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Water district considers energy company requests


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Oil and gas businesses want access for pipelines, pads

Some oil and gas businesses want to access Eddy County property owned by the Pecos Valley Artesian Conservancy District.

Four requests to secure easements to build new pipelines or pads were introduced to the district’s board of directors at its monthly meeting Tuesday morning in Roswell.

The district owns more than 600 acres in south Eddy County near Malagla in the heart of the Permian Basin, said Aron Balock, superintendent for the water district.

“We have purchased it primarily for the water rights. But according to the rules down there, to own the water rights, you have to maintain a minimum number of surface rights. And with all the activity down there, we have had a number of companies contact us about easement rights,” he said.

He explained that the mineral rights are a complicated situation, with many different companies or agencies owning them. The district is required to work with the companies when they need to access the land to tie in pipelines and transport gas and oil.

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The four companies that have submitted proposals either own the mineral rights for that parcel or for adjacent ones. They are Mewbourne Oil Co. based in Midland, Texas; Lucid Energy Group II LLC, a natural gas operator based in Dallas, Texas; and Oryx Midstream Services of Midland and its subsidiary Oryx Delaware Oil Gathering NM LLC. Balock said Mewbourne is seeking permission to place a pad and perhaps a pipeline on the parcel, while the other three are intending to place pipelines.

“The board authorized myself and legal counsel to study the proposal and, if it warrants it, to enter into negotiations,” Balock said. “Once we have completed our end of it, we then would come back to them with a recommendation about whether or not we would enter an agreement with that company.”

Balock said the due diligence exercised to review the proposals could take a month or much longer, depending on all that is involved in the proposal and the workload of the district’s legal staff.

He said the district grants temporary easements only, with negotiations on payments to be part of the discussions occurring among the companies, district staff and board members.

The Permian Basin is the most productive oil region in the United States at this time. According to the U.S. Energy Information Administration, it is expected to produce 4.14 million barrels a day in May. The area is second in gas production, with 13,890 million cubic feet per day projected for May. According to several news and industry sources, a significant need exists for additional pipeline capacity for both oil and gas transportation out of the basin.

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 311, or at reporter02@rdrnews.com.

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Lisa Dunlap is a general assignment reporter for the Roswell Daily Record.