American Oil and Gas Reporter - January 2012 - 219

The Presidential Papers
Independent
Petroleum Association
of New Mexico

GREGORY N. NIBERT
Partner
Hinkle, Hensley, Shanor
& Martin LLP
Roswell, N.M.

from the president
One year ago, Independent Petroleum
Association of New Mexico President
John Thompson reported there was a
sense of optimism among New Mexico oil
and gas producers because Susana Martinez had been elected governor. Governor
Martinez took the helm at the beginning
of this year and has supported numerous
oil and gas industry requests for the state
to revisit a number of the former administration's new regulatory burdens.
While we remain tremendously optimistic, the reality is that government
moves slowly, even with a supportive
governor and a cabinet steeped in business
experience. For instance, the last year of
the Richardson administration saw the
promulgation of Rule 17, also known as
the pit rule, which requires closed loop systems for all New Mexico drilling operations. The rule's enactment not only became a battle cry for the oil and gas industry, it also became a political issue that
contrasted the Martinez campaign from
that of her opponent.
The New Mexico Oil & Gas Association submitted a petition to amend the pit
rule in early October, with IPANM following suit with its own application to
amend, fully supporting NMOGA's application. We believe that the pit rule will
be reopened and heard by the New Mexico Oil Conservation Commission early in
2012. By the time the IPANM president reports next year, I hope the OCC will have
seriously revised Rule 17 to reduce the regulatory burden so New Mexico oil and gas
producers' costs will be more in line with
those in Texas, Oklahoma and Colorado.
The Oil Conservation Division has re-

ceived comments on a proposed rule
making involving horizontal drilling.
IPANM and other groups have submitted
comments on the proposed rule and we are
anxiously awaiting decisions by the OCD
as to how it intends to proceed. As a result
of the many applications to drill horizontal wells in New Mexico,
the existing spacing rules
have not made the process
easy and have caused
some delays and uncertainty as to how the state
should proceed with the
applications.
The OCD has had to approve project areas on a case by case basis for each proposed horizontal well. Again, the regulatory process has become burdensome in
light of the technical advances in horizontal
drilling. I hope the OCD will draft a rule
that provides the framework for a streamlined horizontal well permitting process
while also meeting the division's statutory obligation to prevent waste and protect
correlative rights.
Greenhouse Gas
One of the 32 rules created in the waning hours of the Richardson administration
included the Environmental Improvement
Board's decision to approve the New
Mexico Environment Department's petition to limit greenhouse gas emissions and
make the state unique by creating its own
cap-and-trade program. Governor Martinez
has been very proactive in opposing this
cap-and-trade program, and initially tried
preventing the publication of the 32 rules.
An environmental group, the New Energy Economy-a privately funded group
that describes itself as dedicated to creating economic opportunity powered by
clean energy-petitioned the New Mexico
Supreme Court to prohibit the governor
from interfering with the rules' publication.
The New Mexico Supreme Court ruled
against the governor and the rules were
published and went into effect.
A late 2011 hearing that sought to roll
back this rule included testimony by the
NMED that opposed a New Mexico cap-

★
and-trade scheme. The department stated
that New Mexico had withdrawn from the
Western Climate Initiative and had joined
the governors of several western states in
North America 2050, which will concentrate on carbon sequestration programs, an important first step toward reversing New Mexico's move toward a capand-trade program.
The department also presented testimony that it lacked the personnel to implement a cap-and-trade program and
expressed discomfort about becoming a
partner with California, which would
have a larger share of the market and
would be able to dictate certification of
verifiers and offsets. IPANM and a number of other industry groups testified that
the first rule was passed in 2010 without
adequate economic analysis, particularly
considering how such a rule would impact
small business.
We expect full reversal of the cap-andtrade rule, its mandatory reporting and verification rules, and the emissions cap rule
when the EIB completes its deliberation.
Endangered Activity
On Dec. 14, 2010, the U.S. Fish and
Wildlife Service opened public comment
regarding the proposed listing of the
dunes sagebrush lizard under the Endangered Species Act. This lizard inhabits
lands within four counties in New Mexico and five counties in Texas in a sand
dunes shinnery oak complex. Unfortunately, much of this habitant runs through
some of the most prolific oil fields in
Southeast New Mexico and West Texas.
The proposed listing has generated a
great deal of interest from the oil and gas
industry, local and state governments,
and the environmental community.
Again, Governor Martinez has played
a vital role in confronting federal officials
on this issue, and Energy, Minerals and
Natural Resources Secretary John Bemis
has been very engaged in efforts to try to
prevent an ESA listing.
The USFWS held two public meetings,
one in Midland, Tx., and the other in
Roswell, N.M., in April 2011. Each meeting attracted many concerned citizens, a
vast majority of whom oppose an ESA listing. The date for determining whether to
classify this species as endangered is Dec.
14, 2011. (Editor's Note: The USFWS announced in early December that it was delaying a listing decision for six months.)
JANUARY 2012 219

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