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Flexing Enforcement Muscles On Oil and Gas

Black Gold is running out, and the oil and gas industry has spent billions trying to figure out how to squeeze every last drop out of Mother Nature. At the same time, New Mexico is setting a national example on how clean the petroleum industry has to be over the next decades as we transition into cleaner renewable energy. Last year Governor Michelle Lujan Grisham issued an executive order directing both the Energy and Minerals Natural Resources Department (EMNRD) and the New Mexico Environment Department (NMED) to develop a regulatory framework and draft rules to secure reductions from the oil and gas industry related to methane and volatile organic compounds and oxides of nitrogen.

“For the first time New Mexico is integrating adaptation and resilience into its climate policies across all of state government,” Lujan Grisham said. “We will lead—not only within our state’s borders but beyond.” Over the last year, the two departments have been building on their initial Climate Strategy report.

At the New Mexico Legislative Finance Committee meeting on Oct. 28 on Methane Reduction Strategy: Proposed Rules, Costs of Implementation and Effects on Production and the Environment, James Kenney, secretary of NMED, spoke on the proposed rules. He said they will be presented to the Oil Conservation Commission (OCC) at their regular meeting on Nov. 4 for consideration. The OCC will also decide  whether to hold a public hearing on the proposed regulatory rules. Kenney said the departments would recommend the OCC publish in the New Mexico register on Nov. 24 with the public comment period beginning in December of this year. They will propose to the commission that the actual public hearing commence in January of 2021.

Kenney said the rules focus on reductions and setting of emission standards, as well as additional practices on new and existing pieces of equipment. “We received over 400 public comments on our rules that we are continuing to review.” Kenney said. He anticipates having a version of the rule to petition the Environmental Improvement Board (EBI) in December. Kenney anticipates the EIB will schedule their hearing on the rule sometime in 2021. The hope is these rules stay evergreen.

Sarah Cottrell Propst, Secretary of EMNRD, further explained the proposed rules had two phases. Phase one focuses on data and reporting and begins June 2021. “We know that the data that we have today is incomplete and inconsistent. We need more data from operators in the oil and gas industry about venting and flaring,” she said. “Phase one requires that operators measure and report all venting and flaring during operations. This data will be used to establish enforceable targets for phase two, when the actual reductions need to start occurring,” Cottrell added.

Phase two focuses on gas capture based on levels identified in phase one. “Operators have to reduce their waste by a fixed amount every single year for four years to achieve a 98 percent gas-
capture rate by the end of 2026. And then, at that time, they have to maintain a 90 percent gas capture in perpetuity,” Cottrell said. Ultimately, every single well in the state and every single operator has to get to a 98 percent gas capture. “For those who do not meet those targets, we do have options ranging from shutting of wells to not approving new permits to drill or fines and penalties,” she explained.

Ben Shepperd, President of the Permian Basin Petroleum Association, said of the EMNRD and NMED, “Both agencies have been accessible and listened to our concerns and we’ve been included in the process.” However, Sheppard said there continue to be concerns about the current durations of each proposed rule. He said, as currently drafted, the rules will increase costs for the industry and could potentially have negative implications for the future of oil and gas development in New Mexico. He said there is strong evidence that methane capture is already occurring under current regulations.

Sheppard took issue with the proposed rule requirement for operators to have every single piece of equipment with a scannable barcode that will provide monitoring information and a tracking tag. He said he believed the $26,000 cost to operators a year to install and monitor would be better spent on upgrading and purchasing equipment that actually detects leaks. Sheppard also objected to the inclusion of a third-party verification. “We have great concern that the proposed administrative burdens under these rules will not appreciably increase the capture of methane, but instead will result in the shutting down of a high number of currently producing wells.”

Erik Schlenker-Goodrich, Executive Director of the Western Environmental Law Center, also spoke at the finance meeting saying, “I want to applaud the governor as well as both secretaries and their agencies for moving forward with what we hope will ultimately prove to be nation-leading methane- and ozone-
reduction strategies.” Schlenker-
Goodrich said cumulatively one billion tons of methane, the primary ingredient of natural gas, is being wasted. “It’s equivalent to the potency of 22 coal-fired power plants or upwards of 28 million additional cars on the road; so getting rid of this methane pollution can be a significant factor in ameliorating the climate crisis.”

Schlenker-Goodrich said the methane and pollution released in conjunction with volatile organic compounds can cause unhealthy air quality creating- problems for kids, adults, other people— respiratory issues, cardiac issues, etc. “And then there is just a huge economic problem right now, and what is being lost is wasting a marketable product that produces revenue for the state; lost revenue for the state for upwards of $43 billion.”Reducing methane now can slow global warming. Governor Lujan Grisham’s vision to “make our communities more sustainable and resilient and lay the foundation to provide for the generations of New Mexicans yet to come” will need a strong arm to enforce proposed oil and gas emission rules. Whether our state actually has enough muscle to stand up to the petroleum industry remains to be seen. [ ]