SunCal Claims Water on Its Land

11/07/2008 By Sean Olson, Journal Staff Writer

SunCal Companies is now claiming sole ownership of brackish water underneath its land on the West Side, a claim Atrisco Oil and Gas already made in July.

In an application to the Office of the State Engineer filed late last month, SunCal claims it retains all water rights on its land under an agreement with Atrisco signed in December 2006. The agreement was part of a $250 million deal for SunCal to buy the land formerly held by the Atrisco land grant heirs in its corporate successor Westland Development Co.

Atrisco CEO Peter Sanchez said Tuesday that New Mexico water law is clear that the water source belongs to Atrisco.

“I think their claim is an example of some of the confusion right now due to the lack of law and jurisdiction over these issues,” Sanchez said.

Because the state engineer has no authority over water sources more than 2,500 feet deep, many issues dealing with deep water have little precedent in the state. Currently, water found beneath 2,500 feet is a free-for-all with no way for one group to claim it. However, there are limitations because a group needs to own or have rights to land before they can drill on it.

Sanchez said there was nothing “adversarial” about the dispute over the water rights, but both companies would be taking steps to secure what’s in each’s best interest.

SunCal officials were not immediately available for comment Thursday.

In its application, SunCal points to the mineral rights agreement with Atrisco that states SunCal would have a “… perpetual, exclusive right to all water in, on, under and that may be produced from (Suncal’s land).”

Sanchez said water law in the state trumps a contract that claims water sources that were unknown at the time it was signed.

“You can’t reserve something that has never been found,” he said.

He said that water law usually sides with those who find the water and submit the first claim to it.

“Water law in New Mexico favors the discoverer, first claimant and the beneficial user. That’s Atrisco,” he said.

Sanchez said Atrisco has been speaking with SunCal about the issue and could come up with a deal between the companies. If they don’t, he said, the dispute could end up in court.

The mineral rights contract splits mineral rights existing at the time the contract was executed evenly between the two companies, but any new mineral sources found by Atrisco would be its sole property. Water rights were specified separately from mineral rights in the contract.

Atrisco is currently talking to both public and private entities to form a financial partnership that would fund the testing needed to determine how big the water source is and what it is made of.

Sanchez said all the work his company has done is now being commandeered by SunCal without their own efforts.

“It appears SunCal has simply copied Atrisco’s notice and placed their name on it,” he said. “It is a bit surprising.”

The water would need to be cleaned in an expensive — to build and maintain — desalination plant designed to remove dissolved salts in the water.

Atrisco has said it plans to sell the water once it has been tapped. SunCal stated in its application it would use any water it found for residential, irrigation, municipal, industrial and commercial uses.

SunCal’s application requests permission to drill 46 wells, all between 2,500 and 10,000 feet. Atrisco’s application asks for 35 wells.

Although the state engineer does not have jurisdiction over the water source, he still has the authority to ensure all new wells are environmentally sound and do not affect any water sources that have already been claimed at depths above 2,500 feet.

Sandoval County recently finished testing on its own deep water source, which found the county was sitting on enough water for a city of 300,000 people for 100 years in the Rio Puerco basin. Sandoval County’s new water source and the disputed claim on the West Side are separate deposits of water, but are similar in their makeup, according to geological data compiled by both groups.

The sources are also nonrenewable, prompting cries from parts of the community that they should not be used to supply any permanent development.

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