EARTHWORKS

New Mexico rewrite of oil and gas ‘pit rule’ gets cheers and jeers

Platts | Jim Magill

June 10, 2013
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Oil and gas producers in New Mexico generally cheered changes regulators made last week to relax a rule governing the storage and disposal of drilling waste water and cuttings, while environmental groups said the revisions were unnecessary and likely would result in increased contamination of groundwater in the state.

After more than a year of deliberations on the so-called "pit rule," the New Mexico Oil Conservation Commission on Thursday issued a 51-page order, relaxing some provisions of the Rule 17, adopted in 2009 under former Governor Bill Richardson, a Democrat.

Industry groups had opposed the rule, claiming it was too costly and restrictive, and blamed it for driving producers out of the state. New Mexico's current governor, Republican Susana Martinez, agreed, and in her successful 2010 bid to succeed Richardson she campaigned on a platform to revise the rule.

In the fall of 2011, the New Mexico Oil and Gas Association joined with the Independent Petroleum Producers Association to file a proposal calling for changes to Rule 17.

Among the changes the commission made to the rule are allowing the use of multi-well fluid- management pits at well sites and allowing operators to bury drilling cuttings on site in locations where it can be done in an environmentally safe manner, rather than have to haul the drilling waste to a remote disposal site.

In addition, under the changes, drillers will not be required to report on the impacts to soil, surface water and groundwater from waste pits or below-grade tanks.

In a statement, NMOGA President Steve Henke praised the OCC for the thoroughness of its deliberative process.

"Based on the testimony of many expert witnesses during the rulemaking and extensive deliberations by the commission, protections for the environment, groundwater and human health have been painstakingly addressed," he said.

But Henke said it is too early to gauge what impact the changes would have on New Mexico's exploration-and-production industry.

"Due to the extremely technical nature of the rule, the industry is now analyzing the rule in its final form to determine what impact the changes will have on operating methods," he said.

"We know they addressed our concerns. The biggest level of relief that we got was on the ability to bury on site and to use line drilling and reserve pits instead of closed-loop drilling," Wally Drangmeister, NMOGA spokesman, said in an interview Monday.

Drangmeister said NMOGA would be able to comment more extensively on the impact of the rule changes after conducting some technical analysis of the commission's order. "Hopefully it won't be a matter of weeks or months," he said.

But Bruce Baizel, project director for Earthworks Oil & Gas Accountability Project, said Monday he was "extremely disappointed' in OCC's decision to review the rule, a decision he charged was driven by the governor's office.

Despite the months of hearings during which time the OCC took testimony and reviewed evidence on the need to change the rule, "there was nothing new. It was all a repeat of what was presented in 2007," Baizel said.

"They wanted a different outcome so they were told to redo the rule. It wasn't a science-based decision. It was a politics-based decision," he said.

Baizel said that OGAP expects to see an increase in the number of groundwater contamination incidents in the state as a result of the rule change.

"They've allowed much greater levels of waste to be buried on site and left there, and there will be an increased number of mini-dumps all over the state with lots of chlorides in them," he said.

He also decried the changes the rule made to reporting requirements for the handling and disposal of drilling wastes.

"It's essentially going back to an honor system," he said.

Baizel added that it is too early to say whether OGAP would challenge the rule changes in court.

"We haven't made a final decision yet, but we think the fact that there was no new evidence will give us a fairly strong claim if we go that route," he said.

Tagged with: regulation, pits, pit rule, new mexico

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