Short Circuit - Albuquerque Journal

Short Circuit

This is the type of oil field electric pole that would be inspected by state electrical inspectors checking to ensure the installation and equipment met minimum state safety codes and standards. But some well operators have been allowed to receive electric power without having an inspection. (courtesy of state Regulation and Licensing Department)
This is the type of oil field electric pole that would be inspected by state electrical inspectors checking to ensure the installation and equipment met minimum state safety codes and standards. But some well operators have been allowed to receive electric power without having an inspection. (courtesy of state Regulation and Licensing Department)

The interoffice email was titled “Lost in Space 474.”

The author was state inspector Edward “Tiny” Sanchez of Raton, who had discovered that 474 requests for electrical inspections had been parked for months in an unusual state computer account labeled “E-Vacant.”

From time to time, Sanchez wrote in the Feb. 21 email to his bosses at the Construction Industries Division, he had found safety inspection requests in the agency’s computer system that “were slipping through the cracks.”

This time, he inadvertently came across “E-Vacant” while looking through the computer list of state inspectors’ assignments.

“I am concerned with the volume and spectrum of these requests,” he wrote in his email, “and am worried that these clients are not getting the service they need. I am also concerned about public image and perception of our division.”

Sanchez added that he wasn’t trying to “stir up trouble,” but wanted to alert his supervisors if there was “something here to fix.”

But “E-Vacant,” it turns out, was no accident.

The computer file was created by top CID officials who have allowed oil and gas companies in southeastern New Mexico to skip state inspections of electrical systems for oil and gas well projects over the past 10 months.

“E-Vacant” has also been “the parking lot” for dozens of requests for electrical inspections of water wells and electric hookups of manufactured homes in the same area.

Typically, such safety inspections occur before a utility turns on power to a new project.

By early April of this year, “E-vacant” had grown to more than 500 requests for electrical inspections that still hadn’t been performed. Yet those projects were allowed to get electricity anyway.

After Journal inquiries about “E-Vacant,” state officials, at the direction of Gov. Susana Martinez, have taken the “E-Vacant” inspection requests off the back burner.

“We are closely monitoring the follow-up on this situation and have asked the Department to ensure that all pending inspections are completed within the next 90 days,” said Martinez spokesman Enrique Knell in an email on Friday.

J. Dee Dennis Jr., superintendent of the state Regulation and Licensing Department, acknowledged in a Journal interview that the state still has a duty to perform the safety checks, even though power has already been turned on at the sites.

Earlier this month, however, two of his subordinates questioned how the backlog could be tackled, given the number of state electrical inspectors available.

“We haven’t been able to go back and address these inspections and, without hiring a great number of other inspectors, there really isn’t a way for us to get down there to go to these inspections,” said CID electric bureau chief James “Kelly” Hunt in an interview earlier this month.

Instead, Hunt said, CID officials have been working for the past few months on a “parallel” path that would reduce the number of electrical inspections required for oil and gas well hookups in the future.

In the April 2 Journal interview, Dennis said the governor’s office wasn’t opposed to the idea of allowing “annual permits.” Such permits would require inspectors to periodically review a sample of oil and gas well electrical hookups.

On Friday, however, governor’s spokesman Knell told the Journal in an email that the “annual permit” is an “option that needs to be examined much more thoroughly.”

He added: “We haven’t approved of any response except ensuring that the inspections are completely quickly … .”

Under the New Mexico Administrative Code, “All work for which a permit is issued must be inspected.”

Once a permit is pulled by a contractor, the state is supposed to dispatch an inspector to ensure the electrical installation and wiring meet state safety codes and standards. Once that is affirmed, the inspector notifies the utility the power can be turned on.

But since last June 27, the Construction Industries Division call center has routed certain requests to the new “E-Vacant” file when the location was in the southeastern part of the state.

Instead of dispatching an inspector, CID officials granted “utility releases” that gave the green light to utility companies.

Meanwhile, hundreds of inspection requests, including 60 requests for utility pole releases for manufactured homes, were piling up in “E-Vacant.”

State construction industries officials say they created “E-Vacant” after being “run over” with requests from Lea, Eddy and Chaves counties for oil and gas well inspections over the past year. A legislative analysis in March found that at least 1,070 oil and gas wells were completed in 2012.

