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Home / Articles / News / Features /  NM Drill Down
10.06.10 Oil-Gas-cover

NM Drill Down

Oil & Gas A-Z

October 6, 2010, 1:00 am

Love it or hate it, the oil and gas industry is as much a part of modern New Mexico as red and green chile. But let’s be honest: Without strict regulation, it also coughs haze into once-blue skies, can contaminate groundwater and private wells, upsets landowners, and poses a threat to public health. 


This week, SFR wades through the regulations and names, agencies and scandals, campaign contributions and connections so that you can educate yourself about the industry that brings billions in revenues to the state.


With all that cash, the industry also wields enormous political power. As a result, it continues to thwart progress on everything from federal climate change legislation to the state’s attempts to regulate greenhouse gas emissions from power plants, wellheads and pipelines—which, if unchecked, could threaten future generations of New Mex-icans. 


{A}

Activists
New Mexico has numerous environmental organizations, but these groups specifically tackle oil and gas issues:
Drilling Mora County
Drilling Santa Fe
New Mexico Environmental Law Center
New Energy Economy
Oil and Gas Accountability Project
San Juan Citizens Alliance
Western Environmental Law Center
Wild Earth Guardians

Aggregate air pollution
With respect to the oil and gas industry, this is pollution emitted cumulatively by oil and gas wells via drill rigs, compressor engines, and leaking pipelines and tanks that lead to processing plants. Because aggregate air pollution doesn’t meet the threshold for regulation, individual wells are not regulated—but neither are entire well fields. 


{B}

Baker Hughes
Oil field company that tracks investment information and drill rig counts nationwide. In September, there were 70 drill rigs operating in New Mexico. That’s up from September 2009 (47), but down from a high in September 2008 (91).

Bingaman, Sen. Jeffrey
A Democrat, Bingaman has held office since 1983 and currently chairs the Energy and Natural Resources Committee. In late September, Bingaman told the news service Reuters of climate change legislation: “I don’t see a comprehensive bill going anywhere in the next two years.” 


According to the website Dirty Energy Money, Bingaman has received $520,697 from the coal and oil industries since 1999. Top oil industry donors (more than $10,000) include Interstate Natural Gas Association of America, American Gas Association, Enron, Chevron, BP and El Paso Energy.


Between 2005 and 2010, Bingaman received a total of $97,270 from the oil and gas industry, according to OpenSecrets.org. Of that, $68,000 came from political action committees and $29,270 from individuals.

Bridge fuel
Recently, industry, lawmakers and even some environmental groups have taken to calling natural gas a “bridge fuel” that will facilitate the transition from coal-fired power plants to cleaner energy sources. While the burning of natural gas emits about half the carbon of coal-fired power plants, methane is vented into the atmosphere during the drilling and production process. Methane has more than 20 times the heat-trapping ability of carbon dioxide.

US Bureau of Land Management
Agency responsible for managing all federally owned minerals (including oil and gas) in New Mexico, Oklahoma, Texas and Kansas. The four-state area includes more than 45 million acres of mineral estates.

{C}

Categorical exclusions
Under the Energy Policy Act of 2005, Congress directed the US Bureau of Land Management to approve certain projects without preparing environmental analyses normally required under the National Environmental Policy Act. Instead, the agency could issue what are called “categorical exclusions” to approve projects such as new oil and gas wells. 


In September 2009, the Government Accountability Office released a report raising concerns over BLM’s use of categorical exclusions under the Energy Policy Act of 2005. From 2006-2008, BLM used categorical exclusions to approve 6,100 drilling permits and 800 other actions—and the agency frequently did so out of compliance with federal law and BLM’s own guidance.


According to the report, three BLM offices—including the Farmington, NM, office—accounted for two-thirds of the nation’s categorical exclusions. For its part, BLM’s Farmington Field Office (see “Henke, Steve”) issued 1,389 between 2006 and 2008. The Carlsbad Field Office issued 11, and the Roswell Field Office did not issue any. 


Carbon dioxide (CO2)
Although there are natural sources of carbon dioxide, human activities have increased the amount of carbon in the atmosphere—and are causing the climate to change. Carbon dioxide is emitted during the burning of coal, oil and gas, as well as by automobiles and industrial facilities. 


According to the US Environmental Protection Agency, in 2005, global atmospheric concentrations of carbon dioxide were 35 percent higher than they were before the Industrial Revolution.

{E}

Energy Policy Act of 2005
Passed under the Bush administration—and crafted by former Vice President Dick Cheney—the act continues to guide energy development in Western states, such as New Mexico. (And, in fact, former President George W Bush signed the act into law at Sandia National Laboratories in Albuquerque.) 


