NM Oil Conservation Division Presentation To The Legislative - - PowerPoint PPT Presentation

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NM Oil Conservation Division Presentation To The Legislative - - PowerPoint PPT Presentation

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NM Oil Conservation Division Presentation To The Legislative Finance Committee June 15, 2016 Current Industry Activity Plugging Activity & the Reclamation Fund Bankruptcies FY-16 Inspections & Violations Spill &

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SLIDE 1

NM Oil Conservation Division Presentation To The Legislative Finance Committee

June 15, 2016

  • Current Industry Activity
  • Plugging Activity & the Reclamation Fund
  • Bankruptcies
  • FY-16 Inspections & Violations
  • Spill & Leak Data
  • Roswell Ground Water Basin Update
  • New Enforcement Efforts
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SLIDE 2
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SLIDE 3 ,,, ., ..

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20 40 60 80 100 120 140 160 180 9/18/2014 12/27/2014 4/6/2015 7/15/2015 10/23/2015 1/31/2016 5/10/2016

Number of APD's Date

Applications to Drill: Jan 1, 2015-April 1, 2016

NMOCD LFC Presentation Current Activity

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SLIDE 4

2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000

Barrels of Oil Month

Oil Production: January, 2014-March, 2016

Latest Production: March, 2016 12,482,289 Barrels of Oil NMOCD LFC Presentation Current Activity

2014 2015 2016

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SLIDE 5

OIL RECLAMATION FUND & FEDERAL GRANT PLUGGING EXPENDITURES

FY-14 FY-15 FY-16

NUMBER OF WELLS PLUGGED

45 23 25-State 10-Federal

PLUGGING EXPENDITURES

$1,529,215 $774,891 $778,472-State $318,295-Federal NMOCD LFC Presentation Plugging Activity & Reclamation Fund

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SLIDE 6

NUMBER OF ORPHANED/ABANDONED WELLS ON OCD’S ACTIVE PLUGGING PROGRAM (CURRENT LIABILITY)

  • Wells on State Land:

97

  • Wells on Fee Land:

61

  • Wells on Federal Land:

43

  • Total:

201

NMOCD LFC Presentation Plugging Activity & Reclamation Fund

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SLIDE 7

Bureau of Land Management Plugging Grant

  • OCD Submitted an Application for a BLM Federal

Plugging Grant in 2015

  • OCD was Awarded Grant on 10/1/2015
  • Total Grant Award is $5.0 MM
  • Grant Duration is 5 Years, with $1.0 MM to be Disbursed

to OCD on an Annual Basis

  • Funds are to be Utilized to Plug and Abandon Orphaned

Oil & Gas Wells on Federal land

  • In FY-16, OCD has Plugged 10 Wells and Spent $318,

295.00

NMOCD LFC Presentation Plugging Activity & Reclamation Fund

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SLIDE 8

Bankruptcies

  • OCD Has an Interest in 10 Active Bankruptcies Across the United

States (4 in Texas, 2 in Delaware, 1 in Colorado, 1 in New York, 1 in New Mexico)

  • OCD Does Not File Any Sort of Claim or Track Bankruptcies in New

Mexico in Which an Operator Only has Federal or Tribal Lease Wells (e.g. Priority Energy, LLC Filed for Bankruptcy in May)

  • OCD has Taken Measures to Reduce Potential Liabilities by Being

Proactive in all Bankruptcies

  • As Noted by State Land Commissioner, Oil Conservation Division,

Senator Papen and Others, Increased Federal Regulations Will Result in Additional Costs to Producers.

NMOCD LFC Presentation Plugging Activity & Reclamation Fund

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SLIDE 9

$0.00 $100,000.00 $200,000.00 $300,000.00 $400,000.00 $500,000.00 $600,000.00 $700,000.00 4/1/2012 10/18/2012 5/6/2013 11/22/2013 6/10/2014 12/27/2014 7/15/2015 1/31/2016 8/18/2016

Deposit Amount

Date: Month/Year NMOCD LFC Presentation Plugging Activity & Reclamation Fund

Reclamation Fund Monthly Deposit

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SLIDE 10

Inspection Statistics by Inspection Type For the Period from 7/1/2015 thru 5/26/2016

