Two wells in northwestern New Mexico are the most productive in 20 years for the San Juan Basin
A project that will drill the first oil and gas wells in La Plata County targeting the Mancos Shale formation will go ahead to secure further permits after an agreement with La Plata County.
La Plata County Commissioners on Tuesday signed a memorandum of understanding with NueVida Resources LLC, a Texas-based oil and gas company, allowing the company’s initial request for an exploratory development of approximately 1,280 acres near Ignacio to return to the Colorado Oil and Gas Conservation Commission. For approval.
“This is the first step in a very long process,” said Jim Bob Byrd, vice president of business development for NueVida Resources. “… We have several steps to go through in our process and this was only the first phase that County of La Plata had requested.”
On January 5, NueVida Resources submitted a request to COGCC to create an exploratory drilling area with up to eight horizontal oil and gas wells near the intersection of County Road 309A and County Road 318. south of Durango and west of Ignacio on the south of the Ute Indian Reservation.
The company would drill on private land that has already been the subject of oil and gas development as it searches for natural gas at the northern end of the Mancos formation in the San Juan Basin.
The COGCC set a hearing for the proposed project in June, but La Plata County submitted a petition to the commission in May raising environmental, public health, safety and welfare concerns.
The county asked the commission to modify the request to take into account the potential impacts of the operation on groundwater quality, noise, wildlife habitat, air quality and local infrastructure, among others. He also asked for a memorandum of understanding to be negotiated with NueVida Resources.
In June, NueVida Resources asked COGCC to consolidate hearings for its requests for an oil and gas separation and development plan so that it could secure the deal with the county.
In the past, La Plata County has stepped in with other oil and gas applications so it can develop memoranda of understanding with producers, said Anna Sigler, the county’s natural resources planner.
“The first memorandum of understanding we negotiated was with BP in 2005 and it follows this model,” said Sigler.
However, the deal addressed some differences, she said.
The proposed wells will be drilled horizontally by hydraulic fracturing, so they will be longer than most other wells in the county. The Mancos Shale formation is also much deeper than the Fruitland formation that many other wells in the county are targeting, so the drilling schedule will be longer, Sigler said.
If exploratory development finds natural gas, that could be a boon for NueVida Resources. Natural gas prices have skyrocketed in recent months, reaching a five-year high in early October.
LOGOS Resources II LLC announced in October that it had developed two highly productive wells targeting the Mancos Shale in northwestern New Mexico. The two natural gas wells have been the most productive in the San Juan Basin for the past 20 years.
According to Byrd, they are among the top 10 ever discovered in the region.
La Plata County will now withdraw its intervention in NueVida Resources’ request for spacing. NueVida Resources will submit an oil and gas development plan request to COGCC and proceed to a hearing for the approval of its two outstanding requests.
The company will need additional permits from La Plata County, Colorado Parks and Wildlife and COGCC before it can drill.
“It will take us several months to go through the various processes and submit the requests that we need to have on hand before going into operations,” Byrd said.
“The overall project is extremely complex,” he said. “… And we take our responsibility to be the best possible stewards of the environment very seriously, and that’s one of the things that we discuss with various agencies. “