Basin Resources Summer 2013

4 BASIN RESOURCES

Summer 2013

contents

$15 Million Goal Exceeded

10

Energy Week on Steroids

Agreement ends

22

It may happen 34

12 Wilderness component Groups developing rules for Basin Mancos Gas Pool

Developing policy BLM researches options for open trenches, surface pipelines

40

16 Energy execs speaking out 26 LNG exportation plans begin to take shape

18 Construction underway

New appointment

Production stopped

36

Mora County economics “not a concern”

Safety Network 30

$2.5 million museum expansion dedicated to Basin’s energy industry

38

NMOGA, OSHA work to reduce heat-related illnesses

Railway aid

44

Navajo Nation plan great opportunity for economic growth www.basinresourcesusa.com •SUMMER 2013

6 BASIN RESOURCES

Editor’s note It’s no secret that the Basin has had some hard economic times the last few years.

We just haven’t climbed out of the recession as quickly as have many areas of the country.

A lot of that is due to the fact that our natural gas production has slowed because of gluts and market prices.

But the outlook is definitely on the upswing.

Since our last magazine, it is safe to say we’ve gone from uncertain and downright gloomy to, now, optimistic and hopeful when it comes to prospects in the energy and oil and gas industries.

Recent developments in drilling of the Mancos Shale play have shown some promising results. San Juan College School of Energy has exceeded its $15 million goal and will break ground on the

impressive new school of energy facility in the fall.

There are no bells ringing and no one is doing the Snoopy happy dance yet, but we are seeing new options develop and the chance of an upward swing for the industry in the San Juan Basin.

The outlook was “probably two years down the road,” and just a few months later that timetable has been moved forward.

Also, we have seen some progress in getting rail service in the area, and the governor and other officials are moving forward on possible plans for exporting liquid natural gas.

The Navajo Nation is moving forward with plans to develop an industrial park and railway depot in Thoreau.

Four Corners Economic Development has similar plans for San Juan County, if a

railway were to be developed in the area.

LaTonya Finch, regional manager of economic development for Burlington Northern Santa Fe, or BNSF, agrees. “We need more jobs and more wealth, and we have an opportunity to do that right now,” she said, while meeting with tribal leaders.

The plan would be to develop a railroad in the McKinley and San Juan county regions, according to Finch, who said BNSF has four areas in which their railway company plans to invest to match forecast growth.

Industry leaders my not be 100 percent comfortable with calling the new opportunities the next boom for our industry.

However, there is some forward progress, and after the lean years we have had, that’s music to everyone’s ears.

Cindy Cowan Thiele

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8 BASIN RESOURCES

Doing our part for energy independence As the San Juan College School of Energy makes plans to break ground for its new 50,000-square-foot building, I am reminded once again how important the energy/oil and gas industry is to our county, our state and our nation.

That importance was underlined recently when major players in the industry gathered to share information and learn about new technologies and opportunities at the San Juan Basin Energy Conference, held in March.

Former Senator Pete Domenici spoke at the conference, and said technological advances in horizontal drilling and hydraulic fracturing have unlocked a tremendous volume of additional oil and gas resources in North American shale formations. That is true here in the San Juan Basin, due to the Mancos shale drilling, which is estimated to have up to 30 billion barrels of oil, just in New Mexico. While not all of that oil is going to be recovered, owing to the cost, most experts predict that about 5 percent – or more than 1 billion barrels – is.

According to the Energy Information Administration, natural gas production from shale formations increased by more than 700 percent during the years 2005-2012. That’s good news for the country – and especially for the Four Corners.

That means less dependence by the United States on imported oil, but it also means jobs that will help our local and national economy.

T. Greg Merrion, president of Merrion Oil & Gas, was also a guest speaker at the Energy Conference and expressed his enthusiasm and optimism for shale drilling. “I’m looking forward to this next boom,” T. Greg told the more than 500 conference attendees.

The businesses and individuals who donated money to build the new School of Energy appreciate – and share – T. Greg’s optimism. The energy industry’s need for more highly skilled employees is now acute, and the new facility will help us expand our capacity for more students and bigger classrooms. The mission of the School of Energy is to prepare and provide workers for the energy industry via highquality education and training and we are prepared to continue to do so.

The new facility gives San Juan College the opportunity to reach out to the rest of the world with our education and our

training, and to develop the next generation of professionals in the energy industry. The demands for energy will never go away. The School of Energy is well positioned to be a leader in energy education.

Those who offered generous donations to help fund the new facility share the vision of the School of Energy – BP, Merrion Oil & Gas, the state of New Mexico, San Juan College, ConocoPhillips, APS, the Westmeath Foundation, the Tom Dugan family and DJ Simmons – all understand the importance of providing the training and education needed to fulfill the needs of the energy industry in the San Juan Basin and beyond. The vision and the support for the School of Energy have come from many areas, however. And it is our students – recognizing the value of training, certification and degrees – who provide us with the satisfaction of knowing we are contributing to the local economy and to the workforce. The number of students continues to increase, and we are grateful to them for recognizing that the training they receive through the San Juan College School of Energy is affordable and taught by some of the best instructors in the country.

Pacheco 42

ranDy Pacheco Dean

of

School

of

energy - San Juan college

$15 million goal

exceeded

Construction on new SJC School of Energy will begin this fall LaurEn Duff Basin Resources San Juan College recently received $5 million from the state of new Mexico to help with construction costs of a new School of Energy building to be located at the farmington campus.

The overall cost of the project is $15 million, which the San Juan College foundation has raised during the past year. The foundation’s Executive Director Gayle Dean said the foundation was even able to pass its goal and raise extra money. “We are a little over $83,000 dollars over the $15 million.”

Dean said several oil and gas businesses have donated funds to the project, including Merrion Oil and Gas, ConocoPhillips, and D.J. Simmons.

In august 2012, BP america announced it was donating $4 million to the project. The announcement was made during a reception at San Juan College, attended by new Mexico Governor Susana Martinez, during which she presented a speech. BP later donated an additional $1 million.

Since that time, plans for the new building – expected to be 50,000 square feet – have made much progress.

Within the next month, San Juan College will begin to select a construction company to build the new school through the request for Proposal process, according School of Energy Dean randy Pacheco.

The construction of the new School of Energy building is expected to begin this fall. Before groundbreaking, how-

ever, an environmental assessment and survey for archaeological sites will need to be conducted.

The new building “will attract people from all over the nation,” Pacheco said.

“I would say for the community, it will be a real opportunity to come in and understand how energy is developed in the country. When we think of the oil and gas business, people don’t know the different segments along the way.

There are a lot of pieces to it, such as drilling and completion, and people can come in and understand that.”

The construction of a new building also will allow for more students to enroll into the programs offered.

There are approximately 250 students who graduate from the School of Energy every year. The school also

www.basinresourcesusa.com • SUMMER 2013

BASIN RESOURCES trains 7,000 individuals in industry curricula every year for the workforce.

“Currently they have so many students weight listed and they need more space to accommodate the interest,” Dean said.

Pacheco said another asset of the new building is it will allow for the college’s energy department to be under one roof. “(The School of Energy buildings) are scattered throughout the county and this will allow for us to collaborate and look at energy throughout the country.”

