Overview of the OCD Underground(in US Barrels; Source: OCD database from Form C-115) uced ed uced...

Phillip Goetze, Engineering BureauNew Mexico Oil Conservation Division

Current Status of the New Mexico

Underground Injection Control

(UIC) Class II Program

State Primacy Under the Safe Drinking Water Act (SDWA)

• In 1981, the Oil Conservation Division provided the EPA with a Program Demonstration, called the New Mexico State Demonstration for Class II Wells, as required under Part C, Section 1425 of the SDWA (Public Law 93-523 as amended).

• Following the review by EPA, the Program Demonstration was accepted and the state was approved for primacy effective March 7, 1982.

• This primacy allowed the Division to issue permits, referred to as “orders”, and regulate operations for Underground Injection Control (UIC) Class II wells.

• This primacy agreement resulted in rulemaking which is found in the New Mexico Administrative Code (NMAC) under Title 19, Chapter 15, Part 26 Injection.

• The current method of application for an order approving injection begins with the submission of Form C-108 that contains the information such as the proposed injection interval and the underground sources of drinking water (USDWs) in the area, suitable drilling, casing, and cementing programs that protect USDWs, an evaluation of penetrating wells within the Area of Review, description of the sources of fluids to be disposed and notification.

• The applicant must be an operator in the state of New Mexico and must be in compliance with Division rules on financial assurance and inactive wells.

• If the application is protested, then the application cannot be considered for administrative approval and must be considered in a hearing before an examiner or the Oil Conservation Commission.


• Three groups of injection activities are approved under 19.15.26 NMAC:

1. Enhanced recovery (ER) wells: primarily waterfloods, water-alternating gas (WAG) flooding operations, and pressure maintenance projects

2. Hydrocarbon storage wells: injection wells for the underground storage of liquified hydrocarbons

3. Disposal wells: produced water disposal wells and acid-gas injection wells. Disposal wells for produced water are referred to as both UIC Class II wells or salt water disposal (SWD) wells

• Exempted E&P Waste UIC Class II or SWD wells are permitted to accept waste resulting from oil and gas exploration and production (E&P). These wastes commonly include produced water associated with production from a well, well completion and stimulation operations (including flowback), drilling fluids and workover wastes


Additional Requirements for Review of Injection Applications

• Along with authority granted to the state under the SDWA, the New Mexico Oil and Gas Act of 1978 (NMSA) delegated additional responsibilities when considering an application, the Division is authorized to make rules, regulations and orders:

70-2-12. Enumeration of powers.B. (4) to prevent the drowning by water of any stratum or part thereof capable of producing oil or gas or both oil and gas in paying quantities and to prevent the premature and irregular encroachment of water or any other kind of water encroachment that reduces or tends to reduce the total ultimate recovery of crude petroleum oil or gas or both oil and gas from any pool;

• The Bureau of Land Management also participates in the Division’s UIC Program through the assessment of applications in the Secretary’s potash area, the assessment of impacts to hydrocarbon potential in proposed disposal intervals that include federal mineral estate, and with approvals of Applications for Permits to Drill for disposal wells on federal lands.

• Since 2004, horizontal drilling has grown to become the primary method of completion for oil and gas wells in New Mexico.

• With the expansion of horizonal completions, the greatest demand for proper disposal has occurred in the Permian Basin.

• Produced water disposal in the San Juan and Raton Basins, with coal-bed methane wells as the primary source of produced water, has not significantly increased as compared to the Permian Basin.

Summary of Disposal Activities in New Mexico By The Numbers

Summary of Disposal Activities in New Mexico By The Numbers

• The Division’s November database shows there are 832 active SWD wells statewide with 729 wells (88%) located in the New Mexico portion of the Permian Basin.

• Of the approved 116 SWD orders yet to be drilled or are drilling, 113 are located in the Permian Basin.

600,043,152609,016,747

725,090,953

837,944,734

607,251,276

677,880,971727,898,748

763,292,911

2002 2007 2012 2017

Reported Produced and Injected Water Volumesfor Production in Southeast New Mexico

(in US Barrels; Source: OCD database from Form C-115)

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Recent Developments in Disposal Activities in Southeast New Mexico

Expansion in Exploration and Development of Permian Targets

• The primary targets for earlier horizontal wells have been intervals in the upper Permian including:❑the Bone Spring

Formation,❑the Avalon Shale which

occurs at the top of the Bone Spring Formation, and

❑the lower Brushy Canyon Formation at the base of the Delaware Mountain Group.

• During the last two years, there has been a significant shift in new horizontal well completions to include the lower Permian Wolfcamp Formation.


• The recent establishment of the Purple Sage (Wolfcamp) pool by combining several smaller pools into a single pool covering 30 townships reflects the significant increase in drilling activity, especially in the area south of Loving extending to the New Mexico – Texas state line.

• Other Wolfcamp plays are being identified to the east of this pool and are being consolidated for drilling programs.


Area of One Township


• In addition to an increase in a variety of target intervals, operators have adopted their drilling and completion programs to optimize well production.

• Operators now identify “batch drilling” along with “zipper fracking” of individual wells as preferred practices to increase well performance, reduce completion costs, and improve the ultimate recovery of lease tract.


1-mile horizontal wells

2-mile horizontal wells

1.5-mile horizontal

wells


• Other new completion techniques include staggered placement of horizontal wells in two formations with close proximity. This example shows targets in the base of the Bone Spring Formation and the top of the Wolfcamp Formation.


