To the consternation of some environmental activists, the New Mexico Oil and Gas Association at the end of September took two steps aimed at revising a regulation established in 2008 for the handling of waste produced at drilling and production sites. The association alleges that the "pit rule" drives up costs and chases drilling rigs to other states.

Environmentalists counter that oil and gas producers are trying to gut needed protections against groundwater contamination. Association officials contend that by modifying the rules when and if it can be done safely, more wells will be drilled, which means more positive economic stimulus.

The oil and gas association asked the state Oil Conservation Division to modify rules that regulate the handling of fluids in buried tanks, sumps, pits and closed-loop systems. The producer group filed a motion in state district court to stay action on a suit filed by the New Mexico Environmental Law Center.

Not expecting the court to act, the producers' group now plans to work through the state administrative process where this latest request is one of three pending rulings before the Conservation Division in the Energy, Minerals and Natural Resources Department, an association spokesperson told NGI Thursday. The state unit is expected to deal with the other issues involving horizontal drilling and hydraulic fracturing first and the pit rule after that issue is resolved.

"It probably won't be heard until late this year or in January," the spokesperson said.

An attorney for the environmental law unit told reporters the producers' dual action was unusual, trying to revise the state rules at the same time it was attempting to stop the court action. Eric Jantz, the lead attorney, characterizes New Mexico's pit rule as the toughest of its kind in the nation. Former Gov. Bill Richardson modified the rule two years ago to lessen its financial impacts on the industry, and current Gov. Susana Martinez has identified it as needing to be dropped or changed.

The producers said the changes they are seeking in what is considered a highly technical rule were developed with input by a wide range of oil and gas companies in the state, using a set of criteria that included making the changes based on "sound science," maintaining environmental safeguards, encouraging only environmentally sound energy development, and resulting in increased jobs and tax revenues. They want the option of when groundwater is far enough removed to have on-site burial of drilling cuttings and the use of lined pits at the sites. Now, for an intends, closed-loop drilling for everything.

Critics contend the proposed changes by the association would eliminate almost all references in the state rules to closed-loop systems, which the oil/gas industry claims are expensive; the environmental groups counter that there is no hard data to back up that contention. There is also concern about changes in how low-chloride waste is handled and a provision allowing operators to make "reasonable estimates" about groundwater wells when specific information is lacking.

"There would still be cases where closed-loop systems would be required; we're not advocating eliminating them, but only when they are necessary for environmental protection," said the spokesperson, noting in the southeast part of the state the groundwater is located long distances away from the drilling.

"The oil and gas industry worked extremely hard on this rule over several months," said Steve Henke, president of the state oil and gas organization. "The team knows how important changing the rule is to help New Mexico secure project funding that has been going to other states."

With the proposed changes, producers' association Chairman Jason Sandel said the state's oil and gas industry will be "drilling more wells, adding more employees and paying more taxes."

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