Rio Arriba County’s moratorium on new oil and gas drilling is over.
After more than a year of delays, County commissioners approved the Oil and Gas Ordinance at a special meeting May 20 in Tierra Amarilla. The County had allowed the drilling moratorium to lapse May 18.
Gas and oil industry officials and attorneys lined up to thank County officials for including them in the drafting of the ordinance, which included significant retreats from the aggressive regulations originally envisioned by commissioners (see sidebar).
“I’ve met with each of you over the past 15 months,” ConocoPhillips Senior Manager John Zent told commissioners. “I congratulate your staff for meeting with us and putting together an ordinance that makes sense for all of us.”
Texas-based Approach Resources, whose plans to drill for on private land near Tierra Amarilla in the Rio Chama watershed triggered the County’s April 2008 moratorium, was also represented at the meeting. Calling industry’s meetings with the County “gratifying,” Approach attorney Scott Hall took the podium to suggest additional last-minute changes to the ordinance. Hall asked for the ordinance to use the state’s definition of freshwater and a reduction of the ordinance’s protections for scenic byways.
The County will accommodate the water terminology but probably not the reduced scenic protections, County planner Louise Pocock said.
“We appreciate the camaraderie you have fostered with industry,” New Mexico Gas and Oil Association Vice President Deborah Seligman told County officials. “I hope changes will still be made to streamline (regulations) for industry as well as the County.”
Ending the moratorium was necessary to maintain industry interest in the County during the economic downturn, Lindrith Community Association Chairman Chuck Nielsen said. Nielsen had previously said that the moratorium was a “finger in the eye” of industry and could cost Lindrith jobs.
“The County did an excellent job,” Nielsen said of the final ordinance.
The final ordinance is less aggressive than earlier drafts, County officials admitted.
“The County doesn’t have the staff resources or expertise to do some of what we were thinking about early on,” County Planning and Zoning Director Gabriel Boyle said. “We’ve identified the (state) Oil Conservation Division as our expert agency.”
The County retreated from plans to regulate “down-hole” (underground) practices like the use of toxic rock-fracturing (“frac”) chemicals, Boyle said.
Commissioners Alfredo Montoya and Felipe Martinez had taken a hard line with industry at previous meetings but voted for the ordinance even though it was weaker than earlier drafts.
“Gabe (Boyle) is partly right that we don’t have staff expertise,” Montoya said Tuesday. “But there are ways to pay for staff costs through industry fees. But what we can’t afford right now is the long, drawn-out court battle the (federal Bureau of Land Management) threatened if we tried to regulate private lands with federal mineral rights. I don’t appreciate their threats. But that threat’s one of the reasons the ordinance got watered down.”
“I’m certainly not aware of any discussion of lawsuits,” Bureau Chief of External Affairs Hans Stuart, in Albuquerque, said. “There’s a potential that the mineral rights holder could file suit (against the County). I’m not sure I’d say we objected (to County plans). We probably pointed out that under federal law, BLM has primacy.”
The County and Bureau are working out a memorandum of understanding that would allow the County to participate in the Bureau’s permitting process, Bureau Deputy State Director for Minerals Tony Herrell said.
“Surface owners have to come to an agreement with the (drilling) company about how the surface will be disturbed and reclaimed,” he said. “You don’t want to get into conflicting permitting systems in a situation like that.”
The County also lacks the resources to fight the industry in court, as would likely have happened had the earlier-envisioned prohibition on toxic fracking chemicals and other strong regulations been retained, Martinez said.
“We have oil and gas in the County but we’d like other resources to be equally taken into account and respected so that we have clean water and clean air into the future,” Martinez said. “But yeah, it’s one of those things. We have to be realistic.”
The County will depend on state and federal agencies to regulate subsurface aspects of gas and oil production, County Manager Lorenzo Valdez said.
The ordinance will not affect most drilling operations in the County, since the ordinance only applies to privately-owned gas and oil beneath privately owned surface lands. The vast majority of gas and oil drilling within the County is done on federal and Indian lands.
The County derives more than half of its budget from gas and oil tax revenues generated from wells on federal lands in the western third of the County, but falling prices and slowing production have caused revenues to plummet this year. The County faces an anticipated $5 to $6 million shortfall in next year’s budget, according to Valdez. The County’s fiscal year 2008-2009 budget was $18.6 million, according to County documents.
The ordinance splits the County into two management zones: an Energy Development District in the already-heavily developed western third of the County, and a more-regulated Frontier Basin District encompassing the ecologically sensitive Rio Chama watershed to the east.
New drilling in the Energy District will require only administrative approval by County Planning and Zoning staff, according to the plan. In contrast, permits for drilling in the Frontier District will require more extensive environmental protections, setbacks from surface owners’ homes and water wells, public hearings and groundwater quality monitoring wells.
Approach was the first company to attempt to drill in the Frontier Basin District. The County passed a three-month drilling moratorium in April 2008 after it became aware of Approach’s plans, and extended it twice. The County also opposed Approach’s drilling permits before the Division and won
Approach filed suit against the County in June 2008 but dropped the suit after Gov. Bill Richardson announced he was ordering the Division to write special Rio Chama watershed protection rules. (However, the Division was never actually ordered to do so and the rules were never completed, according to Division and County officials.)
The Division has rescheduled a hearing on Approach’s remaining permits from Wednesday (5/27) until sometime in June.
Approach officials refused to comment on the ordinance, the end of the moratorium or their plans in the County. County officials will be on hand for the permit hearing, Valdez said.
One Tierra Amarilla resident was disappointed that his neighbors weren’t at the meeting.
“Over in Dulce, they’ve done a lot of damage, contaminating the water,” he said. “It’s very important to discuss the (Tierra Amarilla) Land Grant and not to drill here until the Land Grant issues are settled.”
But gas and oil royalties, rather than water pollution, are Archuleta’s primary concern, he said because the Land Grant heirs have lost grazing and timber royalties.
“Oil and gas is what’s left to us,” he said. “The royalties could put our kids in college.”