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Drilling close to homes raises ruckus

SANTA FE, N.M. -- From the pueblo revolt of 1680 to the Civil War, this 400-year-old city has seen its share of battles. But a Texas energy company's proposal to drill for oil and gas just south of town has residents bracing for their biggest fight in decades.

Yesterday, Santa Fe County officials imposed a three-month moratorium on drilling, after residents in the Galisteo Basin just south of Santa Fe launched one of the biggest opposition campaigns the state has ever seen.

Steve Sugarman is one of the leaders of that movement. In his front yard, about 400 feet from the house, stands a rusty metal pole marking the spot where an energy company tried drilling for oil two decades ago.

That attempt to find "black gold" ended in failure. Now, buoyed by new drilling technologies and rising energy prices, a Texas-based energy company wants to reopen the well on Sugarman's property, along with another down the road, and drill six more new wells in the basin. By using hydraulic fracturing -- a drilling technique that forces open pathways in the rock with a mixture of water, sand and sometimes chemicals -- Houston-based Tecton Energy hopes to tap into the basin's estimated 50 million to 100 million barrels of oil.

Sugarman, who recently moved to the area, is adamantly opposed to the company's plan to drill, as are many people in the community.

"It doesn't make sense to drill here," he said, looking out over the yard in the golden light of a late autumn afternoon. "This is an area that has been developed for residential use, and oil and gas is an incompatible use."

Most of his neighbors agree. At a pair of recent public meetings organized by Tecton Energy, scores of area landowners lined up at the microphone, each making it clear that the company's plan to drill eight exploratory wells in the Galisteo Basin will be a tough sell.

"We do not want you here," said Amber Haskell, a real estate broker who lives in the basin, at a Nov. 1 meeting held in Santa Fe.

"Go back to ... Texas!" shouted a heckler from among an overflow crowd.

Bill Dirks, who represented the company at the meetings, said the exploratory drilling would be conducted using low-impact techniques and recycled water. The company will dig monitoring wells to ensure that drinking water wells are not harmed.

"The groundwater is absolutely not going to be contaminated," he told the crowd at the Nov. 1 meeting.

Tecton also plans to collect drilling waste in a "closed-loop" system using above-ground tanks instead of open pits. The state of New Mexico is finalizing new rules that encourage the use of closed-loop systems (Land Letter, Oct. 25).

Of about 800 documented cases of groundwater contamination from oil and gas operations, about half were due to leaking pits, said Mark Fesmire, head of the New Mexico Oil Conservation Division. He said he is unsure if there has ever been a case of groundwater contamination in New Mexico from hydraulic fracturing.

Tecton has not yet secured a water supply for the drilling operation, but the water would likely come from a source outside the basin, where water is scarce, Dirks said.

Those assurances did little to assuage residents' fears at the two meetings and another organized by local and state officials, held Nov. 15. In New Mexico, like much of the West, landowners often do not own the mineral rights beneath their land, and the mineral owners have a legal right to access those minerals. In the Galisteo Basin, Tecton has leased about 65,000 acres of mineral rights. About 6 percent of the leases are for state-owned mineral rights beneath private lands; the rest are privately owned mineral rights, often split from the surface rights.

Tecton began tapping oil from an existing well, called Black Ferril #1, last March. The company will need new permits to proceed with its plans to drill six new wells and reopen two plugged wells, including the one on Sugarman's property.

Tecton had planned to apply for the permits by the end of the month but has not yet done so. Drilling opponents suspect the delay is due to a host of ongoing regulatory revisions that the company hopes will weaken requirements for oil and gas drilling. Residents are pushing regulators to keep current rules or strengthen them.

Santa Fe County has a mining ordinance, but it applies primarily to hardrock mining, and county officials want to establish rules that specifically govern oil and gas drilling. That process is under way. If the new rule is similar to the existing mining ordinance, it could require half-mile setbacks from homes, among other requirements.

At the state level, the Oil Conservation Division is putting the finishing touches on new rules governing how waste from oil and gas operations is handled (Land Letter, Oct. 25).

The company also must abide by the state's new Surface Owners Protection Act, which requires companies to notify landowners of plans to drill and to attempt to negotiate surface use agreements. If no agreement is reached, the company must post a bond. The law also requires companies to reclaim areas disturbed by drilling and compensate the landowner for any losses.

On Monday, state Rep. Peter Wirth (D) asked resource officials to impose a six-month moratorium on oil and gas drilling in the Galisteo Basin. In a letter to Fesmire and Joanna Prukop, secretary of the Energy, Minerals and Natural Resources agency, Wirth wrote that the moratorium would give the state time to "determine whether oil and gas drilling in this area can be prevented all together ... or if any special stipulations are needed on approved permit applications."

