New Mexico’s commissioner of public lands announced he’s giving Houston-based oil and gas companies a break as the city struggles with the impacts of Hurricane Harvey. Aubrey Dunn said his office is offering a grace period to the 25 Houston companies and subsidiaries with state leases. The extension moves the Sept. 25 due date for royalties and interest on oil, gas and carbon dioxide extracted from leases on state trust lands to Oct. 25.
A special audit of the city of Jal found government officials in the southeastern New Mexico oil patch town gave “improper billings and adjustments” of more than $660,000 between 2008 and 2016. Those billings may violate New Mexico’s anti-donation clause, State Auditor Tim Keller concluded, which bars local and state governments from making donations to private individuals. The audit comes after NM Political Report and the Jal Record reported last September that city officials gave a local rancher a $1.2 million discount on commercial water use between August 2012 and April of 2014. At the same time, the city raised water rates on other customers. Jal officials also continued selling industrial water to the the Beckham Ranch, Inc., for six months after a ban on industrial water sales went into effect.
With all the big oil and gas news over the last few weeks, it might be hard to keep track of the different rules, agencies, court rulings and studies—and what they mean for New Mexico. Last week, U.S. District Judge James “Jeb” Boasberg ruled that the federal government’s environmental review of the Dakota Access Pipeline was insufficient. The ruling came after the Standing Rock and Cheyenne River tribes sued the federal government, arguing the U.S. Army Corps of Engineers hadn’t complied with the National Environmental Policy Act when it greenlighted plans to build the oil pipeline under Lake Oahe, a reservoir on the Missouri River. In his opinion, Boasberg wrote that the court agrees that the federal government didn’t adequately consider how an oil spill would affect fishing rights, hunting rights or environmental justice issues. It’s not clear, however, if the company must cease operations while the Corps of Engineers reconsiders certain sections of its environmental analysis.
For most of this year, the budget was the hottest topic for legislators and the governor. Both branches battled, then came to an agreement no one seems enthusiastic about. The deal suggested by Gov. Susana Martinez essentially amounted to using bonding money normally reserved for state infrastructure to balance the budget. State lawmakers request the bonding money for state infrastructure projects. Issuing bonds works like a home mortgage: the state borrows money backed by oil and gas revenue and pays it back with interest over the years. Senate Finance Committee Chairman John Arthur Smith, D-Deming, said the funding method “sets a poor precedent” while Senate Minority Leader Stuart Ingle, R-Portales, said he didn’t “like to do this either.”
And yet, the plan passed with a unanimous vote in the House of Representatives and just two dissenting votes in the Senate.
Sen. Richard Martinez, D-Española, presented a bill to the Senate Conservation Committee Thursday that would restore a state agency’s ability to penalize oil and gas companies that pollute water. Senate Bill 307 would also increase those penalties, which haven’t been updated since the Legislature passed the Oil and Gas Act of 1935. During his presentation to the committee, Martinez pointed out the timeliness of the bill as the Trump administration has emphasized, he said, the “need to shift power to states.” If passed and signed into law, SB 307 would “ensure we meet the federal government’s standards for New Mexico to be in charge of its oil and gas programs,” he said. Under the Safe Drinking Water Act, the U.S. Environmental Protection Agency can authorize states to take over certain regulatory duties. Under that program, states must be able to assess penalties against companies that pollute water.
On Tuesday a bill to fund early childhood education programs with two new taxes on energy and electricity producers failed to make it out of committee. During the Senate Conservation Committee meeting, Sen. Michael Padilla, D-Albuquerque, sought support for a bill that would create an early childhood education fund paid for by a one-hundredth percent oil and gas energy surtax and a one cent per kilowatt hour tax on electricity produced in New Mexico. The two revenue sources would generate more than $320 million annually, according to the fiscal impact report for Senate Bill 288. Once the meeting was opened for public comments, not one audience member spoke in support of the bill. But more than a dozen lobbyists and representatives of the oil and gas industry and utilities like PNM, El Paso Electric, Xcel Energy and Tri-State Generation and Transmission opposed it.
In recent years, spills of crude oil, natural gas and drilling wastewater have increased even more rapidly than production has grown. Yet the state of New Mexico doesn’t fine or sanction oil and gas companies that pollute water. A bill before the state legislature seeks to change that. If passed, the bill wouldn’t create new rules or regulations. Instead, it would allow the state’s Oil Conservation Division (OCD) to impose penalties on polluting companies.
A newly released federal audit points to continued problems in how the federal government manages oil and gas leases and payments for some Navajo families, including in New Mexico. In the 19th century, the federal government deeded some lands within the boundaries of the Navajo Nation to individual families. Families can choose whether or not to allow oil and gas companies to drill on those lands, called “allotments,” which are not overseen by tribal government. Instead, the leases and permits for those wells are handled by the Federal Indian Minerals Office. Based in Farmington, FIMO also oversees royalty payments.
New Mexico legislators start their 60-day session Tuesday with plenty of unfinished business, including closing a projected budget deficit of about $67 million. But any hope that the passing of a rancorous election year and the ongoing budget crisis would inspire bipartisan compromise already seems to have evaporated. Instead, Republican Gov. Susana Martinez and top lawmakers have staked out positions that almost guarantee a clash over taxes and spending. In addition, more budget cuts are likely, no matter the outcome. Martinez proposed easing the projected deficit by requiring public employees to pay for a bigger share toward their pensions.
As New Mexico legislators get ready to tackle the ailing state budget in a few weeks, oil and gas prices are on the rise. Today, the U.S. Energy Information Administration announced that energy commodity prices rose more than any other sectors last year. According to the EIA, after two years of significant declines, crude oil prices rose late in the year. That happened after OPEC (Organization of Petroleum Exporting Countries) and non-OPEC countries announced they would cut production in early 2017. A widespread boost in production over the last few years, in the United States as well as the Middle East and Russia, had led to a glut of oil and lower prices.