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HOUSE BILL 257
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Matthew McQueen and Kristina Ortez
AN ACT
RELATING TO THE OIL CONSERVATION DIVISION; PROVIDING THAT THE
DIVISION MAY MAKE RULES AND ORDERS REGULATING THE TRANSFER OF
OIL AND GAS WELLS, INCLUDING LIMITATIONS ON CERTAIN TRANSFERS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 70-2-12 NMSA 1978 (being Laws 1978,
Chapter 71, Section 1, as amended) is amended to read:
"70-2-12. ENUMERATION OF POWERS.--
A. The [oil conservation ] division [of the energy,
minerals and natural resources department ] may:
(1) collect data;
(2) make investigations and inspections;
(3) examine properties, leases, papers, books
and records;
(4) examine, check, test and gauge oil and gas
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wells, tanks, plants, refineries and all means and modes of
transportation and equipment;
(5) hold hearings;
(6) provide for the keeping of records and the
making of reports and for the checking of the accuracy of the
records and reports;
(7) limit and prorate production of crude
petroleum oil or natural gas or both as provided in the Oil and
Gas Act; and
(8) require either generally or in particular
areas certificates of clearance or tenders in connection with
the transportation of crude petroleum oil or natural gas or any
products of either or both oil and products or both natural gas
and products.
B. The [oil conservation ] division may make rules
and orders [for the purposes and with respect to the subject
matter stated in this subsection ]:
(1) to require dry or abandoned wells to be
plugged in a way so as to confine the crude petroleum oil,
natural gas or water in the strata in which it is found and to
prevent it from escaping into other strata; pursuant to Section
70-2-14 NMSA 1978, the division shall require financial
assurance conditioned for the performance of the rules;
(2) to prevent crude petroleum oil, natural
gas or water from escaping from strata in which it is found
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into other strata;
(3) to require reports showing locations of
all oil or gas wells and for the filing of logs and drilling
records or reports;
(4) to prevent the drowning by water of any
stratum or part thereof capable of producing oil or gas or both
oil and gas in paying quantities and to prevent the premature
and irregular encroachment of water or any other kind of water
encroachment that reduces or tends to reduce the total ultimate
recovery of crude petroleum oil or gas or both oil and gas from
any pool;
(5) to prevent fires;
(6) to prevent "blow-ups" and "caving" in the
sense that the conditions indicated by such terms are generally
understood in the oil and gas business;
(7) to require wells to be drilled, operated
and produced in such manner as to prevent injury to neighboring
leases or properties;
(8) to identify the ownership of oil or gas
producing leases, properties, wells, tanks, refineries,
pipelines, plants, structures and all transportation equipment
and facilities;
(9) to require the operation of wells with
efficient gas-oil ratios and to fix such ratios;
(10) to fix the spacing of wells;
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(11) to determine whether a particular well or
pool is a gas or oil well or a gas or oil pool, as the case may
be, and from time to time to classify and reclassify wells and
pools accordingly;
(12) to determine the limits of any pool
producing crude petroleum oil or natural gas or both and from
time to time redetermine the limits;
(13) to regulate the methods and devices
employed for storage in this state of oil or natural gas or any
product of either, including subsurface storage;
(14) to permit the injection of natural gas or
of any other substance into any pool in this state for the
purpose of repressuring, cycling, pressure maintenance,
secondary or any other enhanced recovery operations;
(15) to regulate the disposition, handling,
transport, storage, recycling, treatment and disposal of
produced water during, or for reuse in, the exploration,
drilling, production, treatment or refinement of oil or gas,
including disposal by injection pursuant to authority delegated
under the federal Safe Drinking Water Act, in a manner that
protects public health, the environment and fresh water
resources;
(16) to determine the limits of any area
containing commercial potash deposits and from time to time
redetermine the limits;
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(17) to regulate and, where necessary,
prohibit drilling or producing operations for oil or gas within
any area containing commercial deposits of potash where the
operations would have the effect unduly to reduce the total
quantity of the commercial deposits of potash that may
reasonably be recovered in commercial quantities or where the
operations would interfere unduly with the orderly commercial
development of the potash deposits;
(18) to spend the oil and gas reclamation fund
and do all acts necessary and proper to plug dry and abandoned
oil and gas wells and to restore and remediate abandoned well
sites and associated production facilities in accordance with
the provisions of the Oil and Gas Act, the rules adopted under
that act and the Procurement Code, including disposing of
salvageable equipment and material removed from oil and gas
wells being plugged by the state;
(19) to make well price category
determinations pursuant to the provisions of the federal
Natural Gas Policy Act of 1978 or any successor act and, by
regulation, to adopt fees for such determinations, which fees
shall not exceed twenty-five dollars ($25.00) per filing. Such
fees shall be credited to the account of the [oil conservation ]
division by the state treasurer and may be expended as
authorized by the legislature;
(20) to regulate the construction and
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operation of oil treating plants and to require the posting of
bonds for the reclamation of treating plant sites after
cessation of operations;
(21) to regulate the disposition of
nondomestic wastes resulting from the exploration, development,
production or storage of crude oil or natural gas to protect
public health and the environment; [and ]
(22) to regulate the disposition of
nondomestic wastes resulting from the oil field service
industry, the transportation of crude oil or natural gas, the
treatment of natural gas or the refinement of crude oil to
protect public health and the environment, including
administering the Water Quality Act as provided in Subsection E
of Section 74-6-4 NMSA 1978; and
(23) to regulate the transfer of oil and gas
wells, including limitations on transfers when:
(a) the transferor, the transferee or an
entity that owns more than a twenty-five percent interest in a
transferor or transferee is: 1) the subject of one or more
notices of violation of the Oil and Gas Act; 2) the subject of
an enforcement action under the Oil and Gas Act relating to
spills or releases; or 3) out of compliance with natural gas
capture or reporting requirements;
(b) the transferee fails to provide
adequate financial assurance as required by the division;
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(c) the transferee lacks sufficient
financial capacity based on known or projected production to
manage liabilities associated with the oil and gas wells; or
(d) the division issues a written
finding that the limitations on transfer are necessary for the
purposes of mitigating risk to the state from potential
inactive or abandoned oil and gas wells ."
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