Company undeterred

Tecton Energy the next day released a statement opposing the county's moratorium and any state moratorium, which the company says would violate state law and would "ignore our legal right to pursue oil and gas operations in the area."

The company said it does not plan to give up on its plans to develop the basin. "None of these recent actions will deter Tecton from moving forward on our proposed Galisteo Basin project," the statement continued. "We continue to believe that it is wasteful not to develop much-needed domestic energy resources. Our plans and methods of extraction will ensure the highest levels of public and environmental protection and help lead the way in improving best practices for our entire industry."

In a phone interview, Dirks was more direct: "At the moment, the only thing I could see that would cause us not to proceed is if we find dry holes," he said.

If Tecton's exploratory wells hit pay dirt, other companies are likely to follow, Dirks said.

"If there really is 50 million barrels of oil here, like we think there is, there will be thousands of wells here," he told the overflow crowd at the Nov. 1 meeting in Santa Fe, triggering a chorus of boos. "Others will come."

And while some environmental groups and residents question whether the company will find as much oil and gas as it believes it will, Dirks is confident the basin will deliver.

"If my company didn't think the oil was there, do you think I would stand up and take this pounding?" he asked the crowd at the Nov. 1 meeting.

If Tecton receives the necessary permits, its drilling operation will use the most environmentally sensitive methods available, he said.

"We want people to know that we're planning fracturing processes that don't use toxic substances and that our designs minimize the use of freshwater," Dirks said.

The Galisteo Basin is part of a stretch of the Rio Grande Rift between Santa Fe and Socorro, N.M., that may contain one of the largest hydrocarbon resources in New Mexico -- between 50 million and 100 million barrels of light sweet crude oil and between 5 trillion and 10 trillion cubic feet of natural gas, according to Tecton Energy.

Drilling on the doorstep

Tecton's attempted foray into Santa Fe is the latest of a spate of drilling proposals near towns and cities. In recent years, companies have sought to tap oil and gas reserves near Choteau, Mont., in the Rocky Mountain Front; around Palmer, Alaska, north of Anchorage; and near the city of Rifle, Colo., on the Roan Plateau. In Texas, home to some of the world's biggest oil companies, a drilling operation is tapping natural gas beneath downtown Fort Worth.

"It used to be that oil and gas development was 'out there,' where nobody complained about it, or could see it or smell it or get sick from it," said Gwen Lachelt, director of the Oil and Gas Accountability Project. "Not anymore."

Dirks of Tecton Energy said the industry is increasingly seeking out resources near urban areas. "It's happening a lot these days," he said. "As subdivisions of cities and communities have been growing farther out into the country, and oil and gas operations going in the other direction, there's been a lot of convergence."

As well-established reserves like the San Juan Basin, on the New Mexico-Colorado border, are tapped out, energy companies increasingly are searching out new areas with development potential. Advances in hydraulic fracturing techniques, directional drilling and other technologies allow energy companies to tap oil and gas deposits that previously were thought to be unrecoverable.

That means that urban communities like Santa Fe, far from oil and gas hot spots like the San Juan Basin, are now finding themselves clashing with energy companies.

"People's lives and homes have been subordinated to allow companies to squeeze every last drop out of the ground," Sugarman said.

The meeting of energy development and residential development at the "urban-energy interface" is resulting in greater controversy over drilling proposals and a need for stricter protections to safeguard scarce water supplies and flora and fauna, Lachelt said.

"It puts a burden on landowners who don't own their mineral rights, but it also puts pressure on the agencies and the companies to require much better practices to deal with competing land uses now," Lachelt said, adding that many states have not updated their oil and gas regulations for decades.

Those pressures are likely to increase as oil and gas development in the West expands. A report released in September by the Wilderness Society found that more than 126,000 new oil and gas wells have been approved or are under review for federal lands in Colorado, Montana, New Mexico, Utah and Wyoming -- up from about 77,000 currently (Land Letter, Sept. 20).

As the fracas in Santa Fe over Tecton's proposal indicates, companies face a difficult challenge in overcoming public opposition to drilling near communities. Some proposals, such as the plan to drill in Montana's Rocky Mountain Front, have been waylaid amid protests by local residents. Others, such as the proposal to drill on Colorado's Roan Plateau, have been modified to become more palatable to nearby communities.

In Santa Fe, state and local regulators have promised residents that they will make sure Tecton's development will minimize impacts on the Galisteo Basin.

OCD's Fesmire said he believes the county has the authority to impose a host of requirements on oil and gas drilling within its borders.

"I think there's some room to put some conditions on drilling in Santa Fe County," Fesmire said at the Nov. 15 meeting. "That being said, you can't take away what they have a right to under state law."

Sugarman is convinced that in the end, local opposition and stringent regulations will render Tecton's drilling plans too costly -- both economically and politically -- to pursue.

"There's a notion that oil and gas should have special rights that no one else has," he said. "It's time to change that."

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