Once the building is complete, the School of Energy will continue to provide programs relating to field technology and education. “Engineering and geoscience are all covered well in universities, but when you look at field technology and education that they need – that really doesn’t exist. This will be a unique facility, and what it

will be dedicated to,” Pacheco explained. “The industry is very promising for the San Juan Basin, and to think about where the country is headed with the use of natural gas. I think we will

SUMMER 2013 • www.basinresourcesusa.com

11

see an increase in how we use natural gas, whether for electricity or transportation, and this is probably the most perfect time to build something like this in San Juan County.”

Energy Week on steroids Kids Energy Camp more in-depth class for middle schoolers DEBRA MAYEUX Basin Resources San Juan County middle school students will have a unique opportunity this summer – they will be able to attend a weeklong summer camp focused on the energy industry.

This camp is like Energy Week on steroids, because it is “much more in-depth with a smaller amount of kids,” according to Liesl Dees director of the San Juan College Community Learning Center.

Dees began developing the camp earlier this year and she sought help from people such as George Sharpe with Merrion Oil and Gas to develop a curriculum and activities that will keep students on their toes and interested in careers the energy industry has to offer.

BASIN RESOURCES 13

This camp is like Energy Week on steroids, because it is “much more in-depth with a smaller amount of kids,” according to Liesl Dees director of the San Juan College Community Learning Center.

“The goals of this camp were very much the goals of Energy Week,” Dees said.

Energy Week is one week each year at the Farmington Museum, where industry officials spend a few hours with eighth-grade students and teach them about the energy industry in the Four Corners. Energy Camp will draw from many different people and career fields in the energy industry, according to Erin Gockel, camp instructor.

“It’s a wide range of energy sources, not just petroleum, because these kids are the future,” Gockel said. “They will get us through an energy crisis years from now.”

The camp was open to 20 area students, ages 12 through 15, who will spend a week on the San Juan College campus and touring such facilities as the Williams Milagro Plant, Farmington’s Animas Power Plant, the college’s Chemistry Lab and the San Juan College Instrumentation and Control Technology program.

“We will be looking at energy sources as well forms and getting to know the differences, as well,” said Gockel, who is a seasoned energy instructor. She teaches at Tibbetts Middle School, where she implemented energy education through interdisciplinary units.

Gockel’s efforts earned the school the title of Energy School of the Year SUMMER 2013 • www.basinresourcesusa.com

14 BASIN RESOURCES

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One of her main focuses is educating students, but she also wants to inspire them.

“In addition to emphasizing academics, we want them to have fun,” she said. The camp also affords these students an opportunity to spend time on a college campus and receive instruction from college-level educators, including Eric Miller in the Chemistry Lab and Rick DeLaBarcena in the Instrumentation and Control Technology Program.

The students will meet industry professionals such as Pete Trosky and Mike Johnson with Williams; Carl Woolfolk with Arizona Public Service; Ryan Davis with Merrion Oil and Gas; and Eric Jaquez with the city’s Animas Power Plant.

Alternative energy also will be represented such as a “pedal bike smoothie” from Turtle Lake Refuge and an energy efficient car from Asa Oakes at Advantage Dodge.

“We are going places. We are going to be doing hands-on and mind-on science,” Gockel said. “These students need a little exposure to all of this.”

The idea for an Energy Camp is from San Juan College President Toni Pendergrass, who had experience with energy camps with her former employer in Houston, Texas. “One of the impetuses for this camp was to expose kids to energy career options,” Dees said.

“We want to keep those amazing brains local,” Gockel added.

“One of the things we hope to do with the career aspect is exposure to careers using different types of things,” Dees said, adding that the Community Learning Center is partnering with the School of Energy on this as well.

Another partnership came from BP America, which has provided the funding for the camp. “The college wrote a proposal to BP for this and they accepted it,” Dees said.

With this funding, there also will be an opportunity for the

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BASIN RESOURCES 15 students to show off what they learned. There will be a reception and banquet at the end of the camp for the students’ families.

“The industry banquet is a great way for the kids to network and see that their thoughts are valid,” Gockel said. The students will set up stations during the reception, and in those stations they can explain what they learned. This will culminate in a dinner provided by the college.

This is the first year for Energy Camp, which is being offered for two weeks the week was o June 10 and the upcoming week is 14 and July 8 through 12. Space was limited to 40 students all together, but Dees said she hopes to expand the opportunity in future years.

“We don’t want any kid to miss out on this opportunity,” Gockel said.

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Wildernesscomponent

Groups developing rules for Basin Mancos Gas Pool DEBRA MAYEUX Basin Resources The Bureau of Land Management has put out a statement of work for the Mancos-Gallup development and, according to District Office Manager Dave Evans, a wilderness component will be part of the environmental impact statement.

The New Mexico Oil Conservation Division, or NMOCD, also is working on developing rules and regulations regarding the Basin Mancos Gas Pool, which encompasses everything in San Juan and Rio Arriba counties.

“There are a lot of pools already in existence, and a lot already have their own particular rules,” said Bill Hoppe, a geologist with the NMOCD. His department is trying to figure out how to write a rule that encompasses the entire area, which includes natural gas in a gas pool and an oil reservoir.

“The purpose of changing the rules is to introduce predictability to the regulatory process,” Hoppe told industry professionals during the quarterly meeting of the Independent Petroleum Association of New Mexico on June 4 at Merrion Oil and Gas in Farmington.

“Some of the pools are frozen, some are expandable – it’s a mystery as to which are which,” Hoppe explained, saying everyone wants to drill east to south.

NMOCD did an email survey in April to try to determine the best way to oversee development in this area. There were questions about freezing all unfrozen pools and thawing all frozen pools, as well as questions about whether the Basin Mancos Gas pool should be considered a

Bill Hoppe, a geologist with the NMOCD and Karin Foster, executive director of the Independent Petroleum Association of New Mexico, talk with local oil and gas producers during during the quarterly IPANM meeting on June 4 at Merrion Oil and Gas in Farmington. – Josh Bishop photo

gas zone, which would require two-mile spacing.

The division received responses from 14 operators. “It was a mixed bag,” Hoppe said. “The OCD needs to define how we are going to handle this here.”

He said the Mancos Shale play is a “whole new ballgame,” and there is insufficient data as to the best way to proceed.

Hoppe said there are proposed vertical wells, horizontal wells and wells being drilled in all different directions, with overlapping projects as well.

“There have been problems building the project areas that way,” said Karin Foster, executive director of the Inde-

pendent Petroleum Association of New Mexico, or IPANM. Hoppe said he liked three vertical 320s without having to worry about 40-acre spots. This would allow producers to drill multiple wells in the project area. “You can do that now. You just have the 660 setbacks,” he said.

“If you’ve got a vertical well and a bunch of 40s, you can drill as many as you want,” said George Sharpe with Merrion Oil and Gas. “If they are horizontal, you can drill as many as you want,” Hoppe said. “If you have 320-acre spacing and you want to drill a well – the smaller the spacing area.

www.basinresourcesusa.com •SUMMER 2013

BASINâ&#x20AC;&#x2C6;RESOURCES 17 You can have overlapping project areas.â&#x20AC;?

Hoppe added that the bigger the project area, the better off the production company will be, so Sharpe asked if the project areas were well specific and not formation specific. â&#x20AC;&#x153;They are both,â&#x20AC;? Hoppe said.

