New Mexico oilfield regulators announced Friday that they may revisit a decision to ease restrictions on natural gas well locations for a Texas-based company operating in the northwest corner of the state.
The announcement came as state oversight of wells shifts to the Democratic administration of Gov. Michelle Lujan Grisham.
The state's Oil Conservation Commission scheduled a public meeting next week regarding the approved application from Hilcorp Energy to increase potential well density in the San Juan Basin area from four wells to eight per 320-acre tract, or about half a square mile (1.2 square kilometers).
Environmentalists estimate the density decision could concentrate patterns of oil well development across hundreds of square miles (square kilometers) of territory.
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In a statement Friday, Hilcorp said it would defend the state's ruling last year on well densities and highlighted the related opportunity for new jobs and investments in an economically depressed region of the state.
"Hilcorp prevailed in this matter by presenting a scientifically sound case in accordance with all laws and regulations," it said.
Hilcorp has said longstanding density limits have prevented the company from tapping more of a formation called the Blanco-Mesaverde gas pool.
The approval of the company's application to increase well densities late last year prompted an outcry from conservationists and a rebuke from the state's independently elected land commissioner who left office Dec. 31.
Upon taking office this week, Democratic Land Commissioner Stephanie Garcia Richard urged the state to take up her agency's request for an appeal that was rejected by oilfield regulators as termed-out Republican Gov. Susana Martinez left office on Dec. 31.
"It is imperative that we make a decision in the region that ensures long-term sustainability and production that is fair to every producer in the state," Garcia Richard said in a statement Friday.
The State Land Office oversees 14,000 square miles (36,000 square kilometers) of land and additional underground resources that are used to help fund schools, universities, hospitals and other public institutions.
The membership of the Oil Conservation Commission is determined by the governor, a Cabinet secretary and the state land commissioner.
The San Juan Citizens Alliance, an environmental advocacy group, also has sought a rehearing of the well-density decision, arguing that it was unfairly shut out of application proceedings where it hoped to provide testimony about public-health and environmental impacts.
Erik Schlenker-Goodrich, an attorney for the Alliance, called the meeting next week a positive development.
"There's an opportunity to rebuild the credibility of the Oil Conservation Commission and to ensure that the public has a voice in oil and gas regulation," he said.