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Updated: Energy firm drops request for non-public process to drill more wells

ALBUQUERQUE, N.M. — The San Juan Basin’s largest natural gas producer has withdrawn a request to replace public hearings with a non-public, administrative approval process to increase the number of wells it drills on existing pads in San Juan and Rio Arriba counties.

The state Oil Conservation Division had planned to consider Hilcorp Energy Co.’s request at a public hearing Friday in Santa Fe. But environmentalists asked the OCD to delay proceedings to allow more time to study the issue and increase public participation.

The San Juan Citizens Alliance, the Oil and Gas Accountability Project, and Rio Arriba County rancher Don Schreiber had filed to intervene, requesting the hearing be postponed by two weeks, said Mike Eisenfeld, Citizens Alliance energy and climate program manager.

“It’s a complicated issue that concerns how many wells are drilled in a given area,” Eisenfeld told the Journal. “We respectfully want to be included, because it’s a significant issue that people need to look at.”

The company did not respond directly to environmentalists’ criticism, but it withdrew its request to the OCD Wednesday afternoon. It still plans to file a “revised application” with the OCD at a later time that addresses some “misnomers” raised by intervening parties, said Hilcorp spokesman Justin Furnace in an email to the Journal.

At issue is how requests for “well density exceptions” are processed by the OCD. Oil and gas companies regularly file them to increase the number of wells drilled in a given area beyond what’s contained in original permits. An OCD hearing examiner currently reviews all requests in public meetings.

Hilcorp has 11 such applications scheduled for hearing on Friday. But alongside its latest applications, the company had added a request to permit “administrative approval” of density exceptions in one large area, the Blanco-Mesaverde Gas Pool in Rio Arriba and San Juan counties. If approved, the company could have forgone public notices, with future requests administratively reviewed by OCD personnel.

Environmentalists said that would have potentially opened the door for a lot more drilling in the San Juan Basin with no public input, especially given Hilcorp’s size in the region. The Houston-based company acquired all of ConocoPhillips’ roughly 1.3 million acres of lease holdings in the San Juan Basin last year for $3 billion, plus 300,000 acres from XTO Energy Inc. for $300 million.

But Hilcorp says administrative approvals for well density exceptions would improve efficiency in existing operations, allowing the company to actually drill fewer new wells.

“Hilcorp has been successful at extending the life of legacy oil and gas fields, in part, by taking advantage of existing wells and upgrading existing infrastructure rather than building new pads or drilling new wells,” Furnace said. “…The process we are proposing would not only allow for efficient development of these resources, but would also reduce the number of new wells needed.”