This discussion was just one example of the complexity of developing the shale play, and Chuck Creekmore, another independent producer, said there are several problems in the area. â&#x20AC;&#x153;You have one API number for a well and then your laterals are going in different directions. What you can do voluntarily is very different from what you can do from a compulsory cooling standpoint,â&#x20AC;? he said. â&#x20AC;&#x153;One issue is you have a state lease in 36, a federal lease in 31, and you have to come to an agreement, and your horizontal well doesnâ&#x20AC;&#x2122;t go all the way across. There are a lot of complications that have not been resolved.â&#x20AC;?

Foster said she wants the independent producers to get involved in the process. â&#x20AC;&#x153;The discussion has been going on for 3 1/2 years now, without any resolution. This is a real big opportunity for independent operators to make comments,â&#x20AC;? she said. â&#x20AC;&#x153;I get the sense from the OCD that the stakeholder process is too involved for them to be involved in. They will make the rule and then youâ&#x20AC;&#x2122;ll have to follow it.â&#x20AC;?

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Comment period extended BLM gives industry, tribes, environmentalists more time to weigh in on fracking

Developing policy BLM researches options for open trenches, surface pipelines DEBRA MAYEUX Basin Resources The Bureau of Land Management is in discussion with a number of oil and gas companies, including Encana, to develop a policy regarding temporary open trenches. The topic came up at the quarterly Independent Petroleum Association meeting June 4 at Merrion Oil and Gas in Farmington.

There “seem to be some inconsistencies” in the right-of-way stipulations and approvals for temporary open trenches,

said Gary Torres, field manager for the Bureau of Land Management in Farmington.

“Part of that comes from there are different laws and regulations that implement both,” Torres told industry officials.

The office was forced to review the issue after a contractor dug a pipeline ahead of the company putting in the line.

“There was a mile of open trench. There were problems with public health and safety in near communities and with grazing an animal – whether it could step Developing policy 19

The Bureau of Land Management has decided to extend the comment period for its newly proposed hydraulic fracturing rule to Aug. 23.

This announcement came days after local BLM officials met with members of the Independent Petroleum Association of New Mexico to update them on the fracturing master plan.

“It’s still in the draft stage, so look at it carefully,” said Dave Evans, BLM district office manager.

This is the first update to the Federal oil and gas regulations since the 1980s, and the BLM wanted to allow sufficient time for all parties to comment, according to BLM Principal Deputy Director Neil Kornze’s comments in an agency press release.

“Extending the comment period ensures that we’ll have greater input from the public and from key stakeholders, including industry and environmental groups and Indian tribes, as well as other people who have hydraulic fracturing operations in their communities,” Kornze said.

“This rulemaking process has been open at every step, and today’s announcement underscores that fact.”

Fracking 20

www.basinresourcesusa.com •SUMMER 2013

BASIN RESOURCES 19 in the trench,” Torres said. The blm put an internal team to work looking at the stipulations and developing a first draft that will be made available to industry officials through such groups as the iPa and the new mexico oil and Gas association. “it’s everything from on open trenches – button it up or fence it off – keep cows out, keep the public out” Torres said the proposal will not stop the agency from issuing permits and most permits will allow for a two-year maximum on open trenches.

“We will keep issuing rights of way.

We will just consider them on a caseby-case basis,” Torres said. “We are trying to get some consistency. it doesn’t make sense to shut everything down.”

John roe, who works for dugan Production Company, said encana wanted industry officials to offer support for

“This was driven by trying to get consistency. We recognize that having one or two miles of open trench is not the norm, but it happened in that one particular case.

— Gary Torres, blm field manaGer

the trenches. “The encana people are concerned with conditions of approval being placed on their permits – if we are in a stage of approval,” roe said.

Torres vowed to keep the entire process transparent.

“This was driven by trying to get consistency. We recognize that having one or two miles of open trench is not the norm, but it happened in that one particular case. as long as we’re having

the discussion i would like to have everyone’s opinion on that,” Torres said, adding there also could be changes to how the blm handles surface pipelines.

“We are pretty comfortable with having surface pipelines for up to two years,” Torres said. “We’ve had that discussion with the staff. They were a little uncomfortable with it. We are confortable with it. i’ve used surface pipelines in other places and seems like a good way to not tear up things. We’re doing it on a case-by-case basis.”

While not every company will be allowed to have a surface pipeline for two years, the blm will allow some flexibility to keep the land from being torn up, Torres said. once the policy is in draft form, it will be available for public and industry review.

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20 BASIN RESOURCES

Fracking

continued from 18

Approximately 90 percent of wells drilled on federal and Indian lands use hydraulic fracturing, but the BLM’s current regulations governing hydraulic fracturing operations on public and Indian lands have been on the books since 1983 and were not written to address modern hydraulic fracturing activities.

The Interior Department began discussing hydraulic fracturing in November 2010. The issue became pertinent to industry officials in the San Juan Basin after interest increased in the Mancos Shale.

The first set of proposed rules was released to tribal representatives and industry officials in May 2012, and more than 177,000 public comments

were received. An updated draft was published May 25, 2013. The new proposal includes important safety standards, improves integration with existing state and tribal standards, and increases flexibility for oil and gas developers.

The draft proposal consists of three main components that were initially proposed. These components include requiring operators to disclose the chemicals used in fracturing activities on public lands; improving assurances of well-bore integrity to verify the fluids used during fracturing operations are not contaminating groundwater; and confirming that oil and gas operators have water management plans in place. The water management plan

needs to address the handling of fluids that flow back to the surface, according to the document.

“They want comments from industry about how they would like to store the pull-back water,” Evans said.

“The revised rule supports the Obama Administration’s commitment to an all-of-the-above approach to American energy by expanding domestic oil and gas production in order to make America energy self-reliant, while remaining true to a focus on promoting safe and responsible development on public lands,” the BLM press release stated.

Karin Foster, executive director of IPANM, encouraged industry officials to comment. “Letters do matter. If our

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BASIN RESOURCES 21 letters are substantive, they will have more weight,” she said.

“Environmentalists might turn in 200,000 postcards, but we will have more weight if we have 2,000 substantive letters.”

The revised proposed rule will modernize BLM’s management of hydraulic fracturing operations, and help to establish baseline environmental safeguards for these operations across all public and Indian lands.

Evans added that he and other BLM officials have been meeting with Navajo Chapter and Council officials about fracking, as well as about other oil and gas activity on Navajo land.

“They seem to have forgotten what oil and gas development looks like and they are concerned about the amount of trucks we have down there for fracking – conditions of roads, water use,” Evans said. “We are going to meet with industry and go back and meet with the chapter. A lot of the concerns were with subcontractors, truck drivers. We need to give them a little consideration, pull over give them a little consideration.”

Navajo officials also expressed a concern about clearing trees and brush from rights of way. They wanted the materials for firewood and cooking, Evans said.

Any comments regarding the fracturing rules need to be submitted in writing no later than Aug. 23, 2013.

Comments can be mailed to: U.S. Department of the Interior, Director (630), Bureau of Land Management, Mail Stop 2134 LM, 1849 C St. NW, Washington, DC 20240, Attention: 1004-AE26.

Personal or messenger delivery: Bureau of Land Management 20 M. St. SE, Room 2134 LM, Attention: Regulatory Affairs, Washington, DC 20003.

Online comments: BLM website at blm.gov.

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22 BASIN RESOURCES

Agreement ends 63 rural customers may be forced to switch to propane Lauren Duff Basin Resources natural gas services could be cut within non-incorporated areas of San Juan County after the agreement between the new Mexico Gas Company, Williams four Corners LLC and enterprise Products Partners is set to end.