In order to expedite oil and gas development, the act includes a number of provisions such as: waiving environmental compliance for drilling (see “Categorical exclusions”); setting up oil and gas pilot offices (including in Carlsbad and Farmington); and exempting hydraulic fracturing (see “Hydraulic fracturing”) from regulation under the federal Safe Drinking Water Act.

{F}

Fesmire, Mark
Since 2004, Fesmire has been the director of the New Mexico Energy, Minerals and Natural Resources Department Oil Conservation Division and chairman of the New Mexico Oil Conservation Commission. Before that, Fesmire was the chief of the New Mexico Hydrographic Survey in the Office of the State Engineer. Before working in state government, he practiced oil-and-gas law in Texas. He is a graduate of New Mexico State University, and his first career was as a petroleum engineer.

{g}

Galisteo Basin
Eighteen miles south of Santa Fe, this area hosts hundreds of Native American and Spanish archaeological sites, as well as the Galisteo Creek and its tributaries. The Galisteo runs from the Sangre de Cristos into the Rio Grande near Kewa Pueblo (formerly called Santo Domingo). The watershed covers approximately 730 square miles and is part of the Rio Grande Underground Water Basin. There are private water wells in the basin, as well as centralized wells that serve Madrid, Cerrillos, Galisteo, Eldorado, Lamy and a few subdivisions.


In November 2007, when Tecton Energy announced its plans to explore the area for oil, citizens, landowners and Santa Feans organized and protested.

Gallagher, Bob
Former president of the trade group New Mexico Oil and Gas Association, who was fired in early 2010. Gallagher also was a senior adviser for Bill Richardson when he was secretary of the US Department of Energy under President Bill Clinton.

US Government Accountability Office
Independent, nonpartisan branch of Congress that investigates how the federal government spends taxpayer money. Recent reports involving New Mexico and the oil and gas industry include one showing that increased permitting has decreased the US Bureau of Land Management’s abilities to protect the environment. Another shows that the US Department of the Interior is not accurately measuring and verifying oil and gas production—this may result in the federal government earning less in royalties than it should on federal land drilling.

Greenhouse gas emissions
Pollutants responsible for contributing to climate change, these include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. Currently, New Mexico is trying to create a new rule that would set a cap on greenhouse gas emissions from power plants and the oil and gas industry facilities such as refineries, compressor stations, and processing and treatment plants.

{H}

Henke, Steve
Since July, Henke has been president of the New Mexico Oil and Gas Association. In June, Henke left his job as US Bureau of Land Management Farmington field manager, at which he oversaw the largest mineral production area in the onshore US. In March 2009, the US Department of the Interior’s Office of the Inspector General had begun an investigation into Henke’s close relationship with the oil and gas industry. Released the same month Henke left his job at BLM, the report reveals that Henke took gifts from Williams Exploration and Production, misused BLM travel funds and solicited $8,000 in donations from Williams for his youth baseball teams. Three years ago, Merrion Oil & Gas also provided Henke’s relative an internship. 


Activists have requested that Interior Secretary Ken Salazar (see “Salazar, Ken”) take action against Henke, and restrict his interactions with BLM in his capacity as NMOGA president. As of press time, Salazar’s office had not responded to the July 21, 2010 letter.

Hydraulic fracturing
Drilling technique pioneered by Halliburton in 1949. According to the company’s public relations literature: “Operators now fracture about 35,000 wells each year in the US with no record of consequent harm to groundwater.” Water, sand and chemicals are pumped into underground coal beds to release methane gas from within coal seams. Nicknamed “fracking,” the process involves injecting the earth with chemicals such as diesel fuel, benzene, formaldehyde, toluene, ethylbenzene and xylene. When mixed with sand and water, those chemicals and gelling agents create new fissures and hold them open so that oil or gas can better reach the wellhead. 


The process is not regulated by federal or state agencies. 


In March, the US Environmental Protection Agency finally announced it will study how injection of chemicals into the ground might affect water quality and public health. 


This move comes some six years after an EPA whistleblower, Weston Wilson, sent a letter to the Colorado congressional delegation revealing that the EPA’s own studies had shown that hydraulic fracturing could taint underground drinking water supplies.


Recently, the Wyoming Oil and Gas Conservation Commission adopted new state rules requiring operators to disclose the chemicals they use while fracking.

