January 9, 2015

Far from heaven: Fatalities, crime and rents rise alongside oil production

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Oil pumps behind a cemetery in New Mexico's oil patch. Photo Credit: Margaret Wright.

© New Mexico Political Report, 2015. Contact editor@nmpoliticalreport.com for info on republishing.

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Oil rigs circle a peaceful cemetery in Eunice, NM. Photo: Margaret Wright

Part two in a series of two. Click here for part one.

On a two-lane New Mexico state road, the number of heavy commercial trucks and semis roaring southeast between the villages of Loving and Jal tops 200 in under an hour. It’s the day before New Year’s Eve. Drivers push past the speed limit, fishtailing over the faded yellow lines or passing when road markers prohibit it. The potholed asphalt ricochets loose gravel; auto glass shops are among local businesses profiting from the manic rise of shale oil extraction.

Commuting in Eddy and Lea counties poses white-knuckled risks. It’s one of many negatives to the southeast region’s surge in unconventional drilling operations.

Today a barrel of oil is at less than half the selling price just six months ago. It’s hard to say how—or if—the area’s strained services will be able to recuperate now that oil has tanked, reducing the amount of new money the state forecast for budgeting.

State Rep. David Gallegos, R-Eunice, tells stories from his district that reflect repercussions from the industry’s highs and lows. Times have been flush, but rents are up around $1,200 a month for a small family home. With schools and emergency rooms at capacity, local officials have been working with home developers to create incentive agreements so that badly needed teachers, firefighters, police and nurses can afford to move into the area.

Following flooding rains in September, a county road on a Eunice school bus route was washed out to one lane. “If you had a semi and a school bus passing at the same time, one would have to go off the road,” says Gallegos, “so we canceled our bus routes out there for the safety of the children.”

The school board had to make the tough call of transferring the students to a neighboring district until a fix could be found.

Gallegos says because oil and gas pays so well, it’s easy to overlook how higher costs of living hurt seniors and people with disabilities. Now that crude prices have fallen, that could change. But there’s a catch: “When oil drops, it affects the whole state.”

Lea County Commission Chair Gregg Fulfer, who works in the oil industry in addition to serving on the state’s Environmental Improvement Board, says the lag in infrastructure improvements drains other sources of state and local revenue. He adds that a 2011 study of Lea County found that in smaller oil patch towns without adequate permanent housing, about 70 percent of the workers are forced to leave the area at the end of every shift, taking potential tax dollars with them.

“In a market town like Hobbs,” adds Fulfer, “it’s about 40 percent leaving, so that’s pretty tough, and a lot of those people are going to Texas. New Mexico’s losing out on the growth, and it makes Texas look really good.”

Small Towns, Big Emergencies

Drilling equipment, rigs and pipelines have inundated the desert in New Mexico's southeast corner. (Photo: Margaret Wright)

Drilling equipment, rigs and pipelines have inundated the desert in New Mexico’s southeast corner. (Photo: Margaret Wright)

Other requirements for a good quality of life in New Mexico’s oil and gas regions have buckled under the pressure from the shale-drilling boom.

Eve Flanigan, program manager at the Carlsbad Community Anti-Drug and -Gang Coalition, says the volume of heavy truck traffic poses unprecedented dangers. “If as many people died of ebola in this country as have died in Eddy County since January 2014,” she says, “we’d be looking at a national emergency.”

Flanigan says other basic services like trash collection in Carlsbad are wholly unprepared for the new influx of industry and people.

Local zoning regulations aren’t designed for current housing needs or new development, Flanigan says. She adds that either local law enforcement nor social services are equipped to push back against other changes rattling townsfolk.

“Oil companies as corporate entities really embrace and highlight their environmental protection measures,” says Flanigan, “and they’re ready and willing to engage in discussions about that. They’re not so ready and willing to engage in discussions about the drug and sex trafficking that comes with the industry.”

The majority of oil workers are men making well above New Mexico’s $7.50 minimum wage, many of them out-of-state roustabouts living in short-term housing called man camps.

“Sometimes they’re made of RV fifth-wheel trailers,” says Flanigan, “sometimes they’re little Morgan buildings, efficiency apartment structures. They pop up virtually overnight usually centered around a worksite: a drilling pad, a transfer station.” She says as they go up in remote places, conditions are ripe for illegal activities.

Wally Drangmeister, communications director for the New Mexico Oil and Gas Association (NMOGA), says while “it may be a concern,” he doesn’t think criminality is a big problem in New Mexico’s man camps.

“Does that mean it’s impossible? People are people, and when you get a lot of them together, not 100 percent of them are going to do the right thing.”

James McCormick, a 25-year law enforcement veteran who heads up the Pecos Valley Drug Task Force, says the number of calls to local police have increased exponentially over the last five years as the oil industry’s ramped up work.

Eddy and Lea counties, with their U.S./Mexico border proximity, have long seen high incidents of drug trafficking, but the problem’s gotten worse, says McCormick—the result of supply/demand dynamics. “What comes along with cash? All of the sins.”

