State Land Commissioner Aubrey Dunn calls out Oil Conservation Division

 In association with misappropriating funds and not plugging abandoned oil and gas wells

SANTA FE, NM – State Land Commissioner Aubrey Dunn is asking Gov. Susana Martinez and Energy, Minerals and Natural Resources Cabinet Secretary Ken McQueen to stop misappropriating revenue from the
Oil and Gas Reclamation Fund and instead use the money for its intended purpose, which includes plugging abandoned oil and gas wells located on State Trust Lands.

In a letter delivered today to Gov. Martinez and Secretary McQueen, Commissioner Dunn urged the Oil Conservation Division (OCD) of EMNRD to cease issuing new drilling permits until such time that it has adopted a five-year plan for plugging and reclaiming the estimated 600 abandoned unplugged oil and gas wells on State Trust Lands.

The Oil and Gas Reclamation Fund was established in 1977 and authorizes OCD to make expenditures for surveying, plugging, and restoring and remediating abandoned well sites and associated production facilities. In Fiscal Year 2017, OCD used the Oil and Gas Reclamation Fund to plug only one abandoned well on State Trust Lands.

“Abandoned unplugged wells devalue State Trust Lands and impact revenues we earn for public schools, universities, hospitals, and other institutions supported by the State Land Office,” said Commissioner Dunn. “If fund money is not used as intended, generations of schoolchildren will be left holding the bag.”

According to OCD regulations, an operator must properly plug and abandon a well that has been continuously inactive for a year or longer. Further, OCD is charged with enforcing an operator’s obligation to plug a dry or abandoned well in such a way as to confine the crude petroleum oil, natural gas, or water in the geological layer in which it is found and prevent it from escaping into other zones. The division is additionally charged with collecting a $50,000 cash or surety bond to secure performance of that obligation.

While the State Land Office’s oil and gas lease requires the lessee to comply with applicable laws and regulations, the State Land Office is not in a position to enforce compliance with OCD’s mandate to ensure the plugging of dry and abandoned wells, particularly where there is no longer a lease in place.

The division has largely failed to carry out its responsibility and has instead expended significant amounts of the Oil and Gas Reclamation Fund for other purposes. As an example, legislation has been introduced which would divert $2 million annually of Oil and Gas Reclamation Fund money to remediate the Carlsbad brine well.

“The Oil and Gas Reclamation Fund is meant for oil and gas operations that go awry, not cleaning up salt mines,” said Commissioner Dunn. “The Oil Conservation Division should have remediated this brine well 15 years ago and held the operator accountable, but they dropped the ball putting people in danger and public education funding at risk.”