Inspection Type Performed Violations Complaint Response 2 Compliance Verification 10 Drill / Deepen /Re-Entry 381 Final Restoration 238 Initial Incident Inspection 517 124 Inactive Well Verification 4 Bradenhead 4,269 6 Pressure Test 1,442 2 MIT Witnessed - Other 173 4 File and Compliance 332 Plug / Plug Back 746 Pit Closure 43 Phone call 107 Plugging Witnessed 99 1 Rig 12 Routine/Periodic 36,713 650 Plugged Well Surface 255 1 Work Over 22

State Totals 45,365 788

___________________________________________________________________

District I District II District II District IV

(Hobbs) (Artesia) (Aztec) (Santa Fe)

  • No. of Inspectors: 7 8 7 1
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SLIDE 11

200 180 160 140 120 100 80 60 40 20 6/1/2014 9/29/2014 1/27/2015 5/27/2015

Date

9/24/2015 1/22/2016 5/21/2016

Monthly Reported Releases Statewide

NMOCD LFC Presentation Leak & Spill Data

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SLIDE 12

20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Crude Oil Reported Spilled (bbls) Produced Water Reported Spilled (bbls) 6/1/2014 9/29/2014 1/27/2015 5/27/2015

Date

9/24/2015 1/22/2016 5/21/2016

Monthly Volume (bbls)

Monthly Volume of Spilled Liquids NMOCD LFC Presentation Leak & Spill Data

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SLIDE 13

State of New Mexico

Energy, Minerals and Natural Resources Department

Oil Conservation Division 1220 South St. Francis Dr.

Santa Fe, NM 87505

UNAUTHORIZED RELEASE Statistics Summary Report 1/1/2016 thru 3/31/2016 (1st Quarter of 2016) Release Totals and District Breakdown

Month Days Releases Releases per day District 1 District 2 District 3 District 4

Volumes of Material Involved

January 31 128 4.1 53 54 20 1 February 29 185 6.4 112 50 23 March 31 89 2.9 42 27 20 Total 91 402 4.4 207 131 63 1 Month NGLs Reported Spilled (bbls) NGLs Reported Recovered (bbls) NGLs Reported Lost (bbls) Crude Oil Reported Spilled (bbls) Crude Oil Reported Recovered (bbls) Crude Oil Reported Lost (bbls) Produced Water Reported Spilled (bbls) Produced Water Reported Recovered (bbls) Produced Water Reported Lost (bbls) Natural Gas Reported Released (mcf) January 157 157 1406 1014 392 4666 3694 972 67933 February 468 75 393 2405 1284 1121 18375 5763 12612 208282 March 222 10 212 1100 814 286 3495 2571 924 233609 Total 847 85 762 4911 3112 1799 26536 12028 14508 509824

NMOCD LFC Presentation Leak & Spill Data Quarterly Report Posted on OCD Website

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SLIDE 14

ROSWELL GROUND WATER BASIN (RGWB)

  • Large Area Defined by the Office of the State Engineer
  • Approximate Area: 120 Miles North to South

66 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 RGWP: 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

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NMOCD LFC Presentation Roswell Ground Water Basin Map

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SLIDE 16

ACTIONS TAKEN BY OCD

  • OCD’s Primary Concern: Protection of Fresh Water
  • All Approved Applications To Drill Within the RGWB

Suspended by Emergency Order E-42 dated 4/25/16. Extended by E-42-A dated 5/4/2016

  • Hearing to Extend APD Suspension Held May 10th.
  • Drilling is Allowed Within the RGWB Provided that OCD

Approves Revised Casing Programs

  • OCD is Conducting a Hearing in August to Establish:
  • A Clearly Defined Area for the RGWB
  • A Casing/Cementing Program for Oil & Gas Wells That

Will Provide Protection of the Shallow Aquifer & Deeper Artesian Aquifer & Prevent Communication Between These Aquifers

NMOCD LFC Presentation Roswell Ground Water Basin

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SLIDE 17

New Enforcement Efforts

  • Working to Train Law Enforcement
  • Work with District Attorneys
  • Financial Assurance Compliance Enforcement
  • Prioritizing Enforcement Cases
  • Working with Operators out of Inactive Well

Compliance

NMOCD LFC Presentation Enforcement

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SLIDE 18

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