{I}

Independent Petroleum Association of New Mexico
Based in Roswell, this trade group was founded in 1978 by J Larry Nichols, CEO of Devon Energy. Today, it has more than 200 company members. 


According to its website, most of its members are small, family-owned businesses: “You’ll have to excuse us if we’re not exactly polished in our approach. We’re not eloquent, nor are we fashionable. Our knuckles are cracked and the lines in our faces run deep. Our trucks tend to be scratched and dusty, but that’s the way we like it.” 


Those scruffy operators, however, manage to pull together “Oil & Gas Day” at the state Legislature each year, hosting speakers, exhibitors and a cocktail reception. In a message thanking participants for turnout at Oil & Gas Day 2009, the association noted: “Our message was summed up loud and clear by our New Mexico Lt. Governor, Diane Denish, ‘Oil & Gas day in the Legislature—It’s about time!’”

{L}

Luján Jr., Ben Ray
A Democrat and 3rd District congressional representative elected in 2008, Luján has received $31,500 in contributions from the oil and coal industries. Oil contributors include Aztec Well Servicing, Teaco Energy Services, Occidental Petroleum, BP and ConocoPhillips.


Prior to running for Congress, Luján was chairman of the New Mexico Public Regulation Commission, which regulates a number of industries in the state, including utilities, and also oversees pipeline safety.

{M}

Methane (CH4)
Greenhouse gas that contributes to climate change. Methane is more than 20 times more effective at trapping heat in the atmosphere than carbon dioxide. According to the US Environmental Protection Agency, human-influenced sources include landfills, natural gas and petroleum systems, agricultural activities, coal mining, stationary and mobile combustion, wastewater treatment, and certain industrial processes. Methane is also released during the process of producing natural gas.

Minerals Management Service
US Department of the Interior division responsible for regulating the oil industry and collecting royalties. 


In 2008, the department’s Office of the Inspector General released the results of a two-year, $3.5 million investigation showing how MMS employees in the Lakewood, Colo., office had taken gifts from industry, had sex with oil and gas company employees, consulted for energy firms, and given government contracts to friends. Between 2002 and 2006, approximately one-third of the employees within one division had accepted gifts from Chevron, Shell, Gary-Williams Energy and Hess. 


More recently, the agency was widely criticized—after the explosion of the Deepwater Horizon drilling platforms and the leak of millions of barrels of oil into the Gulf of Mexico—for its lax “oversight” of offshore drilling. 


In June, Interior Department Secretary Ken Salazar renamed the agency the Bureau of Ocean Energy Management, Regulation and Enforcement.

Mineral rights
Not to be confused with surface rights, mineral rights entitle an owner—an individual, company or government entity—to explore and produce the minerals or oil and gas found below the surface. 


In 2007, the New Mexico State Legislature passed the Surface Owners Protection Act. Among other provisions, it mandates that operators give surface owners 30 days notice before drilling.

{N}

National Environmental Policy Act
Signed by President Richard Nixon in 1970, NEPA ensures that developers consider how a proposed project on federal lands or using federal funds will affect everything from endangered species to archaeological resources. For big projects such as new roads, dams or mines, information is assembled into a draft environmental-impact statement the public can review. The final EIS is evaluated by the lead federal agency.

New Mexico Oil and Gas Association
Trade group that focuses on lobbying and regulatory issues. According to its website: “For every $1 drop in oil prices, New Mexico looses [sic] about $8 million in annual revenue. For every 10-cent drop per thousand cubic feet of natural gas, the state looses [sic] about $12 million annually.”

Noel, Jim
Since July 2010, Noel has been the cabinet secretary for the New Mexico Energy, Minerals and Natural Resources Department, after serving as the deputy cabinet secretary. 


Before that, in 2008, Noel resigned as the state Bureau of Elections director after Republicans called his appointment politically motivated (Noel is married to Amanda Cooper, Democratic US Sen. Tom Udall’s stepdaughter and former campaign manager for both Udall and Gov. Bill Richardson). Before that, Noel was executive director and general counsel for the New Mexico Judicial Standards Commission, and had previously worked at California’s Lawrence Livermore National Laboratory, Los Alamos National Laboratory and the Portsmouth Uranium Enrichment Plant in Ohio.

Noon, Marita
Executive director of the pro-drilling group Citizens Alliance for Responsible Energy, which was founded by Mark Mathis, a consultant to the Independent Petroleum Association of New Mexico, and receives funding from oil and gas producers. Noon also is the author of 19 books on Christianity and relationships, including The Praying Wives Club, Talking So People Will Listen and Tailor-Made Marriage; she writes under the pen name Marita Littauer.

