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

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Page 1: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

NM Oil Conservation Division

IPANM Presentation

August 3, 2016

David Catanach, Director

Oil Conservation Division

Page 2: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 3: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 4: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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Surface-water d ra i nage d i v i de

Lega l boundary of Roswe l l U nd erg round

Water Bas i n i n 1 979

Approxi mate l i m i t of a rtes i an aqu i fer

Ap p rox i ma t e 1 i m i t of s ha l l o e1 aq u i f e r

Figure 1 • Map showing t he sur f ace drainage, legal boundar y , and aquif er

New

limits

Mexic o. of t he Roswell ground-wat er basin, sout heastern

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NMOCD IPANM Presentation 8-3-16

T-5S to T-23S

R-21E to R-27E

Map of Roswell

Ground Water

Basin

Page 5: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 6: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 7: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 8: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 9: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

SHUT-IN WELL PROGRAM

OCD CONTACT PERSON

DANIEL SANCHEZ

OCD Compliance &

Enforcement Manager

505-476-3493

NMOCD IPANM Presentation 8-3-16

Page 10: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 11: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 12: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

200

180

160

140

120

100

80

60

40

20

0 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 IPANM Presentation

Leak & Spill Data

Recent Data Indicates Spills/Leaks

Occurring at a Rate of 4.4 Per Day

Page 13: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 14: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 15: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 16: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 17: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

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

Page 18: NM Oil Conservation Division IPANM Presentation August …€¦ · NM Oil Conservation Division IPANM Presentation August 3, 2016 ... allowed by OCD rules)

David Catanach Director, NMOCD

Energy, Minerals and Natural Resources Department

[email protected]

(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