Annual Report 3 - New Mexico - Energy, Minerals and Natural ...

The division implemented Agreed Compliance Orders which involves working with well operators to negotiate a
plan to bring their violations into compliance, drafting enforceable documents to memorialize the agreements and
enforcement of the agreements in the case of failure. OCD’s enforcement staff also works with well operators to
ensure compliance through inspections, meetings and hearings.
The enforcement team identified ten common compliance issues and published a list of basic requirements for well
operators in New Mexico. These requirements are reviewed with each new well operator as they register to operate
wells. Acknowledgment of the ten basic requirements is also part of the process of transferring wells between
operators.
INACTIVE WELL MANAGEMENT: OCD created a web application that shows each
operator’s inactive wells and allows the operator to project future inactive wells. If an operator has a certain number
of inactive wells, based on the total number of wells that the operator operates, some activities may or must be
denied. A well can be removed from the inactive well list by producing or injecting, by being plugged, properly
temporarily abandoned, or placed on an Agreed Compliance Order which provides a schedule for reduction of the
number of inactive wells.
FINANCIAL ASSURANCE: The enforcement rules adopted in 2005 formalized the need for
additional financial assurance for wells that meet certain criteria for inactivity. These inactive well financial assurances
and the blanket plugging bonds are forfeited by the well operator if the well must be plugged by the state due to the
operator no longer being financially viable. The amount of the financial assurance is based on the depth and location
of the well. Operators can use the Internet to see when additional financial assurance might be or already is required
for each well. OCD currently manages over $31 million in inactive well financial assurances.
ANNUAL REPORT 2010
Photo by:Darold Gray
Drilling activity on
a salt lake near the
potash mines east of
Loving, New Mexico.
“Offshore drilling” in
New Mexico!
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