The more than 60 customers who would be affected reside in rural areas of the county, including navajo Dam and Crouch Mesa. They are considered rule 22 customers, or those served off of a third party pipeline, not connected

to the new Mexico Gas system.

The decision to end the agreement came about after Williams and enterprise announced they are terminating their contracts with new Mexico Gas and will no longer supply unprocessed gas to the company. This would potentially have affected 384 new Mexico Gas customers who are serviced via taps on the Williams and enterprise gathering lines. as a way to reduce the number of affected customers, Williams, enterprise, new Mexico Gas, and the new Mexico attorney Generalâ&#x20AC;&#x2122;s office originally de-

veloped a plan in which new Mexico Gas would extend its mainlines to serve a total of 446 customers who currently receive gas via taps on the Williams and enterprise gathering lines. The cost of this project would have been $8.1 million.

Because all parties agreed it was a costly project, a new agreement was made, but it is awaiting approval by the new Mexico Public regulation Commission. under this agreement, new Mexico Gas will extend its existing mainlines to provide processed gas to 411 affected

www.basinresourcesusa.com â&#x20AC;˘SUMMER 2013

BASIN RESOURCES 23 customer, said Teala Kail, New Mexico Gas communications manager. The estimated total construction cost of this project is $4.6 million. “Ultimately, the costs of these types of utility infrastructure investments are passed on to all customers in the form of rates,” she said.

Even though the plan would increase service to 411 customers, 63 customers still would remain without natural gas.

Kail said it would not be “feasible” to provide gas to those 63 customers,“ either because of distance or geology, and the great expense it would take to reach them,” Kail explained.

The 63 customers would be provided cash payments totaling $387,566 to help “defray the cost of obtaining an alternative energy source,” according to Public Regulation Commission documents.

“New Mexico Gas Company, Williams, and Enterprise are offering to

help offset the cost of propane conversion to those 63 (customers),” Kail said.

An affected customer One of the 63 affected customers is Robert Alley, who has lived in Flora Vista since 2001.

“When I bought this property the selling point was it had natural gas,” he explained, adding that if the plan is approved and he no longer receives natural gas, the value of his property will decrease.

Alley said even though New Mexico Gas, Williams, and Enterprise will provide the affected customers cash payments to switch to propane, it will still “cost us quite a bit to change over to a new energy source.”

Kail said all 63 customers received a letter from New Mexico Gas Company notifying them that they will no longer

SUMMER 2013 • www.basinresourcesusa.com

be served if the agreement is approved.

In a May 20 letter Alley which wrote to the Public Regulation Commission, he mentions that New Mexico Gas has an obligation to the customers. “I believe, all 63 residences and businesses affected by the (New Mexico Gas Company) proposal are actually vested in the New Mexico Gas Company. We have all paid in and helped the gas (company) expand and increase its business over the past 30 to 60 years.”

Alley’s letter also asks for the Public Regulation Commission to have a meeting in San Juan County. “I ask you to have a public meeting here in the Farmington area so we your constituents can voice our concerns on the new Amended Stipulations that could take our gas away.”

San Juan County Commissioner Margaret McDaniel, who represents District

24 BASIN RESOURCES 2 residents, said she has attended previous meetings in San Juan County regarding the agreement between the three companies. “We are doing all we can to see if we can maintain service and provide business to the residents,” she said.

District 2 includes Navajo Dam, Upper Fruitland, and a portion of Bloomfield and Crouch Mesa.

Williams and Enterprise When this issue began, 474 San Juan County customers were served off of Williams and Enterprise gathering lines, according to Kail. Of that number, 384 customers were served off the Williams gathering lines and 90 customers were served off the Enterprise gathering lines.

In 2009, Williams notified New Mexico Gas that it was going to discon-

tinue supplying unprocessed gas to the company.

As a way to extend New Mexico Gas’ time to obtain an alternative fuel supply arrangement for its customers, “Williams and NMGC entered into amendments to the Williams Contracts pursuant to which Williams agreed, among other things, to continue to supply unprocessed gas to NMGC” for the affected customers through July 31, 2013, according to Public Regulation Documents.

Williams is terminating its contract with New Mexico Gas is for safety reasons, said Williams Spokesperson Donna Gray. “It is a safety concern for us because delivering natural gas in an unprocessed form is a safety hazard.

The gas that is being produced has changed over time so it now has more liquids in it. The addition of these liq-

uids poses this safety concern for us.”

Rick Rainey, media relations with Enterprise, said safety also is a concern to Enterprise. “The gas in the region has a lot of liquids that get into the gas lines and freeze and then you have problems and the situation is not safe to continue that arrangement.”

Rainey added that Enterprise’s contract with New Mexico Gas expired on April 30. However, the company chose to extend the contract for up to one more year on a month-to-month basis.

“New Mexico Gas is working with the (Public Regulation Commission) to find alternatives for their customers, and while that is being done we have agreed to continue to honor the terms of our contract on a month-to-month basis until they can find a permanent solution to serve the customers,” he explained.

The Public Regulation Commission

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BASIN RESOURCES 25 will have a public hearing regarding this issue at 9:30 a.m. on July 1 at the Commission’s office, 1120 Paseo de Peralta, in Santa Fe. If necessary, the hearings will continue on July 2 and 3. There will be no decision made at the hearing, but staff will provide a recommendation to the hearing examiner and then the commission will review the recommendation and give a final order at a later date.

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Energy execs speaking out

LNG exportation plans begin to take shape dEBRA MAYEUX Basin Resources The Rio Grande Foundation’s push to increase the nation’s economic output by $200 million through the exportation of liquefied natural gas, or LNG, is picking up steam.

Foundation President Paul Gessing presented research on the issue and

used it as a talking point in presentations throughout New Mexico. Since that time, other energy professionals are speaking out on the topic, and the Obama Administration gave its final approval for a $10 billion natural gas export facility in Quintana Island, Texas.

Another 19 applicants are awaiting government approval of their applica-

tions to export natural gas, according to reports in the Wall Street Journal.

A move to open up trade with countries such as Japan would not only increase the LNG output from this nation, it would create about 2,000 jobs, many of which would be in New Mexico, according to Gessing, who has asked the state’s congressional delegation to support this export.

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28 BASIN RESOURCES Senators Martin Heinrich and Tom Udall have expressed an interest in opening free trade with Japan. Congressman Steve Pearce also is interested in boosting the state’s exports of natural gas, according to Gessing, who called it a “great Kumbaya moment.”

Gessing will ask Governor Susana Martinez to consider supporting LNG exports. “Not so much that she can do anything about it, but she needs to make it a talking point,” Gessing said.

LNG exports fall right in line with the foundation’s mission. “Philosophically, this view flows directly from our support for free markets, but it also is a product of our desire to strengthen New Mexico’s economy by providing new markets for natural gas produced within our borders,” Gessing said.

Farmington City Councilor Jason Sandel is proposing the same type of

plan. He also would like to see the local energy producers and governments buy in to natural gas use to power electric utilities, as well as government-owned fleets.

Sandel has spoken with Congresswoman Michelle Lujan Grishom, who he said is on board. “Her goal is jobs, jobs, jobs. Pearce is energy, energy, energy. I think we’ll have strong support from the delegation,” Sandel said.