Delaware Mountain Group

• Consists of the Bell Canyon, Cherry Canyon and Brushy Canyon Formations.

• Prior to the widespread use of horizontal wells and fracking techniques, the Delaware Mountain Group (DMG) was the favored strata for disposal of produced water.

• As the majority of wells were being drilled and completed as horizontal wells, oil and gas production increased and, correspondingly, the need for disposal of additional E&P wastes.



• With the expanded use of the DMG for produced water disposal, there was an increase in reports of local waterflows and abnormally high reservoir pressures in these formations.

• By 2014, the Division became involved in several hearings where operators had identified adjacent disposal injection as the source of increased water cuts in their producing horizontal wells completed in the lower Brushy Canyon Formation.



• In this case, horizontal production wells being drilled through the DMG observed pressure increase linked to a Delaware SWD disposal well injecting in close proximity.



• The Division approved disposal in the DMG interval in 2004 following an assessment using vertical well costs that classified the well as “uneconomical” for the Brushy Canyon Formation. With the changes in horizontal well completion, the new well was drilled in 2010 and encountered problems.



• Another case identified the impacts of multiple disposal wells injecting into the upper formations of the DMG

• The operator demonstrated that the horizontal production wells in the deeper Brushy Canyon Formation were being washed out at a distance of 1.5 miles from the cluster of disposal wells.



• The DMG disposal wells involved in this specific case showed a cumulative effect from injection with different rates and pressures gradients.

• This case also identified issues about the use of the DMG for disposal:❑ the lack of continuous

confining layers to prevent vertical migration of injection fluids; and

❑ the low formation parting pressures observed in the DMG.


Devonian and Silurian Interval

• With the growing necessity for capacity to receive produced water, the Division reviewed options for alternatives to the DMG and other injection intervals available within the center portion of the basin.

• The Primacy Demonstration identified Devonian strata as a possible alternative to shallower injection but deemed this as impractical due to cost and the available technology.

• With operators prepared to drill to the deeper strata, the ability to increase tubing sizes to increase the disposal volumes for these wells was necessary resulting in what the Division has categorized as “high-volume, Devonian disposal wells”.



• In 2015, the EPA UIC Technical Workgroup release its final work product on induced seismicity and Class II wells.

• In response, the Division is requiring a supplemental assessment with applications that would consider the overall risk for seismic potential for the life of these deeper SWD wells.

• Another recommendation was to minimize the potential impacts of injection-induced seismicity by limiting activation of stresses of the pre-Cambrian basement by injection fluids.

[Source: Lund Snee and Zobach; 2018; State of stress in the Permian Basin, Texas and New Mexico: Implications for induced seismicity]



• With this guidance on sources of induced seismicity, the Division enacted a moratorium on any new injection into the Ordovician strata.

• This is an effort to isolate any injection effects of the SWD wells from migrating deeper by using the Ordovician formations, including the Ellenburger Formation, as a lower confining zone or “buffer”.


Devonian and Silurian Disposal Wells

• The attempt to utilize deeper Siluro-Devonian SWD wells has resulted in concentration of approved orders for injection in the vicinity of the Purple Sage (Wolfcamp) pool especially between Loving and Malaga.

• The Division is proceeding with approval of SWD orders with the intent to “space” disposal wells as to limit impacts to the Siluro-Devonian strata and extend the operational life of these wells.


Disposal Activities in Other Basins of New Mexico

Raton and San Juan Basins

• Production by coal-bed methane (CBM) wells in the Raton and San Juan Basins continues to provide a steady source of produced water but on a much smaller scale than the Permian Basin activities.

• The New Mexico portion of the Raton Basin currently has 847 active CBM wells and seven active SWD wells.

• The daily rates of injection of these SWD wells range from 1,394 barrels of produced water to 5,428 barrels.

Disposal Activities in Other Basins of New Mexico

Raton and San Juan Basins

• Recent research and publications have indicated a correlation between CBM produced water disposal in the Raton Basin and the current catalog of seismic activity.

• The Division is monitoring and reviewing these disposal operations within this basin while waiting for the conclusion of several investigations before making any recommendations regarding injection activities.

Future Plans Regarding Produced Water Disposal Activities in New Mexico

• Continue Efforts to Address Current Practices for Disposal of Produced Water

• The Division is cooperating with NMOGA and other stakeholders to maintain the preferred use of the Devonian and Silurian strata for addressing current and future produced water injection.

• This includes actively compiling and reviewing information to revaluate conditions of approval for SWD orders relating monitoring, reporting, and limitations (such as well “spacing”, injection pressures, injection rates, well design, etc.).

• The Division modifies the administrative application process for high-volume, Devonian SWD wells in an effort to maximize these type of wells while reducing the potential for future issues such as induced seismicity or impacts to correlative rights.

• Support Efforts to Increase Alternatives to Disposal of Produced Water

• Recycling by operators

• Treatment and reuse

• Final Thought – The Division is pursuing this course for its permitting process of SWD orders to address the current demands, but it does not necessarily provide the long-term solution. The growing competition for disposal will eventually necessitate increased costs, increased hearing of protested disposal cases before Division and Commission, and possibly rulemaking as the final resolution.

• And with this situation, there has been ample occasion for increased discussion…………

Future Plans Regarding Produced Water Disposal Activities in New Mexico

Thank you for your attention

Current Status of the New Mexico Underground

Injection Control (UIC) Class II Program

Overview of the OCD Underground(in US Barrels; Source: OCD database from Form C-115) uced ed uced...

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