New Mexico Oil & Gas Association Proposes Fracking Rule, and "Pit Rule" Amendment

The New Mexico Oil Conservation Commission is considering three important changes to its rules. On November 15, 2011, the Commission adopted a new disclosure rule proposed by the New Mexico Oil and Gas Association which requires operators using hydraulic fracturing when completing a well to file a form with the Oil Conservation Division which lists the fluids that were used in the frac job. The rule requires the disclosure of fluids utilized within 45 days of the completion of the well but exempts from disclosure chemical mixtures that are deemed proprietary. The Commission is expected to publish the final rule in January 2012.

The Commission held a hearing on October 21-22, 2011 to consider rule changes and a new Special Rule for Horizontal Wells proposed by the Oil Conservation Division. The proposed changes will specify the ownership and consent requirements required to obtain an Application for Permit to Drill a horizontal well in a project area, well set back requirements, assignment of allowables and other issues concerning compulsory pooling of project areas.

The Commission has scheduled a hearing beginning January 23, 2012 to consider changes to the "Pit Rule" set forth in Rules 19.15.17 and 19.1S.39.8(B) NMAC proposed by the New Mexico Oil and Gas Association and Independent Petroleum Association of New Mexico. For more information, contact Earl DeBrine at edebrine@modrall.com.