The problem is the delegation has to convince the Obama administration to move forward in approving the 19 applications for exportation facilities as well as opening up trade with foreign countries in need of our gas. There also have been roadblocks from environmentalists and lobbyists in the manufacturing industry. Gessing said both groups are trying to stop this movement, and Sandel is frustrated by this

as well.

“I’m a little concerned that you have energy plants, or coal plants, chemical plants and manufacturing plants with a desire to increase their profits rather than put Americans to work,” Sandel said.

A new study from the American Petroleum Institute shows that allowing for the exportation of liquid natural gas will generate an average of 73,100 to as many as 452,300 new jobs in the U.S. through 2035, according to a report written by Margo Thornig of the American Council for Capital Formation in Washington, D.C. Thornig also supports allowing the free market to determine how much LNG is exported and what the costs will be, instead of allowing the government to monitor the prices.

Government monitoring seems to

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BASIN RESOURCES 29 come from fees that LNG exports will increase the cost of doing business in the U.S. This is a false assumption, according to Gessing.

“Because of the supply, you’re not going to see prices go up in the U.S. They would probably stabilize,” Gessing said.

The Wall Street Journal reports that while natural gas prices have wildly fluctuated between $2 and $12 per thousand cubic feet during the past decade, the market could transform greatly with the exportation of LNG. The Journal stated that without an integrated global market the prices range from 75 cents per thousand cubic feet in Saudi Arabia to $17 per thousand cubic feet in Japan. The prices in the U.S. are between $3 and $4, while they are around $12 per thousand cubic feet in Europe. Exportation would bring these prices into uniformity,

while also creating jobs.

According to the U.S. Energy Information Administration, New Mexico produces 5.3 percent of total U.S. natural gas, thus making it likely that New Mexico would experience great economic benefits from LNG exports.

Gessing believes at least 1,000 new jobs would be created in New Mexico and San Juan County. “You could use 1,000 high-paying jobs right now,” he said.

LNG is considered to be a clean burning fuel, but environmentalists don’t like it because gaining access involves fracking. The environmentalists also do not like coal, because it is considered dirty. Sandel said the country has to decide what its energy policy will be, and if it invests in natural gas then there are numerous opportunities.

“Will we make the switch from archaic coal and dirty coal to clean-run-

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ning natural gas?” he asked, pointing out that the city of Farmington’s Public Utility Commission just entered an agreement to purchase more coal-fired electricity from PNM. “We continue to invest millions of dollars in old technology. LNG is new dollars going into new technology,” Sandel said.

Gessing agreed that LNG can be the energy of the future, which increases revenues for the nation, reduces carbon emissions over other energy sources, reduces trade deficits, and shows the government has a principled support of free trade with a desire to develop closer relations with foreign people and governments.

“If we have an existing trade agreement, we can export it,” Gessing said.

“LNG exports are a true win-win-win policy. President Obama should act now.”

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Construction underway

$2.5 million museum expansion dedicated to Basin’s energy history

dEBRA MAYEUX Basin Resources Mick Rich Contractors is hard at work expanding the Farmington Museum and adding on a new wing dedicated to the history of energy in the San Juan Basin.

The $2.5 million project includes a 7,500-square-foot exhibit hall complete with 3,000-plus square feet of humidity controlled storage space.

The facility was designed by Conron and Woods, an architectural firm that planned the expansion design some four years ago.

“We looked at the overall museum and their long-range goals,” said Roy Woods, principal with Conron and Woods. “There was a concept drawing done at that time. We took that concept drawing, worked with the staff, developed it, refined it – and that’s where we are today.”

www.basinresourcesusa.com •SUMMER 2013

SUMMER 2013 • www.basinresourcesusa.com

32 BASIN RESOURCES

“We’ve been working on this project a long, long time, both in raising funds and in working on the plans for it.”

— Bart Wilsey, museum director

the exhibit hall “is basically a big open space that the staff will come and fill in,” Woods said. it will be filled in with items that tell the story of mining, production, geology, fossil fuels, refining, the basin’s history and its future with renewable energies. there even are plans for an old-fashioned gas station. the ceilings will be up to 29 feet high and made of epicore, painted dark blue. this allows items to be hung from the ceiling. the building’s exterior will include a curved, insulated metal panel roof similar to the type used at the corvette museum, according to martin Kuziel, project architect. museum staff and board have been pleased with the design and the process, according to museum Foundation President rick sarver. “We are real pleased with what we have seen,” he said.

“We couldn’t be happier with the design, and it is what we wanted at this time,” museum director Bart Wilsey said, adding the timing is great. “We’ve been working on this project a long, long time, both in raising funds and in working on the plans for it. We’re really focusing on the energy wing at this point. it is a timely subject and we had raised so much money to move that forward. it was the natural progression of what we could do.” the Farmington museum Foundation has raised more than $1 million, with a target of $2 million for the project. it is being funded through a bond issue, and is expected to be completed by next summer.

www.basinresourcesusa.com •SUMMER 2013

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Sonny began designing and building hydroblast units from the ground up

Sonny Riley founded what at the time was Riley Corp. The Doghouse was located on Animas Street. Sonny worked out of it with no electricity, no water and did his paper work with a flashlight for one whole year until he built the building on Animas Street to replace the Doghouse.

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34 BaSIn ReSOURCeS

It may happen Despite public outcry oil and gas lease at Chaco Canyon could move forward dEBRA MAYEUX Basin Resources Oil and gas leases near Chaco Canyon could move forward in January, according to a report from the Bureau of Land Management shared with industry officials during the Independent

Petroleum Association of New Mexico meeting on June 4 at Merrion Oil and Gas. BLM district Office Manager dave Evans said he and his people have been in discussion with Rio Arriba County officials, as well as officials from the National Park Service, regarding leases

at Chaco Canyon.

“We’ve asked our stakeholder engagement what we can analyze,” Evans said, adding the land parcels will be part of a future analysis.

There was a public outcry when the BLM decided to lease some 18,000 acres near Chaco Canyon.

www.basinresourcesusa.com •SUmmeR 2013

BASIN RESOURCES 35 “We believe that the BLM should do a thorough job of what this means,” said Mike Eisenfeld, of San Juan Citizen’s Alliance.

Eisenfeld expressed support in using the park for economic development that does not include industrial uses during a recent Democratic-party sponsored event that discussed oil and gas operations in the region.

“This (Chaco region) is an incredibly vibrant area and looking at this historically, hopefully we can come up with a different scenario. The time now is to increase the dialogue and what economic diversity and sustainability means for our region.”

Sixty percent of the land in the Chaco region is under BLM control, and some 170 leases already exist. Also, there are 280 wells near the park, according to Evans, who said that the BLM plans to

carry parcels forward. “It is the only way we can be defensible” Evans said. “We believe we can this without an impact on the park."

There are four land classes within the BLM, with e Class 1 being the most restrictive because it is used to maintain wilderness areas. Class 2 has controlled surface rights. Class 3 allows for most development, e and Class 4 is the least restrictive.

Environmental groups would like to see Chaco Canyon placed under a Class 4 restriction. “It is hard to express a compelling reason – the significance of using a World Heritage Site – to me it is outrageous that it is not something they want to work harder to evaluate,” Eisenfeld said.

The park service has considered putting stronger regulations on development for areas surrounding Chaco, because there is a desire to create a “dark-sky

site,” Evans said, adding that could make the land uses more restrictive in the Chaco region.

