August 30, 2017

State Land Office extends grace period to Houston-based drilling companies

Courtesy Photo

Aubrey Dunn

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.

The Houston area experienced an unprecedented amount of rainfall from the landfall of the hurricane. Earlier this week, the National Weather Service even had to update its color charts to effectively map the amount of precipitation parts of Texas received.

According to news reports, the extensive flooding has now closed 15 refineries in Texas, representing 25 percent of the country’s refining capacity. That includes the largest U.S. refinery, which is based in Port Arthur, Texas and owned by the state oil company of Saudi ArabiaLeaks and accidents are occurring at the flooded refineries and petrochemical plants, as well.

Suspended production in the Houston area will affect the state’s general fund, Dunn said. His office also noted that about 40 percent of severance taxes collected by the New Mexico Taxation and Revenue Department comes from Houston-based companies.

“Hurricane Harvey’s destruction is far-reaching and will cause substantial revenue volatility in New Mexico,” Dunn said in a press release. “By disrupting a key hub of the nation’s energy industry, Harvey will impact the revenues the State Land Office collects and distributes to the schools and institutions that count on us to pay their bills.”