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Panel to reconsider rule doubling density of gas wells in northwestern New Mexico

January 6, 2019

Correction appended

A reconstituted state Oil Conservation Commission will revisit a decision late last year to allow a Texas company to double the density of natural gas wells in Northwestern New Mexico’s San Juan Basin, the State Land Office announced Friday.

Controversy over the plan pitted environmental groups and ranchers against proponents who characterize the move as a win for economic development in a historically poor corner of the state.

Newly elected Land Commissioner Stephanie Garcia Richard, who controls a seat on the three-member Oil Conservation Commission, said in a news release the decision not only violated the state Open Meetings Act and commission rules but set a dangerous precedent.

“It is imperative that we make a decision in the region that ensures long-term sustainability and production that is fair to every producer in the state,” she said.

The Oil Conservation Commission in November granted a request by Houston-based Hilcorp Energy Co. to allow eight wells per 320-acre tract in the San Juan Basin instead of four wells, which has been the limit since 1999.

The commission scheduled to reconsider the matter on Tuesday will look much different because of changes in state government at the beginning of the year.

Gone are members of former Gov. Susana Martinez’s administration — former Energy, Minerals and Natural Resources Secretary Ken McQueen and Oil Conservation Commission Division director Heather Riley.

Former Land Commissioner Aubrey Dunn’s representative, Ed Martin, voted for Hilcorp’s proposal, even though Dunn opposed it. Dunn removed Martin from the panel in November because of that vote and on Dec. 24 requested a rehearing. But Riley, on her last day on the job, denied the request.

The new commissioners are Allison Marks, director of the Land Office’s Oil, Gas and Minerals Division; a yet-to-be-named member appointed by Sarah Cottrell Propst, who has been nominated by Gov. Michelle Lujan Grisham as secretary of the state Energy, Minerals and Natural Resources Department, and Gabriel Wade, acting director of the Oil Conservation Division.

Former land commissioner Dunn, a Republican turned Libertarian, argued that the commission rushed the proposal at the expense of land owners and the environment to get it through before Jan. 1., when the new Democratic administration replaced the Republican Martinez administration.

Justin Furnace, a spokesman for the oil company, said Friday: “Hilcorp prevailed in this matter by presenting a scientifically sound case in accordance with all laws and regulations over the course of several months, but we are prepared to defend our position and the [commission’s] decision again at the upcoming hearing. We are excited about the new jobs and millions of dollars of investment in the community the new pool rule will allow.”

Ryan Flynn, executive director of the New Mexico Oil & Gas Association, said in a statement Friday, “New Mexico’s northwest corner is in the midst of an economic crisis that will be only solved by well-respected businesses like Hilcorp, who are actively investing in the region. Hilcorp has outlined a plan to employ more New Mexicans, invest millions of dollars in our state, and raise hundreds of millions for our schools in a way that reduces the need for new wells and minimizes the surface footprint of the industry.”

Flynn blasted “extreme environmental groups” who claimed that the process was rushed. The commission last year “made a responsible decision based on a scientific examination of the facts,” Flynn said.

Some opponents of the change, however, are ranchers from San Juan and Rio Arriba counties. At the previous hearing, Don Schreiber, a cattle rancher near Farmington, said he frequently can smell gas from the more than 100 wells on his property. He said he’s afraid that more drilling will devastate wildlife populations and feed the methane hot spot that hangs in the atmosphere over the Four Corners region.

Correction: This story has been amended to reflect the following correction. A previous version of this story incorrectly reported that Energy, Minerals and Natural Resources Department Secretary-designee Sarah Cottrell Propst is on the Oil Conservation Commission. Actually Probst will appoint a member to represent her department.

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