, we wrote last week about some of the impacts of the federal shutdown on New Mexico. And, as it turns out, the U.S. Bureau of Land Management has indeed been processing Applications for Permits to Drill (APDs) in New Mexico.
The U.S. Environmental Protection Agency and the state of New Mexico released a draft report on Friday about the possibility of someday reusing or recycling wastewater from the oil and gas industry. According to the draft white paper compiled by the EPA and three state agencies, “Given that drought is no stranger to New Mexico, decisions about water are growing ever more complicated and meaningful.”
This summer, the EPA and three New Mexico agencies convened a working group to understand and clarify existing regulatory and permitting frameworks and create a road map toward finding other uses for wastewater generated by oil and gas drilling. The draft report lays out various possible reuse scenarios, explains which agencies would be involved in permitting and regulations and parses some of the legal issues. As the authors note, New Mexico became the third-largest oil producing state in the U.S. in 2018 and the industry produces enormous quantities of wastewater. According to the report:
For every barrel of oil, four or five barrels of produced water may be generated: an estimated 168 to 210 gallons of produced water for every 42 gallons of oil produced.
The New Mexico Oil Conservation Commission delayed a decision to approve an energy company’s request to increase well density in two northern New Mexico counties. At its meeting on Thursday, the commission also rejected a community group’s request to intervene in the hearing. Hilcorp Energy Company’s Justin Furnace emailed a statement on Thursday evening. “The Commission made it clear today that the application has merit, but at the Commission’s request, Hilcorp will be re-notifying affected operators in the San Juan Basin to ensure that they are aware of the proposed change,” Furnace wrote. Hilcorp asked the state to amend the “pool rule,” or well density requirements, in the Blanco-Mesaverde Gas Pool in San Juan and Rio Arriba counties. Under the current rules, companies can drill four wells within the designated 320-acre spacing units, and only two can be drilled within each 160-acre section.
At its meeting on Thursday, September 13, the New Mexico Oil Conservation Committee will hear from an energy company that wants to double the density of gas wells in northwestern New Mexico. Hilcorp Energy Company is asking the state to amend well density requirements in what’s called the Blanco-Mesaverde Gas Pool in San Juan and Rio Arriba counties. Under the current rules, companies can drill four wells within the designated 320-acre spacing units, and only two can be drilled within each 160-acre section. Companies can also ask the state to increase the density of wells on a case-by-case basis, something Hilcorp notes in its application New Mexico has allowed it to do in 62 instances this year. Rather than continuing to file individual applications, each with its own public notice and hearing, the company is now asking New Mexico to change the spacing rules for the entire Blanco-Mesaverde pool.
As state agencies move forward with plans to study reusing wastewater from oil and gas drilling, some environmental and community groups want the administration to slow down. They’re concerned about the working group’s quick schedule and lack of transparency thus far on an issue they say demands careful study. This summer, New Mexico signed an agreement with the U.S. Environmental Protection Agency and formed a working group to figure out how wastewater might be reused within the oilfield itself—and someday, beyond it. As we reported last month, the state initiated the process with the EPA. Following the publication of that story, representatives from more than 15 environmental and community groups signed onto a letter to the EPA which said the agreement between the federal agency and the state violates the Federal Advisory Committee Act (FACA) and requesting the federal agency withdraw.
When drilling wells, operators inject chemicals, sand and water underground to create fissures that help move oil and natural gas to the wellhead more efficiently. That practice of hydraulic fracturing, or fracking, uses a lot of water. And it leaves behind a lot of water, too. In 2015, even before the Permian Basin really started booming, industry produced 900 million barrels of wastewater. That’s about 116,000 acre feet—or almost all of the water currently stored in Elephant Butte Reservoir.
In September, the U.S. Bureau of Land Management will hold a sale on almost 200 drilling leases for 89,000 acres in Chaves, Eddy and Lea counties. About a dozen of those leases are within a mile of the boundary of Carlsbad Caverns National Park. The National Parks Conservation Association hopes the BLM will defer the parcels nearest to the park, in critical cave and karst areas and in other places with environmental concerns or wilderness characteristics, said Ernie Atencio, the nonprofit’s New Mexico Program Manager. “They heard our request to that effect, and they might even agree and prepare the paperwork for it, but that’s another decision that has to come down from D.C. and no longer in the hands of local managers,” he said. Since 1923, when President Calvin Coolidge signed the executive order creating what was then called Carlsbad Cave National Monument, the region has been transformed, largely due to oil drilling in the Permian Basin.
On Wednesday, Gov. Susana Martinez and her energy secretary testified in Washington, D.C. that New Mexico is losing revenue from oil and gas drilling due to bureaucratic backlogs. Martinez and Ken McQueen, a former energy executive who now heads the New Mexico Energy, Minerals and Natural Resources Department, testified before a House committee in support of four energy bills, including two proposed by Rep. Steve Pearce, R-NM. Before running for Congress, Pearce owned and operated an oilfield services company. In November, he will face Democrat Michelle Lujan Grisham in the race for New Mexico governor. In Martinez’s spoken remarks before the House Resources Committee, she criticized the U.S. Bureau of Land Management for its slow pace in approving drilling applications, blaming those delays on $2 million of lost revenues per day.
Elected officials will weigh in this week on key energy issues, both in Albuquerque and Washington D.C. What happens in those hearings and committee meetings might not grab headlines, but they affect landscapes, communities and the lives of all New Mexicans, whether they live close to oil and gas wells and coal mines, or hundreds of miles away. When private companies drill or mine on federal lands, they pay a percentage in royalties. Right now, that’s 12.5 percent for onshore coal, oil and gas, though an Obama-era rule—overturned last year—updated valuation rates to increase royalty collections. About half the money collected goes to the federal government and half to the state where the mining or drilling occurred. New Mexico currently receives more royalties from extraction on federal lands than any other state.
This week, we’re running a series of interviews with New Mexico’s four gubernatorial candidates, each of whom answered questions about issues related to water, energy and climate change. Steve Pearce currently serves as New Mexico’s second district congressman and is the lone Republican running for New Mexico governor. Pearce is also a veteran of the Vietnam War and owned and operated an oilfield services company. NMPR: Coming off a bad winter and with drought returning to the state, what critical water issues are you keeping an eye on right now in New Mexico? Steve Pearce: Water is maybe the most important issue that New Mexico faces.