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The executive order aimed at reducing the dangers of climate change, made by President Biden with an air of urgency, didn’t exactly cut oil and gas off at its knees. But it did deal them a blow that the industry knew was coming. Even though Biden’s move heralds the beginning of the very long demise of the fossil-fuel system, activity in the industry will not come to a sudden halt, as oil and gas are not going anywhere anytime soon. Hydrocarbons power our lives. No possible quick fix alternatives exist at this point for petroleum products, including petrochemicals and lubricants. Alternative products, in the amount needed, will take time and an extremely concerted effort to manifest over the coming decades.
In New Mexico, which is so dependent on the oil and gas industry for its economy, the order adds fuel to the need to transition to a more stabilized economy that utilizes renewable energy and a diverse economic base. New Mexico Commissioner of Public Lands Stephanie Garcia Richard told The Paper., “We are working as fast as possible to diversify revenue streams by advancing projects like the recent Netflix expansion, renewable energy development and new outdoor recreation opportunities. While we do that work, it’s certainly no secret that New Mexico and our funding streams remain reliant on extraction.”
Garcia Richard said the state is evaluating the impact that the president’s action will have on existing and upcoming leases on state trust land, many of which exist alongside federal leases. She went on to explain that the State Land Office exists to raise revenue to support public schools, while simultaneously stewarding the land for future generations. “We hope to work with the president and the incoming secretary [of the interior] to develop creative solutions to climate change. while continuing to nurture economic development and revenue diversification here in New Mexico.”
Oil and gas leases currently lock up 22.1 million acres of public lands in the West, leaving millions of leased acres idle and off-limits to other uses. The leasing system is outdated and favors the oil and gas industry, with 30 percent of active leases acquired over the last three decades purchased for $2 per acre or less. These existing leases are not affected by Biden’s executive order and will allow the industry to ride through Biden’s years in office and decades of presidents beyond him. The average lifespan of a well is 30 to 50 years, although they can last longer or shorter depending on different circumstances.
Oil and gas began amassing and stockpiling leases on public land the minute Trump came on the scene, with a grand finale of 1,400 leases in his last three months in office. Trump’s administration was more than nice to oil and gas, making at least 125 rule changes to favor special interests on public lands during his regime. They owe him big time. Time and a pending impeachment will tell if Trump has the power to collect on his IOU.
Many New Mexicans, environmentalists and state government officials seem determined to make the industry accountable for the effects production of oil and gas has on the health of its residents and the polluting of its land, air and water. At the same time, the state is setting an example for the rest of the country. Governor Michelle Lujan Grisham is leading the charge, while still recognizing how important the industry is to the state.
The Laws in the Legislature
There are several bills before the New Mexico Legislature this year that, if adopted, would have a huge effect on oil and gas operations. The Protecting Our Water Act (a.k.a. Produced Water Act amendments) would prohibit fresh water use in fracking. It provides consequences for spills, directs that fines for spills pay for public compilation of oil and gas data, mandates rules to protect against oil and gas pollution, requires tracking of produced water, requires public disclosure of contaminants in produced water that is spilled or offered for reuse for non-oil and gas purposes and sets forth legal requirements for rules governing use of treated produced water for reuse outside the oil field.
Proposed amendments to The Water Quality Act would remove language that forbids the state from creating more restrictive regulations governing water and air quality than are included in the federal regulations. There is also a constitutional amendment that would provide residents of New Mexico with environmental rights, including a right to a clean and healthy environment and a right to the preservation of the environment.
An Amendment to the Produced Water Act would set consequences for spillage and require operators to trace produced water from its origin to disposal, including disclosure of the components in the water such as naturally occurring radiation and limits the use of freshwater in the oil fields. HB 30—Water Lease & Use Effective Dates would limit the state engineer’s ability to grant preliminary or temporary approval for water leasing ahead of an application’s approval.
NM HB 76—EIB Permit Denial For Poor Compliance, would deny a permit application based on a history of poor compliance by an oil and gas operator. A citizen’s rights bill, HB 50—Private Right of Action for Certain Statutes, would enable citizens to file suit against gas and oil operators that cause them harm. At present such action must come from the state.
The Oil Conservation Commission Methane Gas Rule Hearing continuance is scheduled to start again Feb. 11, 2021—until completed. The public can join the hearing on the changes and deliberation of the proposed rules via WebEx at emnrd.state.nm.us/OCD/outreach.html.
What the Future Holds
Biden’s moratoriums on new oil and natural gas leases is for 60 days. He could, of course, extend it. The order does not outright ban new drilling. Senior Interior officials can approve actions that otherwise would be suspended. Biden also canceled the Keystone XL pipeline and has directed federal agencies to review and reverse more than 100 actions on the environment taken by the Trump administration. While he has not banned fracking activity by the industry, his newest order prevents any new fracking opportunities on federal lands. It would allow existing sites to continue operation.
Ryan Flynn, president & CEO of New Mexico Oil and Gas Association, said in an email that the Biden administration moratorium on leasing and permitting on federal lands all but guarantees that jobs, state revenue and the state’s economy are all at risk. “Oil and natural gas development on federal lands is a critical part of New Mexico’s economy and restricting activity here risks the loss of more than 60,000 jobs and $800 million in support for our public schools, first responders and healthcare services. Our state and our industry have already been battered by the pandemic. Now, just as we were starting to see some positive signs of recovery, we are facing another major hurdle.”
Biden has nominated New Mexico Rep. Deb Haaland as interior secretary. Haaland, who co-sponsored the Green New Deal by liberal Democrats, has said she opposes fracking and drilling on public land. Will the regulatory bills pass, and is oil and gas ready for a change? In the end, like any business that has existed for over 100 years regulating itself until recently, real change may not happen until they have exhausted all legal avenues not to.