February 1, 2022

NM eligible for $43.7 million to address orphaned wells

Hannah Grover/NM Political Report

An abandoned pumpjack is seen in a field in Kirtland.

New Mexico is eligible for $43.7 million in federal funding to pay for cleaning up orphaned oil and natural gas wells.

The U.S. Department of the Interior announced on Monday that $1.5 billion of funding is available to states that sent in notices of intent to apply for funding made available through a federal bipartisan infrastructure bill signed into law in November.

“President [Joe] Biden’s Bipartisan Infrastructure Law is enabling us to confront the legacy pollution and long-standing environmental injustices that for too long have plagued underrepresented communities,” Secretary Deb Haaland said in a press release. “We must act with urgency to address the more than one hundred thousand documented orphaned wells across the country and leave no community behind. This is good for our climate, for the health [of] our communities, and for American workers.”

Related: BLM hosts roundtable discussion about federal funding for orphaned wells

The new law created a program with $4.7 billion to address orphaned wells nationwide. The funding announced Monday includes a $25 million initial grant for each of the 26 states as well as phase one formula funding equal to a quarter of the formula funding the states are eligible to receive. The DOI calculated the formula funding for each state based on job losses between March 2020 and November 2021, the number of documented orphaned wells and the estimated cost of cleaning up those orphaned wells, according to a press release from the department.

New Mexico is eligible for $18.72 million in phase one formula funding. The law allocated $2 billion for formula funding. Phase One includes $500 million.

“The investments in this program are a win-win, protecting the environment and public health while also providing good-paying jobs in our rural areas,” Gov. Michelle Lujan Grisham said in a press release. “I am grateful to our congressional delegation for getting this funding to the state.”

Related: Officials say plugging orphaned wells protects public health and environment

Tyler Cherry, a spokesperson for DOI, explained that the states can apply for phase one funding as soon as the agency releases guidelines. These guidelines should be released in the upcoming weeks.

The additional phases of formula funding will involve future allocation and, Cherry said, there isn’t a set date for when the subsequent phases will be announced. He said the department wants to give states time to identify additional orphaned wells and ensure that it can verify the state-provided data.

“The Department is taking a thoughtful and methodical approach to implementing the orphaned oil and gas well program that aims to get money to states as quickly as possible while being responsible stewards of taxpayer dollars. We are committed to ensuring states receive investments equitably and based on data-driven needs,” Haaland said in the press release.

A total of 26 states submitted notices of intent to apply and most of the states were interested in both the initial grant funding and the formula funding.

The state that is eligible for the largest amount of formula funding is Texas, which is eligible for more than $82.56 million in phase one funding. Meanwhile, Alabama has the lowest amount of eligible phase one formula funding—$436,000.

After the guidelines are released for applying for the grants, the Department of the Interior will also provide instructions for states. 

“This first round of funding will put the Oil Conservation Division on track to plug and reclaim more sites statewide,” Sarah Cottrell Propst, secretary of the state’s Energy, Minerals and Natural Resources Department said in a statement. “New Mexico has been preparing for an influx of funding to address this issue and we look forward to ramping up our efforts cleaning up these sites.”

U.S. Sen. Martin Heinrich, a New Mexico Democrat, praised the funding opportunity as a way to create jobs while addressing emissions.

“Orphan wells are an enormous source of methane, a greenhouse gas that is 86 times more potent than CO2. With this new funding we’re putting our traditional energy workers to work solving a major climate challenge,” he said in a press release.

Related: Federal lawmakers seek funds to plug orphaned oil and gas wells

U.S. Sen. Ben Ray Luján, who sponsored the REGROW Act to fund cleanup of orphaned wells, also praised the announcement.

“I’m pleased to see my REGROW Act implemented by the Department of the Interior as part of the Infrastructure Investment and Jobs Act,” Luján, also a Democrat, said in a press release. “This effort was supported by a majority of our nation’s governors, as well as leading environmental and energy leaders, and I’m thrilled to see it in action. Through this historic investment in protecting our environment, this legislation will clean up tens of thousands of orphaned wells across the nation, including more than 1,700 in New Mexico, creating thousands of good-paying jobs in the process.”