Environmental advocates push for increased oil and gas bonding rates

A coalition of environmental advocacy groups filed a petition Monday urging the state Oil Conservation Division to raise the bonding rates for oil and gas companies. They say increasing the bonding rates will reduce the amount of taxpayer money that must be spent cleaning up abandoned oil and gas facilities. This petition comes after a […]

Environmental advocates push for increased oil and gas bonding rates

A coalition of environmental advocacy groups filed a petition Monday urging the state Oil Conservation Division to raise the bonding rates for oil and gas companies.

They say increasing the bonding rates will reduce the amount of taxpayer money that must be spent cleaning up abandoned oil and gas facilities.

This petition comes after a study commissioned by the State Land Office found a more than $8.1 billion gap in the funding available through bonds and the costs of cleaning up oil and gas sites if companies go bankrupt. The study results were released in 2021.

Bonding essentially serves as an insurance policy in case the company responsible for cleaning up the site walks away from its duty. That can be seen in the case of a producer declaring bankruptcy.

“Taxpayers should not be on the hook for cleaning up oil and gas wells and infrastructure, but that’s the current reality for our state,” Camilla Feibelman, Sierra Club Rio Grande Chapter Director, said in a press release.

According to the 2021 study, the existing financial assurances, or bonds, may be able to cover about two percent of the oil and gas infrastructure on state and private lands in New Mexico.

Often larger companies will sell low producing wells to smaller companies that are more prone to bankruptcy and are less financially resilient.

In the petition, the groups call for the OCD to require bonds of $150,000 per well for facilities that are considered high risk. This rate is based on the OCD estimates that it costs $150,000 to plug each well.

Additionally, the groups want time limits on how long a well can remain inactive, or idle, before the company is required to plug and reclaim it. 

The advocates are also pushing for oversight of operator transfers that they say will ensure companies have the financial resources to clean up, plug and reclaim the well sites. 

And, they say, these changes will benefit the state by creating jobs for displaced oil and gas workers, protecting water supplies and reducing emissions.

“Abandoned and orphaned oil and gas wells or those not properly dealt with accelerate climate change, threaten health, harm future generations and lay a burden upon ordinary people. Stronger bonding in the oil and gas field in New Mexico is an ethical action and helps industry with their moral responsibility of clean-up,” Sister Joan Brown, executive director of Interfaith Power and Light-New Mexico and El Paso Region, said in a press release. “Are we not all called to care for our neighbor and this sacred land, water and air that is a gift?”

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