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SPONSOR: |
Whitaker |
DATE TYPED: |
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HB |
147 |
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SHORT TITLE: |
Conservation of Helium and Other
Non-Hydrocarbon Gases |
SB |
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ANALYST: |
Maloy |
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REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
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See
Narrative |
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Energy,
Minerals and Natural Resources Department
State
Land Office
SUMMARY
Synopsis
of Bill
HB147 requires the Oil
Conservation Division adopt and administer rules for the conservation of helium
and other non-hydrocarbon gases. HB147
grants the Division the authority to regulate exploration for and production of
helium and other non-hydrocarbon gases in the same manner the Division
currently regulates oil, hydrocarbon natural gases and carbon dioxide.
Significant
Issues
1.
Helium is a naturally occurring gas found
in subterranean geologic structures in
2.
Helium is extremely valuable, selling for
approximately $75/thousand cubic feet, compared to approximately $3 to $5/mcf
for natural gas. This means the
potential value of
3.
“Natural gas” is not defined in the New
Mexico Oil and Gas Act [NMSA 70-2-1 through 70-2-38], but the term has been
historically applied to hydrocarbon gases.
Therefore, arguably, exploration for and production of non-hydrocarbon
gases such as helium are not regulated by way of the current law.
4.
Environmental factors supporting
regulation of non-hydrocarbon gases and helium include:
a. Protection of
fresh water through the required use of protective technology that will prevent
salt water and other hazardous substances from entering helium wellbores and
migrating to fresh water aquifers, or from escaping to the surface;
b. Preventing waste
of surface area and resources through limitations on the number of wells that
may be drilled, as well as the spacing between the wells, thus avoiding
unnecessary, excessive drilling (and promoting agricultural needs and New Mexico’s
scenic beauty);
c. The development of
environmental consistency among State, Federal and Tribal interests;
FISCAL IMPLICATIONS
1. The
potential value of
2. Currently, the Oil Conservation Division has a production reporting process and the ability to monitor levels of production for oil and gas wells for the purposes of collecting “production taxes”. A similar process for reporting and monitoring may be easily implemented for helium wells. This means that helium production presents the opportunity for significant future tax revenue.
3. The drafting, adopting, administering and enforcing of new helium and non-hydrocarbon gas regulations will undoubtedly have some impact on the Division’s FTE and budget needs. However, the Division predicts that any such impact will be “minimal” and manageable.
4. The regulation of helium exploration and production will protect leases, sales and royalty revenues from State lands.
Because the regulation
of helium and other non-hydrocarbon gases involves essentially the same
activities the Oil Conservation Division presently performs in regulating oil
and gas production, the additional burden on the Division should be
minimal. The Division does not
anticipate any affect on its ability to continue to perform its existing
functions.