{O}

Oil Conservation Division of the New Mexico Energy, Minerals and Natural Resources Department
Organized into four district offices and five bureaus, this state agency regulates the oil and gas industry. District offices issue drilling permits, inspect wells and associated facilities, respond to spills, investigate violations, and carry out enforcement actions. The division also tracks production information by wells and operators.

OpenSecrets.org
Project of the Washington, DC-based Center for Responsive Politics that tracks campaign contributions and industry influence. On its website, you can search for contributions (by candidate, donors, 527 committees and political action committees), learn more about a candidate’s personal finances and search its “earmarks” database to connect the dots between lawmakers who tack onto bills federal funding for companies and the lobbyists who contribute to their campaigns.

Ozone
Nitrogen oxides (NOx) and volatile organic compounds (VOCs) together produce ozone pollution. (Ozone pollution causes and aggravates asthma and other respiratory illnesses.) The US Environmental Protection Agency has announced plans to tighten ozone pollution standards. New rules would protect air quality, particularly in the San Juan and Permian basins, where coal-fired power plants produce pollution—as do pump compressors, leaking valves and pipelines, and condensate tanks.

{P}

Permian Basin
A 75,000-square-mile area of West Texas and southeastern New Mexico rich in oil and home to tens of thousands of wells. In 2007, the United States Geological Survey released a study estimating the basin contains 41 trillion cubic feet of undiscovered natural gas and 1.3 billion barrels of undiscovered oil.

Personal responsibility
Let’s face it: Even the most fervently anti-drilling folks fill up at the gas station, rarely think twice about hopping aboard an airplane and consume as many fossil fuels as anyone else. The industry feeds a need, after all—which means the root of the issue comes down to the willingness of Americans to consume vast quantities of oil and gas.

Pipelines
There are thousands of miles of natural gas, oil and CO2 pipelines in New Mexico. These run beneath the desert floor and even reservoirs such as Navajo Lake, but also beneath cities and neighborhoods—and they are operated by more than 40 different companies. The San Bruno, Calif., gas pipeline explosion—which killed four and destroyed a neighborhood—brought national attention to pipeline safety. But New Mexico has experienced pipeline tragedy, too: Ten years ago, a natural gas pipeline owned by El Paso Natural Gas exploded near Carlsbad and killed six campers.

Pit rules
In 2008, New Mexico’s Oil Conservation Commission implemented rules banning unlined waste pits associated with oil and gas wells. Although industry continues to oppose the rules, support for them gained traction after two state reports were released. One showed there had been nearly 7,000 cases of soil and water contamination between the mid-1980s and 2003 resulting from pits, and another 2005 study documented 400 incidents of groundwater contamination from oil and gas pits. 


Neither gubernatorial candidate supports the pit rules, which are considered the most stringent in the nation.

{R}

Revenue
Revenue from oil and gas production provides a big chunk of cash to the state each year (see numbers from the New Mexico Taxation and Revenue Department), but those numbers don’t reflect how much taxpayer money goes toward environmental cleanup and industry regulation, not to mention the public health costs from impacts such as air pollution.
2009:  $1,820,814,359
2008:  $2,252,120,498
2007:  $1,843,183,302
2006:  $2,036,177,400
2005:  $1,598,828,320

Rundell, Linda
Current state director of the US Bureau of Land Management; former associate state director of BLM in Alaska. According to the Office of the Inspector General report detailing misconduct by former Farmington Office Field Manager Steve Henke, Rundell “had tears in her eyes” when her 25-year acquaintance revealed to her what he had done (see “Henke, Steve”).

{S}

Salazar, Ken
Secretary of the US Department of the Interior, which oversees agencies including the Bureau of Land Management, National Park Service, Fish and Wildlife Service, Bureau of Indian Affairs, Bureau of Reclamation, US Geological Survey, Bureau of Ocean Energy Management, Regulation and Enforcement (see “Minerals Management Service”) and Office of Surface Mining Reclamation and Enforcement. Formerly, Salazar was a US senator from Colorado.

San Juan Basin
A 6,700-square-mile area that stretches from northwestern New Mexico into Colorado and contains the second-largest natural gas reserve in the United States. According to the San Juan Basin Data Recovery Project, the reserve yields 70 percent of the natural gas produced in New Mexico. There are already more than 30,000 wells in the basin—with another 10,000 proposed.

