American Oil and Gas Reporter - July 2015 - 139

ConventionSection: Independent Petroleum Association of New Mexico
we are doing or getting into detail and
interfering unnecessarily with how we
want to complete wells," Krakauskas reveals. "The state and local offices don't
want this rule, and we don't want this
rule, but it is being forced on the field
offices from Washington, and they have
to implement it."
IPANM's stance continues to be that
state regulation of hydraulic fracturing is
sufficient, says association President Glen
Papp.
Krakauskas appeals to IPANM members to keep in mind that local BLM officials simply are doing their jobs. "A lot
of people get mad at the field offices,
and the directors and people who work
in local offices, but they need to understand
they simply are doing their jobs. This is
coming from Washington and (field offices) are forced to implement the rules,"
he says. "I think it stresses them more
than it stresses us because they are being
pressured from every angle. We need to
work with them."

Endangered Species
Although the U.S. Fish & Wildlife
Service decided against classifying the
dunes sagebrush lizard as endangered,
the New Mexico Game and Fish Department still considers the species endangered,
which has IPANM wondering whether
the state listing will influence federal
court cases on other species, Foster says.
"It was disappointing that the state
still opted to list the lizard as endangered
when the federal government chose not
to list it," she says.
Foster points out that the Center for
Biological Diversity successfully challenged a USFWS decision to rely on
Wyoming's nonbinding promises to maintain a certain number of wolves when
the agency decided to delist the gray
wolf. Following USFWS's 2012 decision
not to list the dunes sagebrush lizard, the
CBD cited that Washington court decision
as a precedent for its challenge to the
New Mexico and Texas state plans for
preserving the lizard, Foster says.

Coming In August

The Production Automation reports look at how automation, measurement
and
communications
technologies are evolving to extend
well life, boost recovery rates and
improve economic performance in
unconventional resource plays.

"I think industry has done a great job
in trying to keep the lizard off the list,
and it doesn't say much about the New
Mexico Game and Fish Department to
list it," says Papp, principal and operations
manager at Synergy Operating LLC in
Farmington, N.M.
"The federal government decided
against listing it, and the state needs to
support industries and remove it from its
list as well," he insists.
He says oil and gas operators have
"done more than anybody in the federal
government" to preserve the dunes sage
brush lizard as well as the lesser prairie
chicken, which USFWS did place on the
threatened list in March 2014.
Ironically, suggests Foster, moves by
the federal government could be the
chicken's undoing. She says IPANM is
challenging an attempt to reintroduce the
gray wolf into New Mexico because it
puts oil and gas producers in a particularly
awkward situation.
"Operators have put money into candidate conservation agreements to protect
both the lizard and the chicken, but now
a predator of the chicken is being released
by USFWS in the same area the chicken
occupies," Foster says. "It literally is the
wolf getting into the chicken house. It
makes no sense. Operators can be fined
for a taking if Fish & Wildlife finds a

dead chicken on a lease, yet known predators are being put in the same area!"

Regulatory Excess
Papp calls these developments examples of continued overregulation on the
federal level. "No matter what industry
you are in, there is huge, across-theboard overregulation from the (Obama)
administration," he maintains.
"Obviously, low commodity prices
are a major impediment (for oil and gas),
but when you have borderline project
economics and you heap on the cost of
all the overregulation, projects get
shelved," Papp articulates. "As soon as
we get one regulation in place, there is
another one coming down the pike."
Krakauskas insists that activists' abuses
of the Endangered Species Act have
added to the country's economic problems.
"I think (the ESA) has been hindering
a lot of industries-not only oil and gas. It
has killed industries throughout time,"
he says. "It seems they are going to keep
pushing for more species listings to bankrupt our industry in the same way they
bankrupted logging in Oregon. There
seems to be no end to the amount of
funds these anti-industry groups have
and what they are willing to do to shut
down our livelihoods."
r

WOLFCAMP. . . . . . . . . . . . . . . . . . . . . . . . . . .
FROM PAGE 45

not been delineated fully yet, and operators
still are learning the best ways to produce
from this reservoir."
As of May, the IHS review says there
were more than 3,200 producing wells in
the Wolfcamp Delaware, with nearly 75
percent of those being horizontals. More
than 475 of the 3,200 Wolfcamp Delaware
wells have been producing since January
2014, the company notes.
Olmstead says 150 operators have
participated in the play, compared with
fewer than 90 operators in the Eagle
Ford. Despite that high number, he notes,
there are two dominant operators in the
play-Concho Resources and Cimarex
Energy-who are delineating and testing
the sweet spot's limits and the play's
production streams. Concho Resources
has been active in the southern liquids
subplay, while Cimarex has been focused
on central gas, Olmstead adds.
The IHS review infers that economics
for both operators in their respective sub-

plays are sufficient for drilling through
the pricing downturn, but future delineation
and possible expansion may be halted
until oil prices recover and/or costs fall
further.
As a result, IHS says it expects significant movement as more operators
enter the play, while others-such as those
who lack quality assets, the financial
stamina to wait for better break-even
prices, or don't consider the play core to
their strategies-will exit.
Despite being major operators in the
play, IHS says Cimarex, Concho, Occidental Petroleum, and Clayton Williams
still have relatively low well counts in
the subplays that are expected to drive
future production. Thus, the company
says, while well economics are representative of average historical returns, operators may be able to improve their economics significantly as the play is further
developed.
❒
JULY 2015 139



American Oil and Gas Reporter - July 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - July 2015

Contents
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