In January 2019, Gov. Michelle Lujan Grisham signed an Executive Order (EO) for New Mexico state agencies to develop strategies and regulations to reduce statewide greenhouse gas emissions. The EO ordered the Energy, Minerals and Natural Resources Department’s Oil Conservation Division (OCD) and New Mexico Environment Department to develop regulations to reduce methane emissions from oil and gas operations.

In April 2021, the OCD amended its statewide regulations to reduce waste (e.g., flaring and venting) of natural gas. The rules are included in the New Mexico Administrative Code Title 19, Chapter 15 Parts 7, 18, 19 27 and 28. The rules will be finalized when published in the New Mexico Register.

The New Mexico Environment Department, in separate rule making, will also regulate methane emissions from oil and natural operations from an air quality perspective.

The following is a summary of the OCD rules for flaring and venting. Consult the OCC rules to determine specific rule requirements. See link for full requirements: http://www.emnrd.state.nm.us/OCD/rules.html

 

Operations Included

• Drilling operations
• Completion operations
• Oil and gas production equipment and facilities
• Natural gas (midstream) gathering systems

 

Statewide Natural Gas Capture Requirements

Starting April 1, 2021, operators must meet a statewide annual 98% gas capture rate of natural gas produced by the end of 2026. This is required for each of two reporting areas, one north and one south of the Township 10 North line.

The baseline natural gas capture rate will be based on the operator’s fourth quarter 2021 and first quarter 2022 quarterly reports.

 

Prohibitions

The rule prohibits the venting and flaring of natural gas that constitutes waste (as defined in 19.15.2 NMAC.

This prohibition includes venting or flaring of natural gas during drilling, completion, or production operations.

Exceptions from the prohibition include emergencies, malfunctions and safety considerations. Also, certain activities are specially exempted from the prohibition.

Operators are generally required to flare gas rather than vent gas – except where flaring is not technically feasible or for safety concerns.

 

Allowable flaring and venting

Exceptions to flaring and venting prohibitions are included in the rules. Consult the regulations for details.

Allowable flaring and venting are not included in the calculation of the natural gas capture rate.

The exceptions include:

• Emergencies, malfunctions and safety considerations
• Well unloading and clean-up operations that comply with regulatory specified provisions
• Exploratory well production during first 12 months of production meeting certain regulatory provisions.
• Tank gauging or sampling of existing storage tanks.
• Load out of liquids from storage tanks
• Repair and maintenance operations including depressuring equipment
• Normal operation (except if prohibited by law or regulation or required by an air permit) of natural gas pneumatic devices; dehydration and amine units; compressors; valves, flanges and connectors; storage tanks; and pigging of pipelines.
• Bradenhead tests, packer leakage tests and production tests lasting less than 24 hours.
• Commissioning of pipelines, equipment and facilities.

 

Performance Standards

• Operators have a general duty to maximize natural gas recovery by minimizing venting and flaring.
• Minimize leaks and releases of natural gas.
• Proper design of equipment and control devices (VRUs, flares, enclosed combustors)
• Use of automatic igniter or continuous pilots.
• Use of technology to alert operator that the flare has malfunctioned.
• Automatic gauging of storage tanks that are equipped with a control device (VRU, flare, enclosed combustor.
• Weekly inspect and document the use of audio, visual, olfactory (AVO) monitoring for leaks.
• Use remote or automated leak and release monitoring technology in lieu of AVO inspections – subject to OCD approval.
• Blowdown of gas gathering systems should be controlled by a flare or enclosed combustor.
• Locate flare at least 100 feet from the well or storage tanks.
• Facilities to be designed to minimize waste and to resolve emergencies as quickly and safely as feasible.

 

Natural gas management plan.

Operators must file a natural gas management plan with each application to drill (APD) for a new or recompleted well. Operators may file a single natural gas management plan for multiple wells. The plan will describe the actions taken to meet the natural gas capture requirements.

 

Reporting

Reporting to the OCD using the appropriate form is required. Flaring and venting data will be summarized and published on the OCD’s website.

Reporting includes:

• Monthly well and facility reports of flaring and venting for the rule specified categories (e.g., emergency and malfunction releases, routing operations, etc.).
• By February 28 of each year beginning in 2023, operators must submit a report certifying compliance with the natural gas capture requirements.

