Pre-COVID, the Land of Enchantment was riding high on the greatest oil boom in its history. After almost two years of COVID—coupled with a growing climate change awareness and the formation of coalitions of environmentalists, Native tribes and pueblos and local concerned groups of citizens that are supported by top notch legal advocates—New Mexico is making decisions whether it wants to be left “holding Santa’s bag of coal” as it tries to find ways to transition toward a low-carbon economy. The coalitions are saying it’s about time the oil and gas industry (O&G) paid its own way and cleaned up its environmental mess. O&G harps, through its PR firms, that New Mexico needs its money to survive. Right now, that’s true.

There is a lot of money at stake. Oil and gas revenue comprised 40 percent of the 7 billion dollar-plus state budget in 2019—a windfall to a state that has been poor for so very long. Oil production on New Mexico state land led to a record $1.25 billion in revenue in the last fiscal year. The New Mexico State Land Office reports Fiscal Year 2021 revenue estimates at $1.2 billion, with 96 percent of those funds coming from oil and gas royalties.

There are a slew of effects O&G produces that have grown too hard to ignore⁠—like a methane cloud in the corner of the state the size of Delaware. Coalitions have regulators at a multitude of hearings that are ending up placing short reins on the O&G industry. Mother Nature appears determined to shine a bright light on the situation underground as new issues with the industry continue to surface.

The Shake Up

After multiple earthquakes were felt earlier this fall, regulators in West Texas designated two seismic response areas and have called for less wastewater from oil and gas development to be injected in disposal wells. More than a dozen quakes along the state line have been reported since Jan. 1, 2020. Six of those were reported this fall. Some officials are concerned that, as Texas limits the injection of produced water as a means to curb the seismic activity, it could affect producers in New Mexico. Texas officials referred to the activity as “unprecedented.”

Most of the seismicity being observed is due to saltwater disposal wells and possible over-pressurization. At this point Texas’ earthquake problem is spreading toward New Mexico, according to Michael Hightower, director of the New Mexico Produced Water Research Consortium at New Mexico State University.

“We know there’s a lot of water coming over from Texas,” he said. “If you inject all that, you’re going to have seismicity problems.”

The consortium is seeking environmentally sustainable alternatives for the disposal of O&G-produced water. While O&G already recycles produced water for subsequent fracking operations, they are addressing environmental and water scarcity concerns tied to fossil fuels by looking at reducing the volume of produced water and expanding the potential for its reuse as an economic opportunity.

New Mexico’s Oil Conservation Division director, Adrienne Sandoval, said her agency is encouraging operators to recycle and reuse water instead of injecting it. Sandoval said the state has seen some induced seismicity on the New Mexico side of the border along the Lea and Eddy County line. She said they are gathering data and want to be proactive and protective, “so we can minimize seismic activity as much as we can.”

The Sinkhole

A Carlsbad sinkhole highlights the need for increased oversight and the need to regulate and identify potential hazards the state and its residents could be exposed to from O&G production. What appear to be low-likelihood risks could develop into large and unforeseen costs for future generations.

The sinkhole is in an oil field service company’s brine well and was discovered by New Mexico oil regulators in 2008. The company declared bankruptcy, and the New Mexico Energy, Minerals and Natural Resources Department spent $5.3 million studying and monitoring the Carlsbad sinkhole looking for a solution.

The original budget for remediation of the Carlsbad sinkhole was estimated at $43 million and was funded through state and local funds. In July 2020 the project was suspended for lack of funds, leaving the south portion of the site backfilled and stabilized, with the north portion of the site only partially filled and partially stabilized. The amount of material needed was tremendous—more than 170,000 cubic yards of sand. Screened stone (which is very fine) weighs 2,970 pounds per cubic yard.

An array of sensors was deployed across the site to collect data 24 hours a day, seven days a week to detect ground movement and pressure within the cavity. Estimates of damage the sinkhole could cause have ranged as high as $1 billion. It could potentially swallow a highway intersection, an irrigation canal, a feed store, part of a mobile home park, a rail line, a church, several gas stations and an irrigation canal that provides water for more than 30 square miles of agricultural lands.

After a review period, an additional $18 million in funding has been secured from the state, Eddy County and the City of Carlsbad. The project is now awaiting a signed contract and final approval by the Brine Well Remediation Authority. They anticipate the completion of backfilling in the spring of 2022.

In a plan recently rolled out by the New Mexico Oil Conservation Division, pending permits for wastewater injection in certain areas will require extra review. More reporting and monitoring also could be required and if things worsen, the state could limit how much wastewater is injected in disposal wells.

State officials say the protocols were developed in partnership with New Mexico Tech and after getting feedback from the oil and gas industry.