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New Mexico Gets to Play With the Big Boys

We all know what happened in Saudi Arabia when black gold came spewing forth out of the sand. Billions upon billions of dollars went into a few pockets, and suddenly the Saudis had building infrastructure running for miles out into the open desert and plopped down a lot of buildings in the sand. As the third-largest oil producer in the U.S.—with the Permian Basin projected to be as large as Saudi Arabia’s gush by 2032—New Mexico has the potential to see a lot of money on the table. New Mexico has been poor for so long it is a hard notion to grasp how much potential revenue the oil and gas industry can contribute to the state’s economy.

Against the backdrop of a rampant pandemic and a struggling statewide economy, New Mexico is wrestling with the growing climate and health crisis it is seriously contributing to. Methane, a byproduct of oil and gas production, is a pollutant more hazardous as a greenhouse gas than carbon dioxide—both in terms of the quality of the air we breathe and as a major contributor to climate change. New Mexico is recognized as having the worst methane cloud in the country over the Permian Basin. And in 2014 NASA identified a huge methane cloud the size of Delaware over the San Juan Basin in northwestern New Mexico.

The word on the street is don’t push too hard on oil and gas, you’ll drive them away. Unfortunately, New Mexico’s oil and gas industry has a massive methane problem that must be dealt with to protect the health and safety of its residents. New Mexico urgently needs solutions that will help it to stand tall and make it stronger in the face of all of these crises. With the potential money that is at stake and the amount of permits the industry is applying for, the oil and gas industry doesn’t appear to be leaving anytime soon. 

To put the potential income from the industry into perspective, a recent report from the New Mexico Tax Research Institute showed an increase of $910 million between 2019 and 2018 to the total of $3.1 billion in tax revenue for the fiscal year from the oil and natural gas industry. There is a projected downturn in 2020 due to the pandemic; but given time, it appears the revenue will come pouring back into the state. The fossil fuel industry has always been a boom or bust industry and can play havoc with state finances and employment.  

As federal agencies have backed away from regulating the greenhouse gas under the Trump administration, state controls on methane have become increasingly important across the country. New Mexico has a chance to set an example for the nation on Jan. 4 at the public meeting of the Oil Conservation Commission (OCC), to enact regulations on emissions by oil and gas operations proposed by the Energy, Minerals and Natural Resources Department (EMNRD) and its Oil Conservation Division (OCD)—EMNRD’s primary compliance arm. After an extensive initial public comment period, the rules have been revised and are open again for public comment.  

Governor Michelle Lujan Grisham’s call for nation-leading methane rules received many replies, among them one from Tim Eichenberg, the New Mexico Treasurer and a group of 40 investors, managing some $102 billion worth of assets in the state. According to Conservation Voters of New Mexico (CVNM), the group sent a letter on Nov. 10 to the governor calling for members of the Oil Conservation Commission to remove exemptions and loopholes from the proposed regulations for oil and gas.

The targeted loopholes by Eichenberg’s group in the proposed rules were numerous. Operators should be required to clean up their existing wells before they get permits for new wells. Third-party verification should be required of all operators. Routine flaring of associated gas should not be tolerated in New Mexico. Rules should require operators to achieve a base 90 percent gas-capture requirement by the end of 2021 in order to get new drilling permits. Rules should require oil and gas companies to prepare natural gas management plans showing how they will minimize venting and flaring at the point that well-spacing decisions are made. Unacceptable proposed exemptions should be revised for low-producing stripper wells and for sites below a 15-ton-per-year pollution threshold, as existing exceptions are insufficient to mitigate serious flaws with the New Mexico Environment Department’s ozone pollution rule. It was also pointed out that proposed rules have weak incentive structure for Advanced Leak And Repair Monitoring (ALARM) and do not specifically cover methane leaks, only methane that is vented and flared.

Ben Sheppard, president of the Permian Basin Petroleum Association, whose membership includes some of the smallest operators and service companies and some of the largest producers in the world, told the Legislative Finance Committee members at their Oct. 28 meeting on Methane Reduction Strategy there were concerns about the current durations of each proposed rule. “As currently drafted, they will increase costs for the industry and could potentially have negative implications for the future of oil and gas development in New Mexico. There is also strong evidence that increase in methane capture is already occurring under the current regulatory framework,” he said.

Nathalie Eddy, an international environmental attorney with expertise in air quality and climate change policies and a certified optical gas-
imaging thermographer who works as a field advocate in New Mexico for Earthworks, recently told The Paper., “There’s so many leaks and spills in this air you can’t even pinpoint some of them, because there’s just odors everywhere.” Eddy said she uses a high-tech FLIR camera to take optical gas imaging to find leaks and to record footage of problems with oil and gas infrastructure. “I was just out in the field for a week and a half. I was in the Four Corners area, Chaco area, and then went down to the Permian and found more of the same emissions from all types of smaller and large sites.” Some of Earthworks’ invisible oil and gas pollution is visible through optical gas-imaging videos created for the Community Empowerment Project. New Mexicans are invited to view for themselves at earthworks.org/campaigns/community-empowerment-project. [ ]