Santa Fe County Oil and Gas Ordinance
In 2008, the Santa Fe County Board of County Commissioners amended its land-development code, creating what’s called an “oil and gas overlay zoning district” to manage oil and gas exploration and drilling. Initially, the county passed a three-month moratorium on drilling so it could write new oil and gas regulations. Then, in early 2008, Gov. Bill Richardson issued a six-month moratorium on drilling in the area.

Spills
Although spills must be reported, the state does not have available a state-wide list of oil and gas spill incidents, a rather curious fact given that the Land of Enchantment is one of the nation’s largest producers of natural gas and oil.

State Land Office
State agency that manages 9 million acres of surface lands and 13 million acres of mineral rights. In fiscal year 2010, oil and gas development on state trust lands generated $316.5 million in royalties.

{T}

Top New Mexico drillers in 2009, natural gas

1. Burlington Resources Oil and Gas, Houston, Texas
Acquired by ConocoPhillips in March 2006, and has operations in more than 30 countries and worldwide assets of $155 billion.

2. ConocoPhillips, Houston, Texas
Third-largest integrated energy company in US with 29,900 employees worldwide.

3. Devon Energy Production Company, Oklahoma City, Okla.
Holds interests in 13 million onshore acres, two-thirds of which have yet to be developed.

4. BP America Production Company, Tulsa, Okla.
Owned by BP (those same folks who just ruined an ocean).

5. XTO Energy, Fort Worth, Texas
Formed as Cross Timbers Oil Company in 1986, the company was acquired by ExxonMobil in 2010.

6. Energen Resources Corp., Birmingham, Ala.
The company’s largest operations are in the San Juan Basin (New Mexico and Colorado) and the Permian Basin (New Mexico and Texas.)

7. Williams Production Company, Tulsa, Okla.
The company’s total operations produce 1.2 billion cubic feet of natural gas each day.

8. Yates Petroleum Corp., Artesia, NM
Family-owned company founded by Martin Yates Jr., who helped drill the first commercial oil well in southeastern New Mexico—and the first well on state-owned land. According to OpenSecrets.org, during the 2010 election cycle, the company has contributed $64,426—making it the third-largest contributor to federal candidates and parties in the entire state.

9. Chevron USA, San Ramon, Calif.
Second-largest US-based integrated energy company. Also operates more than 10,800 miles of pipelines in the nation.

10. El Paso E&P Company, Houston, Texas
Owns 2.3 trillion cubic feet of reserves worldwide and 42,000 miles of pipeline in the US.

Top New Mexico drillers in 2009, oil

1. COG Operating, Midland, Texas
Also referred to as Concho Resources Inc., 99 percent of the company’s operations are focused on the Permian Basin of New Mexico and Texas.

2. Chevron USA
See “Top NM drillers 2009, natural gas.”

3. Occidental Permian, Los Angeles, Calif.
Subsidiary of Occidental Petroleum Corp., and the largest oil producer in Texas

4. ConocoPhillips
See “Top NM drillers 2009, natural gas.”

5. Marbob Energy Corp., Artesia, NM
In July 2010, Concho Resources agreed to acquire Marbob for $1.66 billion. According to OpenSecrets.org, during the 2010 election cycle, the company has contributed $33,600—making it the eighth-largest contributor to federal candidates and parties in the entire state.

6. Apache Corporation, Houston, Texas
In 2008, drilled 1,418 wells worldwide with a self-proclaimed 93 percent success rate.

7. Devon Energy Production Company
See “Top NM drillers 2009, natural gas.”

8. Oxy USA, Los Angeles, Calif.
Also called Occidental Petroleum Corporation, the company has operations in Bahrain, Libya, Oman, Qatar, United Arab Emirates, Yemen, Argentina, Bolivia and Colombia.

9. Yates Petroleum Corp.
See “Top NM drillers 2009, natural gas.”

10. XTO Energy
See “Top NM drillers 2009, natural gas.”

{U}

Udall, Sen. Tom
A Democrat, Udall was elected to the Senate in 2008. Before that, he had represented New Mexico’s 3rd Congressional District in the US House of Representatives since 1999. According to the website Dirty Energy Money, Udall has received $11,000 from the coal and oil industries since 1999. Oil contributions include those from Bass Brothers Enterprises, ONEOK Inc., BP, Williams Companies and Coleman Oil & Gas.

{Y}

Yates, Jr., Harvey
Southeastern New Mexico oilman who is also chairman of the New Mexico GOP and a former board member of the New Mexico Turn Around political action committee.

{Z}

Zeitgeist
As in, when did oil and gas truly become part of New Mexico’s overall outlook? How about 1921—the year producers drilled their first successful gas well here.  SFR

 

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