“The park is pursuing a dark sky site,” said Gary Torres, BLM field manager.

“This is a non-federal process, but if they get it there could be some ramifications later.”

Tom Mullins, an independent oil and gas operator in the area, said the issue and the discussion about Chaco is an important one. “This is important because it affects the new leases,” Mullins said during the IPANM meeting.

Samuel Sage, who spoke at the Democratic Party event, said Chaco is “sacred” to his people and he doesn’t like development in the region. “Chaco is continually being pushed on, companies drill as closely as they can to the edge of Chaco,” he said, adding that he would contact the BLM about the proposed leases.

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36 BASIN RESOURCES

Production stoPPed! Mora County economics “not a concern” DEBRA MAYEUX Basin Resources Mora County, a small county in the northeast portion of New Mexico, caused a stir among oil and gas industry officials throughout the nation when the Mora County Commission

adopted an ordinance banning all oil and gas development in the county.

In a 2-to-1 vote of the Commission on an ordinance that was drafted by the Pennsylvania-based Community Environmental Legal Defense Fund, it declares sovereignty for all residents of Mora, and it was a move that Joe

Montes, state director for Americans for Prosperity, called “unfortunate.”

Mora County Commissioner Alfonso Griego said “he supported the measure because he feels that federal and state laws fail to adequately protect communities from the impacts of hydraulic fracturing, or fracking.” He

www.basinresourcesusa.com •SUMMER 2013

BASIN RESOURCES 37

also stated: "they just come in and do whatever is necessary for them to make profits. there is technology for them to do it right, but it’s going to cost them more money. they’re not willing to do that yet. so we don't want any oil and gas extraction in the county of Mora. it's beautiful here.” the oil and gas industry in new Mexico has created some 33,000 jobs and contributes a combined $5.73 billion to the state’s economy. “in Mora, economics is not a concern,” said dave evans, district office manager for the BlM of farmington. evans and other BlM officials met with county commissioners in rio arriba and Mora County regarding federally issued oil and gas leases and the potential for development. in Mora, shell oil is the largest leaseholder, with 125,000 acres. interestingly, the unemployment rate in Mora County is 15 percent, which is double the national rate.

Montes said the ordinance is backward, but Karin foster with the independent Petroleum association of new Mexico said it is being touted as a “model ordinance that needs to get

“The folks in Mora County send their kids to schools that are funded largely by oil and gas, heat their homes and watch TV by the power of gas and/or some other nasty fossil fuel, drive on roads that have a petroleum base, and generally benefit from the fact that society around them embraces fossil fuels and oil and gas exploitation.”

— Paul GessinG, rio Grande foundation

picked up across the country.”

Her goal is to defeat the ordinance, which she said is “completely unconstitutional.” she plans to work with shell and landowners to file a lawsuit – something new Mexico land Commissioner ray Powell has not done, foster said. “shell has leased state trust lands in Mora County. those state trust lands are not valueless. the beneficiaries of that trust are the state’s school children,” foster said. “i hope, in the next couple of weeks, to come forward with a plaintiff and say we are going to file a lawsuit.” now that commissioners in Mora County have approved the only county-wide ordinance in the nation specifically prohibiting all oil and gas drilling, prepare for lawyers on both

sides to do battle.

Wally drangmeister, spokesman for the new Mexico oil and Gas association, told new Mexico Watchdog his organization “can’t comment on filing a lawsuit” but that “many people in the industry and people who have leased land (in Mora County) are looking very closely at that.”

Paul Gessing of the albuquerquebased free-market think tank the rio Grande foundation, took to the internet and called the commissioners who voted for ordinance “Mora-ons.” “the folks in Mora County send their kids to schools that are funded largely by oil and gas, heat their homes and watch tV by the power of gas and/or some other nasty fossil fuel, drive on roads that have a petroleum base, and generally benefit from the fact that society around them embraces fossil fuels and oil and gas exploitation,” Gessing wrote.

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Safety network

NMOGA, OSHA work to reduce heat-related illnesses DEBRA MAYEUX Basin Resources

Four Corners Safety Network has joined with the New Mexico Oil and Gas Association, and the Southeast New Mexico Service, Transmission, Exploration and Production Safety Network, in partnership with the New Mexico Occupational Health and Safety Bureau, to reduce the number of heat-related illnesses at worksites.

“Heat illness can be a matter of life and death,” said Wally Drangmeister, communication director for NMOGA. “People throughout the country die from heat stroke every summer and every death is preventable.”

The goal of the Heat Illness Prevention Initiative will be to provide training on how to prevent heat-related illnesses and deaths within the state and to raise awareness to employers and employees about the hazards of working outdoors in hot weather.

“Remember three simple words when working outdoors: Water, Rest and Shade. Drinking water often, taking breaks, and limiting time in the heat can help prevent heat illness,” said Harry Buysse, N.M. OSHA consultation program manager. “Our goal is for every worker and every New Mexican to make it through the heat of the summer safely.”

NM OSHA has put together a training manual that is available on its website: osha.gov/SLTC/heatillness/osha_heattraining_guide_0411.pdf Buysse also reminds New Mexico businesses that this information is not limited to the oil and gas industry. “The same information that companies can use to train their employees is also great advice for all New Mexicans as the weather starts to heat up.”

40 BASIN RESOURCES

Governor Susana Martinez

New appoiNtmeNt F. David Martin new energy, minerals and natural resources secretary DEBRA MAYEUX Basin Resources

New Mexico Energy, Minerals and Natural Resources Secretary John Bemis retired April 16, and Governor Susana Martinez appointed New Mexico Environment Secretary F. David

Martin to fill the position.

“Secretary Martin has provided tremendous steady leadership at the New Mexico Environment Department since he was appointed at the beginning of my administration in 2011,” Martinez said. “We have worked closely together to preserve New Mexico’s

natural treasures in a balanced and responsible way, and his engineering background and knowledge of working with the federal government will continue to serve him – and the State of New Mexico – well as the new cabinet secretary of the Energy, Minerals and Natural Resources Department.”

www.basinresourcesusa.com •SUMMER 2013

BASIN RESOURCES 41 Martin’s career includes extensive energy experience. He worked as an engineer and as a policy coordinator between the state and the U.S. Department of Energy. Martin also served as an adjunct associate professor at the New Mexico Institute of Mining and Technology.

“While it is difficult to leave a great staff behind at the New Mexico Environment Department, I’m looking forward to working with all of the divisions within the Energy, Minerals and Natural Resources Department,” Secretary Martin said. “I congratulate Secretary Bemis on his retirement and thank him for his leadership at the Energy, Minerals and Natural Resources Department. I especially thank Governor Martinez for giving me this exciting opportunity.”

Bemis has served for the government during the past 10 years. Prior to that he served in the military and worked as a private and corporate lawyer. He said it was time for him to retire, and he believes Martin to be a “stellar” choice to take over the department.

Governor Martinez said Bemis also has done an “outstanding” job. “I congratulate him on wrapping up an outstanding career in public service and in the private sector. He has helped to transform the department into a more responsive

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professional operation, and I have appreciated his oversight of State Forestry during two of the worst wildfire seasons in New Mexico history,” she said.

Governor Martinez announced that she has appointed New Mexico Environment Department General Counsel Ryan Flynn to the position of Environment Cabinet Secretary.

