David Catanach, Director Oil Conservation Division PRESENTATION - PowerPoint PPT Presentation

NM Oil Conservation Division IPANM Presentation August 3, 2016 David Catanach, Director Oil Conservation Division

PRESENTATION OUTLINE • Roswell Ground Water Basin Update • Marginal Well Shut-In Relief Program • Spill & Leak Delineation & Remediation Standards Workgroup • Focused Enforcement Efforts • Upcoming Issues NMOCD IPANM Presentation 8-3-16

ROSWELL GROUND WATER BASIN • Large area defined by the State Engineer • Approximate area: 105 Miles North to South 33 Miles East to West • Within a portion of the RGWB there exists two fresh water aquifers. Shallow Aquifer : 450’ & Deeper Artesian Aquifer: 1200’ - 1400’ • Remaining portion of RGWB: Deeper Aquifer only • OCD initially contacted by Representative Townsend • Initial reports indicated possible water contamination • OCD attended 2 public meetings with Pecos Valley Conservancy District, Office of the State Engineer & Various legislative members • At issue is whether a single casing string set through both aquifers provides adequate protection NMOCD IPANM Presentation 8-3-16

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ACTIONS TAKEN BY OCD • OCD’s primary concern: Protection of fresh water while not hindering oil & gas drilling activities • All APD’s within the RGWB are currently suspended by emergency order • Drilling is allowed within the RGWB provided that OCD approves revised casing programs • OCC hearing will establish: • A clearly defined area for the RGWB • A definitive casing/cementing program for oil & gas wells that will continue to provide protection of both aquifers & prevent communication between these water zones

RGWB PUBLIC HEARING • Case will be presented to the Oil Conservation Commission • Parties to the case include the OCD, Pecos Valley Conservancy District, COG Operating, Fasken Oil & Ranch, Oxy USA, Inc., Yates Petroleum, Mack Energy, Devon Energy & IPANM • August 8 : Meeting to schedule hearing • Hearing in September or October

OCD MARGINAL WELL SHUT-IN PROGRAM • New OCD program allows operators to shut-in marginal producing wells during times of low oil & gas prices • Program commenced early 2016 • Will reduce premature plugging of marginal producing wells • Must be conducted in a manner that will protect fresh water resources • 12 Operators; 400-500 Wells NMOCD IPANM Presentation 8-3-16

Requirements/Parameters • Applicable to wells that are planned to be shut-in or have recently been shut-in due to low prices • Must execute an agreed compliance order • Must demonstrate economic need • After a shut-in period of 15 months (currently allowed by OCD rules) wells can remain shut-in for an additional 3-year period • Wells must demonstrate mechanical integrity by Bradenhead Test at month 27 and annually thereafter • Additional financial assurance may be required • Check with BLM & SLO NMOCD IPANM Presentation 8-3-16

SHUT-IN WELL PROGRAM OCD CONTACT PERSON DANIEL SANCHEZ OCD Compliance & Enforcement Manager 505-476-3493 NMOCD IPANM Presentation 8-3-16

Spill & Leak Delineation & Remediation • Standards for delineating & remediating spills & leaks are currently contained within an OCD guidance document • Industry is concerned that standards are not established by rule & are not uniformly enforced within OCD • Industry recommendation: Form an OCD/Industry committee to establish a rule for spill & leak delineation & remediation standards

SPILL & LEAK DELINIATION & REMEDICATION WORKGROUP OBJECTIVES • Develop a rule to replace guidelines • Establish delineation protocals for leaks & spills • Establish characterization values • Develop timelines for compliance OCD is in the early stages of identifying workgroup participants NMOCD IPANM Presentation 8-3-16

NMOCD IPANM Presentation Leak & Spill Data Monthly Reported Releases Statewide 200 180 160 140 120 100 80 60 Recent Data Indicates Spills/Leaks Occurring at a Rate of 4.4 Per Day 40 20 0 6/1/2014 9/29/2014 1/27/2015 5/27/2015 9/24/2015 1/22/2016 5/21/2016 Date

FOCUSED ENFORCEMENT EFFORTS • Inactive wells: Rule 19.15.5.9 • 2,331 Non-compliant wells • Letters have been sent to 150 operators currently out of compliance • OCD is requesting operators submit a plan to bring wells into compliance • Enforcement action may be taken against non-responsive operators NMOCD IPANM Presentation 8-3-16

FOCUSED ENFORCEMENT EFFORTS • Financial Assurance: Rule 19.15.8.9 • OCD audit revealed that 151 operators were in violation of FA • OCD has sent out 124 letters to operators • Industry response has been outstanding • Additional FA in the amount of $472K has been furnished to OCD by industry as a result of this program NMOCD IPANM Presentation 8-3-16

FOCUSED ENFORCEMENT EFFORTS • Administrative & Hearing Orders • Many administrative & hearing orders issued by OCD contain certain requirements necessary for approval • Issue: Non-compliance with provisions contained within OCD orders • OCD will track order for compliance • OCD will send letters to operators for non- compliance NMOCD IPANM Presentation 8-3-16

FOCUSED ENFORCEMENT EFFORTS • Illegal dumping of oil field waste • OCD & New Mexico Junior College working to educate industry, public, law enforcement agencies, & district attorneys on issue of illegal dumping of produced water & oilfield waste • OCD is establishing relationships with law enforcement & district attorneys to criminally prosecute cases NMOCD IPANM Presentation 8-3-16

UPCOMING ISSUES • Delaware Formation Injection (Over Pressured & Injection into Potentially Productive Horizons) • Horizontal Well Rule Revision • Streamline Regulations • Drilling Activity Across State Lines • OCD Proposed Legislation OCD IPANM Presentation 8-3-16

David Catanach Director, NMOCD Energy, Minerals and Natural Resources Department David.Catanach@state.nm.us (505) 476-3468 OCD Website: http://www.emnrd.state.nm.us/ocd OCD Well Information and Operator Data: https://wwwapps.emnrd.state.nm.us/ocd/ocdpermitting/Data/Wells.aspx