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Salazar proposes potash, oil and gas plan for NM

Salazar proposes potash, oil and gas plan for NM

July 12th, 2012 by SUSAN MONTOYA BRYAN, Associated Press in News

ALBUQUERQUE, N.M. (AP) - Interior Secretary Ken Salazar on Thursday introduced a proposal that could effectively end a decades-long squabble over development of oil and natural gas in an area that makes up the nation's greatest potash reserve.

Oil and gas developers and the companies going after potash - the key ingredient in fertilizers - have been locked in a series of legal disputes over development of the resources for years. The concern has centered on contamination of the resources and mining safety.

"At stake here are tens of thousands of jobs in southeastern New Mexico in the oil and gas industry as well as thousands of jobs in the potash industry," Salazar said. "And importantly, both of those industries are part of the energy and mineral security of the United States."

Salazar's draft order would establish a program for identifying areas where development can happen safely. Buffer zones would be established to allow oil and gas drillers to go after the fossil fuels without compromising potash deposits.

Experts say advances in drilling techniques make the proposal possible. Salazar said "drilling islands" could be created within the 625-square-mile area where potash is protected.

The area, which is managed by the Bureau of Land Management, produces three-quarters of the potash mined in the US. Part of the Permian Basin that spans New Mexico and Texas, the area is also home to nearly 800 federal oil and gas leases.

"What we're seeing is a tremendous level of activity in southeastern New Mexico," said Steve Henke, president of the New Mexico Oil and Gas Association. "There has been some uncertainty, denials and delays of permitting due to potash concerns, so operation within the framework of the new order I would think will allow for full exploration of possible new development on the oil and gas side."

The potash lies above the oil and gas deposits. The potash industry long objected to oil and gas development taking place below its operations, claiming that such drilling spoils the potash and presents a potential hazard to miners who work underground.

In January, Salazar met with representatives from both industries. A committee was formed and has been working for the last six months to develop a framework for the draft order.

That first meeting "put the heat on everyone involved to quit squabbling and find some way to agree," said Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee.

The public has until Aug. 12 to comment on the proposal. Salazar expects to have a final order this fall.

Salazar said the conflict drained millions of dollars in litigation fees from both industries and left a cloud of uncertainty over energy development in the area.

Federal officials said it remains to be seen how much the order will boost oil and gas production in New Mexico, which is already expected to enjoy a $200 million boost in state revenues thanks to oil and gas taxes and royalties.

Potash mining is also ramping up. In March, the BLM approved plans by Intrepid Potash to operate a solution mine northeast of Carlsbad and a $36 million potash compaction plant opened in May.

"This is all about jobs," said Sen. Tom Udall, D-N.M. "It's about jobs in the potash industry. It's about jobs in the oil and gas industry. There are thousands of jobs there and I think this draft order is going to put us on a path where people are going to be able to grow their businesses and create more jobs. That's what people want to see right now."