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Water district considers leasing wells to Texas company

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A local water authority is considering whether to allow a Texas-based energy company to lease wells on a farm in Eddy County.

The Pecos Valley Artesian Conservancy District Board of Directors met in a special meeting Friday and appointed a committee to work with its legal team to decide about a proposal offered by Select Energy Services, a public company based in Gainesville, Texas.
In other business, the board approved extending a legal agreement that gives some of its water rights to the New Mexico Interstate Stream Commission.
Select Energy’s proposal to lease water is made in conjunction with its subsidiary, Gregroy Rockhouse Ranch Inc., which sells water to the oil and gas industry. The water is often used for fracking operations, according to online reports.
The company has proposed paying at least $10,000 a month to lease water from a well on the Pardue Farm, located in Eddy County in Malaga.
“I guess there would be no cost to the district except legal, drawing up the contact,” said Board Chair Bill Netherlin.
Under the initial proposal, Select Energy and Gregory Rockhouse would transfer their existing water rights elsewhere to allow them to use water from the Pardue Farm wells. The $10,000 monthly fee would be for use of up to 333,333 barrels a month, and the company would pay an additional 3 cents per barrel for more water. Select Energy also would pay for any upgrades or maintenance needed on the wells.
At this time, the proposal calls for a contract of one year, with up to four one-year extensions. The district also would want to ensure that the agreement would allow them to protest should problems arise, board members said.
The agreement would require the approval of the New Mexico Department of Finance and the Office of the State Engineer.
The district board also would have to give final approval, said A.J. Olsen, one of the lawyers representing the district. He said it would probably take at least 60 days for a negotiated contract to receive final approval.
“Right now, the wells are not working. They are just sitting there, not equipped,” Olsen said, “so it is an opportunity for the district to make income from the wells.”
The board also voted to approve extending a legal agreement with the New Mexico Interstate Stream Commission originally worked out in 2008 as partial settlement of a lawsuit.
That agreement provides water rights to the commission within the Pecos Valley district. The commission is part of the Office of the State Engineer.
Olsen told the board that the addendum, which extends the agreement until July 2018, does not change the agreement from previous years.
Pecos Valley Artesian Conservancy District was created by court order in 1932 to preserve and conserve waters in the Roswell-Artesia basin, which covers both Chaves and Eddy counties and runs north of Roswell to the Brantley Dam area near Carlsbad.
A portion of property taxes for people living within the district funds the organization, which exists to maintain the waters for the future use of residents, agribusiness and other commercial interests.
Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 310, or at reporter02@rdrnews.com.