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The additional space in the new facility will allow us to grow in a variety of ways. Not only will we have the capacity to serve more degree and certificate seeking students, we will have the ability to partner with other colleges and universities to further develop their programs with the potential of offering advanced degrees.

The energy industry in Farmington is a diamond in the rough, and the School of Energy is fortunate to be one of the gemstones in our treasure chest that we have enjoyed for such a long time. The energy industry has helped keep the United States out of recession, and I can’t imagine what our country would do without it.

San Juan College will be in a position to take advantage of shale drilling. We have the infrastructure, the knowledge, and the training center to make it happen. We also have the support of the community, the students and the leaders in the industry – and for that, we are most thankful. www.basinresourcesusa.com •SUMMER 2013

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Railway would aid oil and gas industRy Navajo Nation plan great opportunity for economic growth DEBRA MAYEUX Basin Resources Area officials agree that the time has come for the San Juan Basin once again to have rail service.

The Navajo Nation is moving forward with plans to develop an industrial park and railway depot in Thoreau. This could mean rail is on its way to San Juan County.

Rail is a less costly mode of transportation when it comes to hauling large loads of items such as coal and oil and gas, and having the ability to export those products could be a key factor in new economic development in the region, according to Ray Hagerman, executive director of Four Corners Economic Development, or 4ECD. The Nation, as well as economic development and government leaders from San Juan County, has met with representatives from Burlington North-

ern Santa Fe Railway Company about building a railway between Farmington and Thoreau. This announcement from the Navajo Nation could mean there is movement toward the project’s development.

“We need to put the Navajo Nation in

a direction of job creation and economic development,” President Ben Shelly said during a June 6 morning meeting with the Burlington Northern Santa Fe Railway Company. He added that the industrial park would be 300 acres and bring in jobs.

BASIN RESOURCES 45 Four Corners Economic Development has similar plans for San Juan County, if a railway were to be developed in the area.

“It would be a benefit to be able to get goods out of here more cheaply,” Hagerman said. The other issue is that if potential businesses know the rail is coming, they will more likely be willing to commit to the region.

“If you know it is coming, you can plan for different things,” Hagerman said. “Just knowing it would be coming would be significant economically.”

LaTonya Finch, regional manager of economic development for Burlington Northern Santa Fe, or BNSF, agrees.

“We need more jobs and more wealth, and we have an opportunity to do that right now,” she said, while meeting with tribal leaders.

The plan would be to develop a railroad in the McKinley and San Juan

county regions, according to Finch, who said BNSF has four areas in which their railway company plans to invest to match forecast growth. The areas included Gallup, Belen, Las Cruces and Clovis. The Gallup area also includes the Thoreau industrial park, with as many as 22 different companies awaiting expansion between Gallup and Thoreau.

“We’ve got tremendous opportunity here,” Finch said.

Indian Affairs Sec. Arthur Allison said that Gov. Susana Martinez supports the Thoreau industrial park and building a railroad from the Four Corners area to Thoreau, because the railway would open the door to exporting products such oil, gas, coal and produce from Navajo Agriculture Products Industries to an international market, Allison said.

The tribal involvement would include the sale of Navajo coal, most likely

mined from Navajo Mine, which the Nation is working to purchase from BHP Billiton.

“Navajo Coal would be sold on the international market,” Allison said.

There also would be an opportunity for the tribe to share its culture on a larger scale, according to Navajo Vice President Rex Lee Jim. The rail port in Thoreau can bridge the principles of Navajo culture and economic development. “I believe we can have economic development while maintaining the integrity of our culture,” Jim said.

Dr. Jim Henderson, a former San Juan County Commissioner and partner with 4ECD, while not commenting on the tribe’s meeting, did say the time has come for this area to have rail. “Hopefully everything will work and it will come together. It would be tremendous for this community,” Henderson said.

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46 BASIN RESOURCES

A vote for permanent poverty Late last month, the elected officials of a small, rural New Mexico county became the first in the nation to vote for permanent poverty. Mora County’s unemployment is double that of most of the country and nearly 500 percent greater than that of some other parts of the state where oil and gas development is taking place, and 23.8 percent of Mora County’s residents live in poverty. With that in mind, you’d think that the Mora County Commissioners would welcome the jobs that are boosting the economy in the southeastern part of the state. Instead, they voted, 21 — in a session that may violate the Open Meetings Act, as the notice did not contain the date, time, and place of the meeting — to pass an ordinance that permanently bans oil and gas drilling.

Defending his vote, Chairman John Olivas, an employee of the New Mexico Wilderness Alliance with no political experience, explained: “We need to create other jobs. First, sustainable agriculture; second, business development; and third, eco-tourism to keep people on the land.”

Frank Trambley, the Mora County GOP chairman, disagrees: “In our economic climate, we simply cannot afford to needlessly throw the possibility for jobs down the drain.”

Currently, Mora County has no oil and gas activity — and now it looks like it never will (though the outcome of potential lawsuits could change that).

But there is reason to believe that the potential for development and jobs is

there. Shell Oil has 100,000 acres leased for development — not to mention private interest — in Mora County, and there are more than 120 leases on state lands within the county.

In adjacent Colfax County, there are 950 natural gas wells. The Commissioners there don’t seem too troubled by the activity. The Colfax Country Commissioners are looking at drafting an ordinance that would “allow oil and gas drilling to continue while setting standards and regulations to give county officials control over aspects of the industry’s work that affect landowners and other citizens.”

But this story is bigger than the sparsely populated — less than 5,000 and declining — northeastern New Mexico County. Following the passage of their “ban” ordinance, the two “yes” vote commissioners sent a letter to all the county commissioners in the state: “We’re sending you this letter to urge you to consider adopting a similar law.

In Mora, we decided that ‘fracking,’ along with other forms of oil and gas drilling, are not compatible with Mora farming, forestry, and our quality of life.” Apparently unemployment and poverty are “compatible” with the Mora “quality of life.”

How did Mora come to believe that it might become the little county that could “force” change aimed at “restoring democratic control of our

communities”? They had the help of an out-of-state environmental group: the Community Environmental Legal Defense Fund, or CELDF — which helped draft Mora’s “Community Water Rights and Local Self-Government Ordinance.” Thomas Linzey, executive director of CELDF explained: “This is the fight that people have been too chicken to pick over the last 10 years.”

The CELDF press release on the ban states: “Mora is joining a growing people’s movement for community and nature’s rights” and brags about CELDF’s involvement in other communities across the country.

The Mora Commissioners’ letter — on County letterhead — encourages all other New Mexico Commissioners to join them and invites participation in a gathering “hosted by a new group, the New Mexico Coalition for Community Rights (NMCCR) which was formed this past year to begin to change how our system here in New Mexico functions.” Kathleen Dudley, a “community organizer” and CELDF staffer, is the “contact person for that event.”

Wayne Johnson, a Bernalillo County Commissioner, alerted me to the Mora letter that may be in violation of state’s

Marita k. noon ExEcutivE DirEctor EnErgy MakEs aMErica grEat inc. www.basinresourcesusa.com •SUMMER 2013

BASIN RESOURCES 47 code of conduct — to which every elected official is subject. Johnson told me: “I believe I would at least be violating the spirit of the law if I sent out a letter on Bernalillo County letterhead that directly promotes the political activities of a specific group. Imagine the uproar that would be caused if I sent out — at taxpayers’ expense — a letter promoting an NRA conference or a Right to Life meeting. The First Amendment guarantees the right to express their political opinion. However using government resources to do so is inappropriate.”

