News

New Mexico’s latest hydrogen bill dies while Oil and Gas Reform Act advances

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Jerry Redfern, Capital & Main

A bill to overhaul New Mexico’s 88-year-old Oil and Gas Act passed out of its first committee hearing this week on a straight party vote, while a bill that would have promoted hydrogen production from natural gas disappeared from the Legislature’s calendar. The latest version of the Advanced Technology Energy Act, HB12, died quietly over the weekend without even receiving a committee hearing after its sponsors learned that tribal leaders from across the state strongly opposed it. Mark Mitchell, the chairman of the All Pueblo Council of Governors (which represents 19 pueblos in New Mexico and one in Texas), sent a letter outlining the group’s dismay to four of the bill’s five sponsors. He said tribal leaders were worried about the impacts of advanced technology energy projects “on water, groundwater, cultural resources, and sacred sites.” He then recommended the bill be tabled until legislators addressed tribal concerns. While calling the bill “well intentioned,” Mitchell recommended legislators do a better job of explaining the hazards and communicating clearly with tribal people before the next legislative session.

News

Oil and Gas Act reform clears first committee

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A bill attempting to reform New Mexico’s Oil and Gas Act passed its first committee, the Senate Conservation Committee, on a 6-3 vote on Tuesday. The Oil and Gas Act became law in 1935 and many of those original provisions remain in place. SB 418 reconstitutes the Oil Conservation Commission and requires that the Oil Conservation Division protects the public health and environment and promotes the public interest, health, safety and general welfare. It also requires “fair treatment and meaningful involvement of the public, including environmental justice communities,” according to the fiscal impact report. 

SB 418 also includes an environmental justice advisory council as well as single-well bonds for inactive or low-producing wells. These bonds would provide financial assurance that the wells will be remediated and bring those financial assurances more in line with actual costs.

NM Legislature

Bill would change oil and gas law to ease environmental impacts

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By Scott Wyland, Santa Fe New Mexican

A bill that advocates say would modernize the state’s Oil and Gas Act to consider impacts on the environment and disadvantaged front-line communities will go before the Senate Conservation Committee on Thursday. 

Senate Bill 418 contains a beefy list of proposed changes to the 87-year-old law, but the linchpins are more emphasis on combating climate change and pollution that can harm public health, especially in neighborhoods, schools and businesses near fossil fuel operations — which research shows are most often communities of color. 

The bill calls for revamping the state’s two main bodies for regulating the industry, eliminating the caps on “blanket bonds” for multiple oil wells, creating safer setbacks of drilling sites from communities and removing limits on fines for ongoing violations. 

It also seeks to establish an environmental justice advisory council to identify the inequities and recommend to the Oil Conservation Division and the rule-making commission how to address them.  

“The Oil and Gas Act was passed in 1935; we’re pulling this into 2023,” said state Sen. Leo Jaramillo, D-Española, the bill’s sponsor. 

The bill is the first major reworking of the law that he is aware of, he said, adding any significant revision would’ve happened long ago. 

Jaramillo said he’s hopeful the bill will make it through the committee, preferably with its most important provisions intact. 

“If not, it at least starts the conversation, and we bring it back again next session,” Jaramillo said. 

This is the latest effort to increase oversight on an industry that is extracting fossil fuel at an all-time high, providing about a third of the state’s tax revenue while also emitting a large amount of pollution. That includes methane, a climate-warming greenhouse gas, as well as nitrogen oxide and volatile organic compounds, which together form toxic ground-level ozone. 

The state’s oil production increased to a high of 531.4 million barrels in fiscal year 2022, a 30% jump from 2021. 

That has helped drive the state’s projected revenue for fiscal year 2024 to about $12 billion, giving lawmakers considerably more money to work with in the current session than last year’s $8.5 billion. 

Industry advocates in emails voiced opposition to the bill, calling it counterproductive. “SB 418 is a regressive bill that takes regulatory authority out of the hands of subject matter experts and places it into the hands of individuals who have the singular motive of ending the oil and gas industry in New Mexico,” wrote Jim Winchester, executive director of Independent Petroleum Association of New Mexico. “It will not only stifle some of the cleanest oil and gas production in the world, but it will potentially deny New Mexicans of hundreds of millions of dollars that go to critical services like education, public safety, social services, and even environmental stewardship in New Mexico.”

Ben Shepperd, president of the Permian Basin Petroleum Association, expressed concerns about “sweeping changes” the bill would make to the law. “It will undo all of the efforts that industry and environmental groups have negotiated in good faith over the last five years, including agreements on financial assurance in 2018 … and penalties in 2019,” Shepperd wrote.