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US Congresswoman calls for delay in New Mexico oil case

November 16, 2018

ALBUQUERQUE, N.M. (AP) — New Mexico oil and gas regulators are being pressured to delay a decision on an application by a Texas-based company that seeks to ease restrictions on well locations in one of the nation’s oldest producing basins.

U.S. Rep. Michelle Lujan Grisham, who begins her first term as New Mexico governor in January, is among the Democrat politicians who are asking for a delay in the proceedings or to raise questions about the process. Her request on congressional letterhead was followed Friday by a similar letter from other members of the state’s delegation.

Lujan Grisham wrote that more information is needed from the Bureau of Land Management and from Hilcorp Energy Co., the company seeking the state rule change.

“The oil and gas industry is a cornerstone of the New Mexico economy, but it is imperative that we balance this key economic driver with health, safety and environmental considerations,” her letter reads.

Lujan Grisham and the state’s Democrat-controlled Legislature will inherit a significant budget surplus for the coming year when they take office. Most of that surplus is linked to the state’s oil and natural gas sector.

Environmentalists and landowners are concerned about increasing well densities in northwest New Mexico as developers look to tap more reserves in the San Juan Basin. Hilcorp has said its application does not seek to drill more wells or change the way new wells are permitted.

The Oil Conservation Commission is scheduled to continue hearing the matter Monday. A spokeswoman for the agency said the commission has met all requirements to provide proper notice of the ongoing proceedings.

According to its application, Hilcorp 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 could recover reserves within the Blanco-Mesaverde formation that aren’t being tapped due to current density limits, the company said.

The company also has argued that changing well density limits wouldn’t eliminate the need to meet regulatory standards and environmental, cultural and archaeological requirements for drilling new wells or working on existing wells.

Supporters of the proposed change, including the energy advocacy group New Mexicans for Economic Prosperity and economic development officials from the region, say the increased productivity of the wells could lead to millions of dollars in additional tax revenues.

The New Mexico Attorney General’s Office sent its own letter in early November, seeking clarification from the state Energy, Minerals and Natural Resources Department — which oversees the Oil Conservation Division — about the hearing process and public notification.

In October, the U.S. Environmental Protection Agency also requested that Hilcorp provide information on its production facilities in New Mexico to ensure compliance with federal clean air rules.

Rancher Don Schreiber, who has been a vocal opponent of Hilcorp’s proposal, said that information should also be considered by the state oil commission before a decision is made.

He said he wants to ensure state government “can plan an orderly and safe way for our natural gas to be developed using the best practices and insuring we have responsible operators to protect the environment and the public’s health.”

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