The letter also includes this: “You may be unaffected by fracking and oil and gas drilling in your county.”

Wrong. There is no county in New Mexico that is “unaffected.”

In response to the letter, Greg Nibert, Chairman of the Chaves County

Commission, shot back: “The oil and gas producing counties bear more than 40 percent of the entire state budget.

We send money to Santa Fe that pays for educating the children of New Mexico. It is difficult to swallow that a county who may be blessed with such rich resources would enact such an ordinance.”

Along with the other counties in the region, the Chaves County Commissioners plan to send a “strong letter in opposition to the Mora County Commission letter.” In a recent radio interview Mora’s Olivas said that he had no problem accepting state revenue from energy development in other counties, but is unwilling to allow any production and contribution from his own.

If the other counties followed Mora’s lead and banned fracking and/or oil and gas development, the

state would lose 33,000 jobs — that’s 33,000 people who would be unable to put food on their families’ tables, pay their bills without worry, and even save for retirement. The states’ budget would be short a combined $5.73 billion dollars of investment. The majority of New Mexico’s 50,000+ wells have used hydraulic fracturing for decades.

Nibert hopes some brave citizens of Mora County will step forward and bring a lawsuit against Mora County and at least its two commissioners who enacted the ordinance, as it takes the real property of its citizens without compensation, which is guaranteed by the U.S. Constitution and the Constitution of New Mexico. To date, no one has come forward. “I know some lawyers who would love to take the case!”

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48 BASIN RESOURCES Nibert may get his wish. Several groups are looking at a legal challenge.

The one dissenting vote was from Commissioner Paula Garcia, who believes the ordinance goes too far. Federal and state law typically overrides local county legislation, but with regard to oil and gas extraction, the Mora ordinance puts the county above the state and the U.S. government.

Garcia says: “It is trying to reclaim local decision making that isn't recognized in the law currently, and, in essence, it is challenging existing laws.” She “worries the ordinance won't hold up in court and that Mora County can’t afford a pricey lawsuit.”

The state says its Oil Conservation Division can still issue permits to drill in Mora County, but permit holders will now likely have to go to court to fight the county ordinance. Likewise, officials at the Bureau of Land Management say that they are not bound by local ordinances. Yet, the little county’s ordinance has the gall to demand an amendment to the state Constitution “to explicitly secure a community right to local self-government that cannot be preempted by the State” — even threatening secession.

Olivas believes Mora County is prepared: “What we’re doing to prepare ourselves is signing with a legal firm

to represent us. At the next County Commissioner meeting, we will sign a retainer with the firm.” It is reported that CELDF is the firm — charging $1 for representation, and that Mora County is working to establish a fund to help pay for the living and travel expenses involved in representation.

Trambley told me: “The County is split on the drilling issue, but people are afraid to speak out against the ban — afraid that if they do, they’ll lose their job. It’s maddening to see sweeping bans being made without accurate information about the economic and environmental effects of drilling.”

A recent poll from the Western Energy Alliance supports Trambley’s position. Responses showed that “prior to any presentation of the facts, almost a majority (49 percent) of voters support” the use of fracking. However, “if and when the public understands what industry is doing to protect their safety and the environment, their support for hydraulic fracturing increases up to 71 percent.”

I firmly believe that government closest to the people is the best. I’ve rallied with hundreds of people from other New Mexico counties who are fighting federal overreach that denies them their economic freedoms. But, when an out-of-state entity is driving an issue by spreading fear, uncertainty,

and doubt, and when the Commission has to hide the time and location of the meeting to get the vote through — that is not the true voice of the locals.

Commissioner Olivas defends his actions by claiming that his vote followed through on a campaign promise.

Sources tell me that his campaign was heavily funded by a single source that doesn’t primarily live in the county and whose money comes from the Progressive Insurance fortune.

While this is a New Mexico story, beware. CELDF has its sights set on a national movement. Emboldened by its success in Mora County, they may be coming to a community near you. You may find that your local leadership voted for permanent poverty.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy, or CARE. Together they work to educate the public and influence policy makers regarding energy, its role in freedom and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.

www.basinresourcesusa.com •SUMMER 2013

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Farmington Fire Equipment ......................................25 6007 E. Main Farmington, NM 505-327-1933 www.f-fire.com

Antelope Sales & Service Inc. .....................................9 5637 US Hwy 64 Farmington, NM 505-327-0918 www.NMASSI.com

Four Corners Community Bank ..................................47 505-327-3222 New Mexico 970-565-2779 Colorado www.TheBankForMe.com

Armstrong Coury Insurance ......................................23 424 E. Main Farmington, NM 505-327-5077 www.armstrongcouryinsurance.com Bailey’s Welding.......................................................24 6175 Hwy 64 Bloomfield, NM 505-632-3739 Bank of the Southwest .............................................31 320 W. Main Farmington, NM 505-325-1917 6570 E. Main Farmington, NM 505-326-6204 2 CR 6500 Kirtland, NM 505-598-5823 920 N. First Bloomfield, NM 505-632-0450 Basin Well Logging...................................................17 2345 E. Main Farmington, NM 505-327-5244 Big Red Tool, Inc. .....................................................42 2010 San Juan Blvd.

Farmington, NM 505-325-5045 Cascade Bottled Water & Coffee Service ............20 & 47 214 S. Fairview Farmington, NM 505-325-1859 • 800-416-1859 City of Farmington ...................................................43 1300 W. Navajo St. Farmington, NM 505-599-1395 www.IflyFarmington.com ConocoPhillips ...........................................................3 www.conocophillips.com Edward Jones - Marcia Phillips ..................................11 4801 N. Butler, Suite 7101 Farmington, NM 87401 505-326-7200 www.edwardjones.com Elite Promotional & Embroidery................................32 1013 Schofield Farmington, NM 505-326-1710 www.elitepromonm.com

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Reliance Medical Group ............................................35 3751 N. Butler Ave. Farmington, NM 505-324-1255 Occupation Medicine 505-324-1255 Urgent Care 1409 Aztec Blvd.

Aztec, NM 505-334-1772 www.reliancemedicalgroup.com Riley Industrial.........................................................33 505-327-4947 San Juan College School of Energy ...........................17 800 S. Hutton Farmington, NM 505-327-5705 www.sanjuancollege.edu San Juan Plastic Surgery...........................................45 2300 E. 30th St., Building B #103 Farmington, NM 505-327-1754 San Juan United Way.................................................25 505-326-1195 www.sjunitedway.org Southwest Concrete Supply.......................................14 2420 E. Main Farmington, NM 505-325-2333 www.southwestconcretesupply.com Spare Rib.................................................................21 1700 E. Main Farmington, NM 505-325-4800 www.spareribbbq.com Spotless Solutions ...................................................27 505-326-4755 www.spotlesssolutions.com Sundance Dental Care...............................................52 505-407-087 www.sundancesmiles.com Treadworks................................................................5 4227 E. Main St. Farmington, NM 505-327-0286 4215 Hwy. 64 Kirtland, NM 505-598-1055 www.treadworks.com Uncle Bob’s Auto & Truck .........................................32 3995 Cliffside Dr. Farmington, NM 505-436-2994 Yokogawa Corporation..............................................51 1-800-447-9656 www.yokogawa.com/us Ziems Ford Corners..................................................37 5700 East Main Farmington, NM 505-325-8826

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