Note: This reporting is separate from air quality regulatory and/or air permit reporting required by the New Mexico Environment Department.  https://www.env.nm.gov/general/report-an-environmental-issue-or-incident/

 

Credits for ALARM Leak Monitoring

Operators using an OCD approved ALARM (advanced leak and repair monitoring) technology for detecting natural gas leaks (that is not required by law or regulation) are eligible to earn a credit (reduction) against the reported natural gas release.

The OCD will publish a list of approved ALARM technology.

For ALARM approved systems, a credit of 40 percent of the volume of gas released during an event may be granted by the OCD. This can be used by operators to meet the 98% flaring/venting reduction goal. The credit would be applied to the annual reporting for the facility.

 

Measurement or Estimation

Measurement is required for natural gas recovered, beneficially used, vented and flared.

Estimation of natural gas volumes vented and flared is allowed if metering is not practicable provided the method can be independently verified. Use of an annual GOR test data may be allowed for wells not require measuring devices.

 

Action Items

1. Determine your baseline venting and flaring volumes and baseline capture rate.
2. Prepare and implement a natural gas management plan. Parts of a plan can include:
   1. As needed, replace or upgrade pilots and automatic igniters for flares and enclosed combustors.
   2. Install systems (SyteLink360TM) to alert operators that the flare, enclosed combustor or VRU is not operating and to document uptime.
   3. Install systems (SyteLink360TM) to alert operators that the storage tank hatches are not closed properly and to document uptime.
   4. Use automatic tank gauging if the storage tanks are routed to a control device.
   5. Measure vent gas volumes from storage tanks to determine which tanks can use a vapor recovery (VRT) and/or vapor recovery units (VRU). Install and operate VRTs and VRUs where feasible.
   6. Install meters to measure gas sent to flares, enclosed combustors and VRUs.
   7. Conduct leak monitoring and repair leaks found.
   8. Use tankless facilities to minimize storage tank emissions.
   9. Setup a system to track and document the volume of natural gas recovered, flared and vented by each rule specified category (e.g., sold, beneficially used, emergency venting and flaring, pneumatic devices, etc.).

 

Summary and Conclusions

The rule was developed by the OCD to reduce waste of methane and strengthen collection of royalty and severance taxes. Production and midstream operations are affected by the rule. Allowances for flaring and venting of natural gas from emergencies, malfunctions, safety considerations and routine operation of facilities are included in the rule.

The 98% capture rate is expected to be achievable by the oil and gas operators. Operator written plans, reporting, monitoring, recordkeeping and certification of natural gas capture rate are used to ensure compliance.

The New Mexico Environment Department, in separate rule making, will also regulate methane emissions from oil and gas operations. This may include air quality regulations and air permit requirements for methane emission controls.

Cimarron Solutions

Cimarron solutions to assist with compliance with the new flaring and venting rules include:

• Measurement of vent gas from storage tanks using our IQR Teams.
• Fugitive leak detection and repair monitoring
• Installation of vent and flare gas meters
• Vapor Recovery Units
• Vapor Recovery Towers
• Enclosed Combustors 
• Flares
• Retrofit flares and enclosed combustors with automatic igniters, pilot systems and alarm systems for flare pilot/ignitor malfunction.
• Automated alarm system technology (SyteLink360TM)

 

Cimarron – Who We Are

Cimarron’s vision is to work with our clients to create a cleaner environment.

The company engineers and manufactures environmental, production and process equipment for the upstream, midstream and downstream energy industries, as well as environmental control solutions for biogas at wastewater facilities, digester tanks and landfills.

Cimarron offers our customers the know-how and environmental expertise to meet the environmental standards of today and tomorrow. Cimarron is committed to bring value to the Energy industry and their shareholders based on our financial strength, experienced personnel, and engineering capabilities.

As a company, we thrive every day to make a difference through innovation (e.g. ESG), customer focus, and operational efficiency. In addition to being present in all major regions in the US, Cimarron serves more than 45 countries around the world, ranging from offshore to desert. From key operational centers in the United States, Italy and the United Arab Emirates, Cimarron offers ongoing service and support through its own field service personnel and strategic third-party partners, creating a cleaner environment for our customers and their shareholders.

Since its founding in the mid-1970’s in Oklahoma, the company’s product offering has expanded from production equipment to include the largest line of environmental solutions that capture or incinerate fugitive vapors. With the acquisitions of HY-BON/EDI in 2019 and AEREON (including Jordan Technologies) in 2020, Cimarron has added strong brands, products, and services to its portfolio.

Please contact us to learn more about our products and services and about all our ESG solutions at sales@cimarron.com or visit our website.