October 10, 2008

Tecton Hints at Galisteo Basin Sale


Tecton Energy, the Houston-based company that applied for permits to drill in the Galisteo Basin last winter, might be trying to sell its mineral leases in the area.

Last week, Meagher Oil and Gas Properties Inc., a divestiture firm serving the industry, began listing Tecton's leases on more than 100,000 acres in the Albuquerque Basin and 75,000 acres in the Santa Fe Hagen Embayment, which includes the Galisteo area.

William Dirks, president of Tecton, said the company has been "seeking investors to join us in this basin since 2006." The company isn't necessarily backing out of New Mexico. "We are looking for a potential partner who wants to invest their (own) capital to continue the drilling opportunities," he said.

But Julia Foster of Meagher in Denver said, "They're looking to sell the property."

The bids are due Nov. 7, and the closing date listed by Meagher is Dec. 1.

Steve Sugarman, an environmental lawyer who faced the prospect of Tecton's reopening a plugged well near his home south of Santa Fe, called the news "extremely gratifying."

He said he thought the county's release Sept. 30 of a draft oil and gas ordinance "was a pivotal event in Tecton's business decision."

"Santa Fe County's really aggressive and visionary effort to regulate oil and gas development was going to make it much more difficult to do the exploration they wanted to do in order to prove (there are) economically recoverable resources."

Dirks declined to comment on the ordinance.

Among other things, Sugarman said the proposed law "imposes on oil and gas developers the financial burden of putting infrastructure into place where it doesn't yet exist." The cost of upgrading roads, hiring more deputies and increasing fire protection has been estimated at $61 million by attorney Robert H. Freilich, a partner with the Los Angeles firm of Miller Barondess, who specializes in land-use issues and helped prepare the ordinance.

Under the 126-page draft, drilling companies can use only fresh water for fracturing rock to draw out oil and gas, and must prove a 50-year supply for any project. It would also ban the use of brine and chemicals in the drilling process.

The County Development Review Committee is scheduled to hold hearings on the ordinance Thursday and Nov. 13. The Board of County Commissioners will also hold hearings before an adoption hearing Jan. 23.

In writing the new ordinance, the county prepared a detailed resource study of the ecological and physical characteristics of the Galisteo Basin. It identifies those areas that are ecologically critical. For the most part, residents agreed with the findings, although they felt the list was "underinclusive," and, Sugarman said, "that is one of the things we'll take up with the CDRC" and the commission.

The listing on the Meagher Web site indicates the company has large geologic and geophysical databases of the areas. Extensive source-rock sampling in the Albuquerque Basin shows it received a large gas charge in the mid-to-late Tertiary period, which began 65 million years ago and lasted more than 63 million years. Tecton has identified drill sites ready to be permitted. Three 1970s vintage wells produced water-free gas.

In the Santa Fe Hagen Embayment (or sub-basin), Tecton suggests there are 50-100 million barrels of recoverable oil with multiple targets at 2,500 to 7,500 feet. Black Ferrill No. 1, a well southeast of Galisteo that produced 40 barrels a day in 1985, is included in the package.

Contact Anne Constable at 986-3022 or [email protected]

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