He ticks off the list of nagging local ones: prostitution, burglary and narcotics, especially meth. Plus, the many itinerant workers arriving from out of state go uncounted in official population numbers.

“We’re really short-staffed and undermanned,” he says. “I could use five, ten more agents tomorrow without a problem. But we don’t have the manpower to that.”

Drangmeister says industry operators share residents’ concerns. While he can’t name specifics at this time, he says there are also plans being forged with local leadership “to provide more resources in terms of roads that could be win-win as far as both the counties and the industry.”

Back at Carlsbad’s anti-drug-and-gang coalition, Flanigan says downturns in the community’s appearance and basic civic functions hinder efforts to prevent and treat substance abuse. The condition of physical surroundings send an unspoken message to local families, she says, especially ones with children.

“If there’s no place to put the trash, and it blows all over the neighborhood, that contributes to perceived lower expectations. Based on my drug prevention life, that’s a big concern.”

More Hidden Costs

The upside of New Mexico oil and gas production in the form of job growth, tax revenue and royalties is well documented. A 2011 study funded by the American Petroleum Institute, for example, found that every one job created in the U.S. oil and gas industry has a ripple effect of adding about three others.

Much less clear is the bigger picture of social and environmental costs oil companies pass along to the public in places where extraction takes place.

According to a December 2014 report from a partnership of corporate oversight advocates and shareholders, major energy companies have a long way to go when it comes to being upfront about impacts of hydraulic fracturing activity, more commonly known as fracking.

NMOGA’s Drangmeister says although inspections of new and producing oil and gas rigs on state and federal lands have failed to keep pace with industry construction, “these have not shown to be huge issues.”

Besides, he says, “anything that would be a problem for a regulator would also be a problem for us. We want wells with high degrees of integrity, because that’s how we make our money. If these wells lose integrity, the millions of dollars we’ve put into them to make and produce are put at risk.”

Jim Winchester is spokesperson for both the state’s Environment Department and the Energy, Minerals and Natural Resources Division (EMNRD) that oversees the Oil Conservation Division. He writes via email that “inspectors at OCD are doing an adequate job, but with the booming oil and gas business, more inspectors are necessary.”

The Environment Department is asking the Legislature for a budget increase this session, he says. OCD is also requesting money to add hire another nine inspectors, “to provide increases in the number of inspections on active wells, plugging wells releases, remediation of spill sites and overall environmental compliance. This response includes all counties in New Mexico.”

The OCD’s mandate includes oversight for water quality issues associated with oil and gas operations, and based on the numbers, they don’t have an easy job.

According to Winchester, from July 2013 to June 2014, a total of 14 OCD staffers (one position is currently vacant) inspected 38,920 oil and gas wells or facilities. That means working at full staffing levels, OCD inspectors would have inspected seven wells a day, seven days a week.

Lives Lost

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A glimpse from rig-crowded Loco Hills between Artesia and Hobbs. (Photo: Margaret Wright)

Taxpayers are on the hook for other costs of industry in the oil patch. Two sinkholes formed on the New Mexico side of the Permian Basin during brine well production related to drilling operations. One lurking under a major roadway conjunction in Carlsbad will likely collapse in 10 to 20 years, according to the Current-Argus. The company that created it has since declared bankruptcy.

OCD spent just over $1.74 million in 2014 dealing with the Carlsbad sinkhole, according to Winchester. He writes that “despite what the Current-Argus article might say or imply, it would be a incorrect to say it is EMNRD’s position that the City of Carlsbad is solely responsible. We are attempting to work with a larger number of stakeholders and interested parties toward resolving the situation.”

Flanigan of the Carlsbad Community Anti-Drug and -Gang Coalition says southeast New Mexico “embraced this industry, but people aren’t blind to its drawbacks.”

People outside oil-producing regions don’t always think about all the things oil and gas provide, she adds. “The plastic that your Prius dashboard is made from comes from oil. Virtually everything we touch all day has something back in its lifespan tied to this industry. The fact that we’re enjoying low fuel prices is, in part, due to the amount of production going on down here.”

She and her neighbors often feel frustrated that the bulk of tax money they and the industry pay doesn’t come back to the community, says Flanigan, “in terms of better highways, in terms of more police patrol. That’s the constant drumbeat here.”

Meanwhile, says NMOGA’s Drangmeister, “we’ll have to wait to see if the downturn in price reduces some of that [production] activity in the short-term, and/or lets the infrastructure catch up. At this point we have not really seen a reduction in oil activity, but we haven’t seen it grow really either. It may stabilize for a while.”

He says oil companies expect activity in the fields to slow down if prices stay low, which would take some pressure off area communities.

That may be a relief to Vickie Connally, who lives in the little village of Loving, NM, south of Carlsbad. She describes it as one of the newest epicenters of industry activity.

“I would say there’s probably not one family group—and we have several large families in the area—that have not had a [motor vehicle] death in the last couple of years,” says Connally. “It’s just awful.”

A neighbor down the road with two young children was killed a wreck. Connally knows another family that lost two brothers on the road home from 12-hour shifts in the oil fields.

“That’s the most tragic and important point that needs to be made,” she says, “because those lives are more important than everything.”

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