Longtime New Mexico oilman hopes to drill in Valencia County - Albuquerque Journal

Longtime New Mexico oilman hopes to drill in Valencia County

Longtime New Mexico oilman Harvey E. Yates Jr. in Valencia County. (Courtesy of Harvey E. Yates Jr.)

Copyright © 2022 Albuquerque Journal

In New Mexico, the Yates family name is synonymous with oil and gas development, and the family patriarch, Harvey E. Yates Jr., is now applying that heritage to virgin lands in Valencia County.

Harvey E. Yates Jr.

Jalapeño Corp. – Yates’ Albuquerque-based oil and gas drilling and exploration company – is actively assessing the geology and subsurface hydrocarbon potential on lands around the county that the Yates family either owns outright, or that it has acquired subsurface mineral rights to explore, Yates told the Journal in a recent interview.

Between owned property and subsurface mineral rights, Yates’ holdings encompass at least 20,000 acres, mostly on the county’s east side, which Yates largely acquired in the early 1980s from Horizon Land Corp., a real estate company that at one time owned about a quarter of all the land in the county.

Yates’ acquired those holdings largely to explore for oil and gas, but he has also pursued other uses, such as ranching and some industrial development. Now, however, Jalapeño Corp. is directly focused on drilling into potential hydrocarbons trapped in the Albuquerque Basin below those lands, something Yates has envisioned for more than four decades.

“I’m an old man – 80 years old – and I want to see a discovery there while I’m still alive,” Yates told the Journal. “I’m intent on doing some drilling.”

Undeveloped basin

The Albuquerque Basin is a vast, undeveloped zone potentially rich in hydrocarbons that roughly stretches from the northern desert area in between Albuquerque and Santa Fe to Bernardo in the south, and from the Sandia and Manzano Mountains in the east to the Rio Puerco in the west.

Sporadic drilling projects around the basin date back to between World War I and II. But most exploration back then focused on shallow zones that hold less commercial potential, rather than the deep shale and sandstone layers where oil and gas are more likely trapped at some 20,000 feet down, or about four miles deep, said Ron Broadhead, petroleum geologist emeritus with the New Mexico Bureau of Geology and Mineral Resources at New Mexico Tech in Socorro.

In the 1970s and early 1980s, Shell Oil Co. drilled much deeper to explore for commercial potential, providing a lot more geologic information that encouraged some further exploration by other companies in the 1990s and early 2000s. But none led to commercial production, likely because of the increased costs and risk for deep drilling in a new basin at a time of low prices and lack of modern hydraulic fracturing and horizontal drilling technologies that could penetrate into mineral rich zones.

“Nobody ever really found enough to warrant commercial development, although with today’s modern technologies, it’s possible,” Broadhead told the Journal.

Yates now believes those modern techniques could crack open productive areas in Valencia County. “There’s very strong evidence of hydrocarbons in the Valencia County area,” Yates said. “In my view, it’s a prospective area, but with a lot of risk.”

Jalapeño Corp. would likely drill in three different prospective zones to test for potential.

“We’d hope for at least one well to hit,” Yates said. “We want to move on with it, but it will still take some additional geologic assessment first.”

Yates declined to reveal specific target zones. But if exploratory drilling, and eventually commercial operations, do take place, it would likely be located near interstate pipelines that already run through Valencia County south of Belen. That’s because the state’s new methane rules require gas development to occur near the infrastructure needed to capture and transport it to avoid venting and flaring.

“I won’t say specifically where,” Yates said. “But it’s a good bet that our first well or wells would be close to a pipeline, and Valencia County is blessed with two interstate pipelines that go through it.”

Overlay zone

Yates said he approached Valencia County officials over the past year regarding subsurface mineral exploration, because current zoning and regulation makes drilling very difficult in most places, if not impossible.

“I asked for a map of mineral resource districts, and when they finally produced one, it was inaccurate and showed virtually no place where you can drill,” Yates said. “I suggested to a county commissioner there and a lawyer that we ought to be able to explore down there. … They had created an overlay zone for solar development and it seemed to me an overlay zone might be created for mineral exploration as well.”

The County Commission did approve a new “natural resource overlay zone” on May 3 that would potentially allow for exploratory oil and gas drilling, which commissioners will be discussing again at today’s biweekly meeting.

“The overlay zone doesn’t actually authorize drilling any place, but it offers the opportunity to apply for county approval,” Yates said. “I assure you, if we do apply, it won’t be near homes, but it will likely be near the pipelines.”

Commissioner Joseph Bizzell, who sponsored the overlay ordinance, said county attorneys drafted the ordinance, and he has no direct relationship with Yates. However, Jalapeño Corp. donated $1,500 to Bizzell’s 2020 election, representing the bulk of money Bizzell raised in that campaign, according to records from the New Mexico Secretary of State’s Office.

Yates attended the May 3 commission meeting and spoke in favor of the overlay ordinance. He also gave feedback on it before the commission meeting, suggesting modifications to the initial draft proposal, Yates told the Journal.

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