Empire Petroleum said the New Mexico Oil Conservation Commission has issued a favorable ruling regarding the company’s rights to the residual oil zone (ROZ) in the Eunice Monument South Unit (EMSU) Unitized Interval in Lea County, New Mexico.
After four years of expenditures, Empire was granted the commission’s unanimous decision at a public hearing, affirming the existence of a ROZ in the Grayburg and San Andres formations within the EMSU and confirming Empire’s exclusive rights to produce the ROZ under the 1984 Commission Order.
The ruling allows Empire to implement a carbon dioxide (CO2) enhanced oil recovery (EOR) pilot project over the next three years, the Tulsa, Oklahoma-based company said in a news release.
Empire had applied to revoke four existing permits and deny five new applications for what it believes is the illegal disposal of wastewater into EMSU Unitized Interval by the largest of the third-party saltwater disposal operators.
The commission has also taken action against Goodnight Midstream Permian, denying five new injection well applications from the firm and suspending injection operations at four existing Goodnight injection wells, according to Empire.
The commission found that Empire “presented compelling evidence of possible future impairment or waste,” according to the release.
Empire said it intends to proceed with motions to revoke the existing permits granted to the remaining third-party saltwater disposal operators that are disposing of wastewater into the EMSU and Unitized Interval of the Arrowhead Grayburg Unit, while advancing litigation for trespass and damages.
“We are extremely pleased with this unanimous decision, which marks a significant regulatory win for Empire and reinforces our position in New Mexico,” Empire Chairman Phil Mulacek said. “It paves the way for us to move forward with CO2 development to unlock the capacity for sustained production in the ROZ and upper zones, while also safeguarding our assets from activities that threaten their value”.
Empire President and CEO Mike Morrisett said, “This outcome reflects years of dedicated work by our employees, legal team, and consultants, and I want to thank them for their tireless efforts in protecting and advancing our New Mexico position. We also want to thank the NMOCD for its thorough review of the facts and its unanimous decision. We take seriously our fiduciary responsibility to our shareholders and remain committed to realizing the long-term value we see in the EMSU assets. This decision gives us a clear path forward to responsibly develop these resources and position Empire for sustained growth and returns”.
While litigation has limited the scope of development activity in the affected areas, production from the EMSU and Arrowhead Grayburg units have increased in recent months, reflecting ongoing optimization efforts, the company said in an earlier statement.
Empire said it expects to reach steady-state production levels by the end of the fourth quarter in its existing EOR program in the Starbuck region of North Dakota’s Williston Basin, contingent on continued equipment reliability and seasonal operating stability. The program is expected to “support sustained production growth and improved asset performance over the long term,” the company said.
Empire Petroleum describes itself as a publicly traded oil and gas company with current producing assets in New Mexico, North Dakota, Montana, Texas, and Louisiana.
To contact the author, email rocky.teodoro@rigzone.com
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