Judge OKs stricter rules on drilling waste

Staci Matlock | The New Mexican

3/4/2008 - 3/5/08

A state district judge has upheld the state's move to tighten regulations on surface waste disposal from oil and gas operations over the protest of 16 companies.

The New Mexico Oil Conservation Commission won the appeal in state District Court in Santa Fe on Feb. 26 but didn't find out about the decision until Friday.

Mark Fesmire, head of the Oil Conservation Division, said the new rule primarily sets new limits on the amount of salt allowed in waste that is spread out on "land farms" and remediated naturally. Under the old rule, he said, "we had not adequately controlled the waste generated during oil and gas drilling."

Raye Miller, treasurer for Marbob Energy Corp. in Artesia, one of the 16 companies that appealed, said he believes the revised rule will have unintended and detrimental consequences for land farm operators and the oil and gas companies using them.

Bob Gallagher, president of the New Mexico Oil and Gas Association, said he's not surprised District Judge Daniel A. Sanchez ruled in the commission's favor. "Judge Sanchez has consistently allowed the OCD to virtually write every opinion he's penned," Gallagher said.

The surface waste rule is one of four major rule changes the Oil Conservation Division has proposed under Fesmire. One sailed through without protest. Another one, which tightened enforcement, was protested by the oil and gas industry up to the state Supreme Court, where it is awaiting a hearing. The Oil Conservation Commission is set to decide another big rule change, regarding open-pit storage of drilling wastewater and muds, on March 12.

"I know OCD has a lot of good folks working for them and they are working to make a cleaner environment," Miller said. "Their intent is good, but if they rush through making rules there can be unintended consequences."

But Fesmire, who has worked as a geologic engineer with the oil and gas industry and as a water engineer for the state, said he's convinced his office needed to do more to protect the environment. "We have to protect the resources we have while we're drilling, or we won't be able to drill. Both can be done," Fesmire said. "It's just a little more expensive than what we've done in the past."

The surface waste rule applies to oil and gas operations when there's a spill from a pipeline, pits or other machinery. Companies are required to clean up hydrocarbons and contaminated soil. That waste is taken to a state-permitted land farm or a landfill, depending on the type of waste.

Much of the waste can be spread out on land farms, where sun and water help bacteria break down the hydrocarbons and return sludge to healthy soil, Fesmire said.

But salt doesn't break down, so waste with a high salt content is instead hauled to a landfill.

Miller said the rule would make sense if there weren't other materials in the waste that also have to meet a new stricter standard. But he said the way the new rule is structured will discourage "high quality, prudent operators" from opening land farms. He said the rule fails to take into account existing background levels of regulated minerals like barium in the soil where a spill occurs.

If those background levels are high, and those contaminated soils are mixed with dirt at a land farm that also has high barium levels, the land farm might never be able to meet the state's requirements. That would prevent land farms from winning state approval to close after oil and gas operations are finished. Instead, farm operators would have to pay to excavate all of the land-farmed soil and haul it to a landfill, Miller said.

Gallagher said the association had just received the opinion, and he's not sure if it will appeal.

The companies that appealed the division's waste rule change are Marbob, Burlington Resources Oil & Gas Co., Chesapeake Operating Inc., Chevron Texaco, ConocoPhillips Co., Devon Energy Corp., Dugan Production Corp., Energen Resources Corp., Marathon Oil Co., OXY USA, Inc., Occidental Permian, LTD, OXY USA WTP, LP, D.J. Simmons Inc., Williams Production Co., XTO Energy Inc. and Yates Petroleum Corp.

Contact Staci Matlock at 986-3055 or smatlock@sfnewmexican.com.