IPANM (Financial Assurance) – IPANM members are reminded to submit their new Financial Assurance Bond amounts to the Oil Conservation Division by April 15, 2019. The OCD should have sent all operators a notice of the new bonding levels and new amounts owed, however, IPANM is uncertain if the department successfully notified all operators. Regardless of notification, IPANM members are urged to take pro-active measures to ensure your bonding is up to the new, appropriate amounts to ensure compliance by April 15. All information can be found below.
All historical information involving IPANM’s opposition to new Financial Assurance Levels can be found at the members-only issues and information section under Financial Assurance.
Notice to Operators: January 15, 2019 New Financial Assurance and Temporary Abandonment Rules in Effect, 19.15.2, 19.15.8 and 19.15.25 NMAC
The Oil Conservation Commission has amended the rules pertaining to the required financial assurance for state and private wells operated in the state of New Mexico. As of January 15, 2019, the amendments to 19.15.8.9 NMAC apply to all applications for permits to drill, deepen or plug back and applications for approved temporary abandonment. The new amounts will apply for all other wells on April 15, 2019.
Blanket Financial Assurance Amounts for Active wells (new wells or wells with reported production or injection within the last two years):
The Commission adopted a tiered bonding structure based on the operator’s number of state and private wells. 19.15.8.9(C)(2) NMAC requires an operator to provide a blanket plugging financial assurance in the following amounts covering all the wells of the operator:
(a) $50,000 for one to 10 wells;
(b) $75,000 for 11 to 50 wells;
(c) $125,000 for 51 to 100 wells;
(d) $250,000 for more than 100 wells.
Blanket Financial Assurance Amounts for Inactive Wells (wells without reported production or injection for two years or more):
Operators who have inactive or temporarily abandoned state or private wells are required to provide financial assurance in addition to the blanket bond for active wells:
(a) $150,000 for one to five wells;
(b) $300,000 for six to 10 wells;
(c) $500,000 for 11 to 25 wells;
(d) $1,000,000 for more than 25 wells.
Single Well Financial Assurance: If an operator does not provide blanket plugging financial assurance for either an active, or inactive state or private well, a bond amount of $25,000 plus $2 per foot of depth is required for each well.
Maximum number of wells allowed to be placed in approved temporarily abandonment status: The limits are now one well, if the operator operates between one and five wells; and one-third of all wells in New Mexico, rounded to the nearest whole number, if the operator operates more than five wells. 19.15.25.12 NMAC.
During the period between January 15 and April 15, 2019 the Division encourages all operators to review their bonding status for both active and inactive wells. The increased amounts will not be required until April 15, 2019 for existing wells or for wells for which the operator applied to drill prior to January 15, 2019, planning ahead will ease strain on the Division and providers of financial assurances when the new provisions apply to all wells on April 15, 2019.