Requests pile up

Within days of the Journal request seeking public records about the “E-Vacant” account, Hunt sent an email to an attorney for Regulation and Licensing.

“I accept all responsibility for the concept and implementation of the ‘E-Vacant’ account,” Hunt wrote to agency attorney Justin Woolf on March 5. “There was (and is) no way we could physically visit all of these locations so we devised this account to ‘park’ permits that were not as critical as other commercial and residential permits.”

Hunt had help from then-CID Deputy Director Land Clark, who wrote a June 27, 2012, interoffice email stating, “I created the fictitious inspector E-VACANT, which is essentially a parking lot for oil wells, water wells and manufactured home services in the SE.”

At the time, one electrical inspector assigned to the area had left. So CID formed a team of 12 inspectors from around the state to temporarily perform his inspections.

Meanwhile, the “E-Vacant” account continued to grow, hitting 474 by February of this year, according to the Raton inspector’s email.

When the Journal interviewed Dennis and Hunt earlier this month, the number of “parked” inspection requests was 512.

Currently, there are 20 electrical inspectors statewide, with two in the southeastern part of New Mexico.

In interoffice emails, Hunt has described the “E-Vacant” account as a “management tool” and a “test bed” that highlighted the need for a new approach to electrical inspections of oil and gas wells.

“No one was impeded, no one was held up,” Hunt said. “Oil and gas wells were drilled, the power was turned on, they’re producing wells and they’re paying money into the tax coffers in New Mexico.”

CID approved utility releases for the manufactured home electric poles or pedestals so that no contractors or homeowners have been delayed, said agency spokesman S.U. Mahesh in an email.

Dennis said the contractor and the state of New Mexico would likely bear the liability if safety issues or harm occurred involving uninspected wells or manufactured homes.

But agency officials said there have been no reports of any incidents involving those uninspected sites.

Parking the inspection requests in “E-Vacant” was a better solution than what has happened in the past, Dennis said.

“Field inspectors (in the southeastern part of the state) were not doing inspections at all (involving oil and gas wells), they were not doing utility releases and what we found out … was they let those things sit on their account for a period of time and then they just closed it without inspecting them.”

Dennis said those inspectors no longer work for the agency, and the practice went back prior to the administration of Gov. Susana Martinez. Dennis, who formerly ran his own electric company in Albuquerque, was appointed by Martinez in 2011.

Martinez spokesman Knell said the “problem began 10 years ago.”

Annual permits a fix?

In recent months, CID officials have met with oil and gas company representatives, lobbyists, contractors and utility representatives to discuss the idea of allowing oil and gas companies to obtain annual permits for electrical inspections.

“With the volume of well installations and the need to approve electrical connections quickly to not limit production, the oil and gas companies cannot wait for individual approvals,” states a CID outline of the proposal.

Under the proposed permit, the oil or gas company would submit one well site standard for each type of well installation for review by CID.

CID inspectors would then do the spot checks to “confirm the installation met minimum code requirements and the installation met the design standard,” the outline states.

During the April 2 interview, Dennis and CID officials said there was no requirement for public comment on the idea or need for formal approval from the state Construction Industries Commission, which sets rules and standards for New Mexico’s construction industry.

State Sen. Carroll Leavell, R-Jal, said the annual permit is “actually going to put the responsibility on the oil and gas company to make sure that they’re getting the kind of (electrical) job that they need and a safe product.”

Robert Brant, an electrical inspector supervisor for the state of Colorado, said there have been discussions in his state about the kind of “risk management” inspections contemplated by New Mexico.

“But it would not work for us because our state statute says that every permit will be inspected. In Colorado, the utilities will not release a meter until it’s inspected.”

Brant said such safety checks are important to protect against explosions or fires that may be due to faulty wiring, equipment or installation.

Leavell said there’s no reason to be concerned about safety under the proposed annual permit, which he said will streamline the process.

“All governors claim to be business friendly, but this governor’s actually making the move to do that … seeing how we can cut through some of this red tape that’s not necessary.”
— This article appeared on page A1 of the Albuquerque Journal

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