In the past seven months, oil and gas companies have dramatically stepped up their outreach and public relations spending at some of New Mexico’s best-known, best-loved events. The industry also picked up an additional public relations bump from the not unexpected news that oil and gas revenues will add an additional $2.5 billion to next year’s state government budget. This record breaking funding comes on the heels of last year’s record breaking budget, both of them courtesy of record breaking oil and gas production and record breaking oil and gas prices. All of this money sloshing around the state raises the positive public profile of the petroleum industry. Meanwhile, the public sees little of its state Legislature — but that doesn’t mean it’s not busy.
Back in 2020, as oil and gas prices tanked because of the COVID crisis, New Mexico implemented an emergency program that would allow oil and gas producers to temporarily stop production and shut down wells for up to three years without penalty. The state’s Oil Conservation Division (OCD) created the program so that companies could bank petroleum reserves until prices rebounded — a move that would preserve profits for the companies and safeguard future tax revenue from the state’s largest single stream. Understandably, the program proved popular and, at its peak, 34 companies idled 6,505 wells — roughly 12% of the state’s total number of active facilities. As energy prices rebounded and then soared into record territory in the last year, most of those idled wells returned to producing fuel and tax revenue. But not all.
Oil and gas revenues added more than $1.7 billion to New Mexico coffers in the first four months of the year — more than in any other four-month period in state history. A lot more. Records compiled by the New Mexico Tax and Revenue Department show that year-on-year, revenues from January through April more than doubled from $782 million in 2021 — itself a record year. (Records lag by two months to allow producers time to report their production numbers.) This money gusher comes from increasing production in New Mexico’s portion of the Permian Basin — currently the most productive oilfield on the planet — and skyrocketing oil and gas prices brought on by the Russian invasion of Ukraine. This story is by Capital & Main and is republished with permission.
FARMINGTON — On Oct. 21, 1921, residents in Farmington heard a hissing roar as a natural gas well 10 miles upriver blew skyward — the debut of the first commercial well in the coal-bed formation known as the San Juan Basin. This stream of natural gas would transform northwestern New Mexico from a sleepy agricultural region to a community that triumphantly built itself on fossil fuels. But in October 2021, exactly one week and 100 years after this first lucky strike, a conference held to commemorate the first century of oil and gas development in the basin was decidedly less triumphant. Speakers at the San Juan Basin Energy Conference talked of a “tumultuous decade” in the basin and of the “worst downturn in the San Juan Basin’s history.”
As the U.S. Environmental Protection Agency develops policies for methane emissions from oil and gas production, environmental advocacy groups have a new tool to back their calls for regular leak detection and repair at all sites, including those that produce limited amounts of oil and gas. Scientists with the Environmental Defense Fund published a study this week in Nature Communications that found while small-producing well sites may, individually, have relatively low emissions, when looked at as a whole, they account for a disproportionate share of methane emissions.
While scientists from an environmental advocacy group that has actively been lobbying for stricter regulations for low-production facilities conducted the study, it was published in a peer-reviewed paper. That means other scientists evaluated the methodology used and looked for potential errors. During a press conference on Wednesday, the lead author Mark Omara explained the researchers’ methodology, which relied heavily on previously published peer-reviewed studies. Omara said the researchers defined a low-producing well site as one that produced less than 15 barrels of oil equivalent.
The Bureau of Land Management announced an extension to the comment period for withdrawal of federal lands around Chaco Culture National Historical Park from mineral leasing. The comment period, initially scheduled to close April 6, will now end on May 6. Additionally, the BLM has scheduled two meetings that will allow people to provide oral comments. These meetings will be from 2 p.m. to 7 p.m. Wednesday, April 27 at San Juan College in Farmington and from 8 a.m. to noon Friday, April 29 at the National Indian Programs Training Center in Albuquerque. Related: BLM director: Comments on Chaco buffer are ‘just the beginning of the process’
The new meetings come following a request by Jerome Lucero, the former governor of Zia Pueblo and the current vice chairman of the All Pueblo Council of Governors, during a February meeting.
In recent years, New Mexico has tried to move away from its historical role as an oil and gas hub, and the crisis in Ukraine could have major implications. Russia’s invasion of its neighboring country has caused oil prices to surge. Reilly White, associate professor of finance at the University of New Mexico, said depending on the length of the conflict, it also could put pressure on U.S. producers to ramp up crude-oil production. “The United States right now is the largest oil producer,” White explained. “We have about 20 percent or so of the world’s production.
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.
In New Mexico, new state rules sparked a dramatic increase in reported incidents of vented and flared natural gas in 2021 — and reveal that the oil and gas industry has been losing vastly more of the climate-change-driving fossil fuel than previously reported. “The state’s updated reporting requirements were long overdue,” says Jon Goldstein, senior director of regulatory and legislative affairs at the Environmental Defense Fund. The new numbers are in line with previous EDF research showing huge amounts of vented and flared natural gas in recent years. A review of year-end data from the state’s Oil Conservation Division (OCD) shows that producers vented or flared enough natural gas to power nearly 39,000 homes for a year — roughly the number of households in Las Cruces, the state’s second-largest city. This story originally appeared at Capital & Main and is reprinted with permission.
Randy Pacheco, the chief executive officer of the San Juan Basin-based A-Plus Well Service, said the state’s workforce needs to be built up to address the orphaned oil and natural gas wells that dot the landscape in many states including New Mexico.
Pacheco was one of the panelists who participated in a roundtable-style webinar discussion about the federal orphaned well program and the Bureau of Land Management’s efforts to implement it. The bureau hosted the webinar, which drew hundreds of people, on Thursday. The bipartisan Infrastructure Investment and Jobs Act that was signed into law in November provided $4.7 billion for clean-up, remediation and restoration at orphaned well sites. That led to the U.S. Department of the Interior releasing initial guidelines on Dec. 17 for states to apply for funding.