Some state legislators are concerned about the possible revenue implications of a proposed rule aimed at reducing methane waste in oil and gas operations. The state’s Legislative Finance Committee, a committee made up of members of both the House and Senate that considers priorities for the state budget ahead of the January session, is gearing up for a tough year financially for the state after the COVID-19 pandemic and an unrelated but simultaneous bust in the oil market has ravished state coffers.
“The state is in, in my terms, dire financial straits, because of income,” said Sen. Bill Burt, R-Alamogordo. “We are in a time right now where income to the state is down, oil and gas revenues are down. The timing sometimes is not always the best and so I think hopefully that will come into consideration before we finally apply these rules.”
The state’s Energy, Minerals and Natural Resources Department (EMNRD) proposed methane rule would require all oil and gas operators in the state to reduce their methane waste by a fixed amount every single year, starting in 2022, to reach the 98 percent gas capture rate by the end of 2026.
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EMNRD Secretary Sarah Cottrell Propst told lawmakers during a recent Legislative Finance Committee meeting that the department’s proposal “will yield an additional $10 billion a year in revenue to the state for wasted resources” that would otherwise be lost. Cottrell Propst called the $10 billion a “low-end estimate.”
But several lawmakers on the committee worried the new regulations would threaten some of the state’s oil and gas operators during the downturn.