I run crews or trucks out of Pecos. What should my insurance and MSAs account for?

Pecos is the county seat of Reeves County, on the west bank of the Pecos River. The Handbook of Texas puts it 74 miles southwest of Odessa, on Interstate 20 and U.S. 285.

Reeves County is a border county. Its northern edge touches New Mexico, and the Pecos River forms its northeast boundary with Loving and Ward counties.

For oil and gas, the Railroad Commission assigns Reeves County to District 08, handled from the Midland district office. For highways, Reeves is in TxDOT's Odessa District.

Why this matters on paper: when an operator's MSA, a Rule 36 certification or a waste hauler permit question comes up, the district office you deal with is Midland, not a local office in Pecos. And because the county runs to the state line, a Pecos yard can have crews working Texas and New Mexico leases in the same week.

The RRC says the Delaware Basin "includes significant development in the Bone Spring and Wolfcamp, together known as the Wolfbone." The EIA describes the Delaware as the western part of the larger Permian Basin, spanning southeastern New Mexico and West Texas, with the Bone Spring lying directly over the Wolfcamp.

Reeves County has a long history in that basin. The Handbook of Texas says Pecos was the focus of Delaware Basin oil exploration in the early 1920s, though little was found in paying quantities then. The Toyah gas field came in 1952 and the Geraldine-Ford field began production in 1956.

Today's horizontal Delaware work means long laterals, high-volume completions, a lot of flowback and produced water, and heavy equipment on location. For a service contractor, that puts weight on a few parts of the program:

• In-hole and downhole tools. Who pays if your tools are lost in the hole? Read the MSA, and see underground resources and equipment coverage.
• Equipment on location. Your floater, not your GL, covers your own equipment. See oilfield equipment insurance.
• Well control. Most service MSAs leave well control costs with the operator, but check. See control of well insurance.

This is the local issue that most changes water work around Pecos.

According to the RRC, it established the Northern Culberson-Reeves Seismic Response Area in October 2021 after six magnitude 4.0 or greater earthquakes in one month. An operator-led response plan began March 1, 2022.

After a magnitude 5.4 earthquake in Reeves County on November 16, 2022, the RRC expanded the area north to the New Mexico border, from 2,366 to 2,601 square miles, covering 78 active disposal wells. Operators committed to cut the deep disposal target from 298,000 barrels a day to 162,000 barrels a day by June 30, 2023, which the RRC describes as a 68% drop from January 2022.

On December 19, 2023, the RRC acted to suspend permits for 23 deep disposal wells, effective January 12, 2024.

What that means for a Pecos water hauler or SWD contractor:

• Routes change. When deep disposal capacity is cut, water goes to different wells, sometimes farther away. More miles is more auto exposure, and your auto underwriter will ask about radius.
• Disposal sites change. If your pollution coverage schedules or limits coverage at disposal sites, a new destination may need to be added.
• Permits still apply. Hauling non-hazardous oil and gas waste for hire off a lease requires an RRC waste hauler permit. The RRC says it must be renewed annually, with a $250 fee.

See water hauling insurance and do I need pollution coverage to haul produced water.

Reeves County runs to the state line, so New Mexico work is a short drive for many Pecos crews. Two New Mexico rules change your insurance.

Workers' compensation. The New Mexico Workers' Compensation Administration says coverage is required for an employer with three or more workers, and for any business licensed under the Construction Industries Licensing Act regardless of size. Texas lets most private employers opt out. If you send crews across, New Mexico needs to be listed on your WC policy's information page, and the certificate you send New Mexico operators should show it.

Anti-indemnity. New Mexico's statute, NMSA 56-7-2, voids indemnity tied to an oil, gas or water well to the extent it covers the indemnitee's own negligence, the negligence of a contractor directly responsible to it, or accidents in operations it directs or supervises. The 1999 amendment also voids additional insured and waiver of subrogation requirements that would get around that ban.

So one MSA can work differently on a Reeves County lease than on a lease a few miles north in New Mexico. The attorney reviews the contract. We make sure the insurance matches it for both states. See Texas oilfield anti-indemnity act and the Permian Basin guide.

Rule 36. Where gas in a system contains hydrogen sulfide at 100 ppm or more, Statewide Rule 36 requires the operator to use only trained service company personnel and to get written certification from the service company that its people were trained. Operators file a Form H-9 certificate reporting H2S concentration and maximum escape volume, and the RRC's H-9 query can be searched by county and district. Expect operators to ask for your H2S training records, often through ISNetworld or Avetta.

Ground movement. A 2018 Southern Methodist University radar study of about 4,000 square miles in Winkler, Ward, Reeves and Pecos counties found subsidence of more than an inch near newer hydraulically fractured wells near Pecos. That is a research finding, not a regulation, but it is a reason to know how your equipment floater treats collapse and earth movement.

To review a Pecos-area program, send:

• The insurance exhibit and indemnity sections of each MSA you work under.
• Your current certificates of insurance, and any rejection notice from ISNetworld, Avetta or an operator.
• A list of disposal wells or facilities you deliver to, and whether that list changed after the seismic actions.
• Whether any crews work in New Mexico, and how many people you have on payroll.

We will check whether your limits, endorsements and states listed match what the MSA asks for. Coverage is placed through a licensed Texas insurance agency. Contact an expert or start a review.