07123-07

Goal
The goal of this project is to minimize the financial burden on small producers in New Mexico who incurred increased costs associated with compliance and permitting under the State’s new “pit rules,” which were adopted in 2008. Without cost minimization, future reserves in marginal and mature fields could be reduced as producers leave the business or the state. This project has the primary goal of reducing permitting costs and time by making data and maps available in automated formats needed to more rapidly and accurately assess compliance issues. The data will enhance decision-making and speed up the application process while giving producers and regulators better information on potential surface issues for any site in New Mexico.

Performers
Petroleum Recovery Research Center of the New Mexico Institute of Mining and Technology, Socorro, NM 87801
Independent Petroleum Association of New Mexico, Albuquerque, NM 87113
New Mexico Oil Conservation Division, Santa Fe, NM 87505

Background
New Mexico’s new “pit rules” were designed to decrease environmental impacts on groundwater; they have also significantly impacted cost and time requirements for receiving drilling and surface storage permits. In the southeast part of the state, in the prolific Permian basin, many drillers have been forced to use closed-loop systems with off-site disposal to reduce application time and risk. Incremental costs from this have stressed small oil and gas producers and may impact future development.

The pit rules are revised surface water management rules that regulate pits, sumps, below-grade tanks, and closed loop systems. Potential increased costs include the requirement for expert site surveys as part of the application process, construction and maintenance costs for pits, and remediation at new and existing wells. The increased complexity of the permitting process has caused significant delays in permit applications, both for producers and regulatory agencies. This project has developed, and is now refining GIS software and maps that enable optimal siting for impacted surface facilities to minimize financial and environmental risks and expedite permitting under the new the pit rules. These tools help producers identify potential site regulatory issues and predict the potential for problems. The project has developed a database and associated web GIS which contains geo-spatial data that including surface geology, subsurface water depth, watercourses, existing well locations, subsurface mineral usage, municipal boundaries, 100 year floodplain locations, surface stability and karst data, wetlands information, links to satellite and aerial photos, and other relevant information.

The geospatial database helps identify low risk and high risk areas and best possible locations for pits and tanks, list required forms for reporting or permitting, and identify expected end-of-life closure protocols for pits. Currently under development is web software that will allow relevant forms to be partially or wholly filled in online while interactively viewing geo-spatially referenced siting information. Key features will include automated forms, lists of relevant data, GIS maps, and regulatory agency approved data sources for any potential surface location in New Mexico.

Deliverables include monthly status reports, a web site that is updated semi-annually on the progress of the project, and a final report. NMT will also make presentations at a minimum of two professional association meetings and will make presentations on the work at two out-of-state events geared toward the producers in the adjacent states of Texas and Colorado.

Potential Impacts
Oil and gas producers, especially smaller producers, will benefit from this research by having compliance related information made readily available in electronic formats that would otherwise cost them significant time and dollars to acquire on their own. Small producers with limited numbers of specialized staff will potentially incur the greatest benefit in cost savings by reducing personnel requirements for acquiring and preparing forms. Ultimately, the research will minimize the costs of increased environmental compliance and keep small producers from being priced out of future drilling and production, which in turn will help to avoid a reduction in the development of oil and gas resources in New Mexico.

The information supplied by the research will allow producers to foresee potential compliance issues and remediation expenses prior to drilling. The permitting process will be sped up by enhancing the decision-making process for both producers and regulators and by automating map generation to prove compliance. Cost savings will be realized by a reduction in permitting delays and by allowing specialist personnel to spend less time on permitting.

Accomplishments
The team developed prototype, beta, and final versions of the web GIS, and the software is available for use by producers and regulatory agencies. The project web page can be found at http://ford.nmt.edu [external site] and has already had significant use since the beta version went live in August of 2008. Currently the web site sees more than 450 visits per month and has received positive initial feedback from Industry and OCD. This full beta release of the data model had 250 unique page visits between December 2009 and January 2010, including one beta tester who is applying the product to over 200 wells. The team has already performed, and continues to develop, new and significant Technology Transfer events many of which are listed below:
1. July 2008 – Met with Colorado Oil Conservation Division
2. August 2008 - Presented project and received feedback at Independent Petroleum Association of New Mexico Annual Meeting
3. September 3, 2008 – Gave lunch talk about project to Roswell SPE chapter
4. September 8, 2008 – Project meeting and discussion with New Mexico Oil Conservation Division
5. October 2008 – New Mexico Oil and gas Association Meeting
6. November 12, 2008 – Project Meeting and discussion with New Mexico Oil conservation Division
7. February 2, 2009 – Project Discussion with Mentor Jeff Harvard, SPE Meeting
8. March 2009 – First Web model of the GIS online
9. June 24, 2009 – Discussions with producers in Farmington New Mexico
10. June 2009 – Full beta model online and introduced to stakeholders
11. July 2009 – Feature article on project in PRRC review with circulation ~2500 producers
12. August 2009 – Delivered Full beta to stakeholders at IPANM annual meeting, distributed ~30 hardcopy manuals.
13. September 10, 2009 – Met Project Mentor Jeff Harvard, discussions with producers in Roswell and Artesia.
14. October 2009 – New Mexico Oil and gas Association Annual Meeting, meeting with OCD
15. October 13, 2009 – Feedback meetings with producer’s in Roswell and Artesia NM
16. November 2009 – Feedback meetings with producer’ in Farmington NM 17. January 27, 2010 – Presentation to Four corners SPE chapter on project
18. February 3, 2010 – Midland RPSEA Project Review
19. March 23, 2010 – Presentation of Project results to SPE Roswell Chapter, Artesia NM.

All major tasks through product delivery have been completed. The software can be reached through http://ford.nmt.edu [external site], and has been available for public use since August 2009. The GIS can be used by any computer with a modern browser.

Current Status (January 2011)
Work continues on Task 12: Continued Technology Transfer, Task 13: Data Management, and subtask 11.2: Adjustments to Maps and Data. The research team continues to meet with producers to introduce the features of the product.

Project Start: August 19, 2008
Project End: August 18, 2011

DOE Contribution: $509,185
Performer Contribution: $254,211

Contact Information:
RPSEA – James Pappas (jpappas@rpsea.org or 281-313-9555)
NETL – Chandra Nautiyal (Chandra.Nautiyal@netl.doe.gov or 281-494-2488)
New Mexico Institute of Mining and Technology- Dr. Robert Balch (balch@prrc.nmt.edu or 505-835-5305)

Additional Information

Pit Rule Mapping Portal User's Guide [PDF] - August, 2009

Technology Status Assessment [PDF] - September, 2008