New Mexico’s oil and gas industry is one of the largest in the Mountain West. The Permian Basin in southeast New Mexico contains three of the country’s 100 largest oil and gas fields. The laws that govern the oil and gas industry, however, haven’t been meaningfully updated in decades. The Oil and Gas Act was initially adopted in 1935.
As a result, the state doesn’t have all the tools it needs to ensure common sense safeguards are in place, especially for communities living adjacent to the industry. Research has shown that families living in close proximity to oil and gas wells are exposed to high levels of air pollutants known to cause health impacts, including respiratory illness. In 2014, NASA discovered a giant methane “hotspot” the size of Delaware hovering over New Mexico’s San Juan Basin. It was one of the nation’s highest concentrations of airborne methane, an air pollutant along with ozone that can cause substantial health impacts in the surrounding communities. This contributes to spikes in asthma rates in children, and other respiratory impacts. Eddy County was recently given an “F” grade for air quality, and rated as one of the most polluted counties in the country due to ozone. Over half of New Mexicans also live in a community impacted by unhealthy levels of pollution.
Thankfully, in 2021, New Mexico passed some of the country’s strongest methane waste and ozone capture rules, setting an ambitious target to capture 98% of the potent greenhouse gas. The rules are necessary for curbing the worst effects of ongoing climate change but they also need to be codified in statute.
The financial assurance required by current statute is also outdated, and inadequate to cover the full cost of well clean-up. Across the state, there are an estimated 1,700 abandoned wells. Unplugged wells pose numerous issues to nearby communities and the environment, including potentially contaminating water resources, decreasing air quality, and threatening the health and well-being of residents. Abandoned wells are also expensive to address, and costs vary widely depending on factors like well depth and known
contamination. Some state officials put the cost between $40,000 to more than $80,000 to plug a single site, whereas others put this as high as $100,000 for one well.
Currently, the 1935 Oil & Gas Act’s “blanket bond” is capped at $250,000, even if a company owns hundreds of wells, which renders existing bonding requirements woefully inadequate. A 2021 analysis found a more than $8.18 billion dollar gap between the financial assurance put up by the oil and gas industry and the estimated costs to close and clean up wells across New Mexico’s state trust and private lands.
Consequently, New Mexico taxpayers are left to bear the financial burden to clean up the mess left behind by the state’s booming oil and gas industry. A report from Grist and The Texas Observer estimates that taxpayers across Texas and New Mexico are on the hook for almost $1 billion in costs associated with abandoned well clean-up.
Community advocates living in the state’s fossil fuel centers have also continued to emphasize the importance of establishing buffers to protect people from the impacts of oil and gas production. Impacted residents have long called for setbacks between infrastructure and places like schools, hospitals, houses, and bodies of water. Nearly 7% of the state’s population is reported to live within a half mile of oil and gas infrastructure. Nearly 90% of the state population also relies on groundwater for everyday use, including drinking water. Oil and gas infrastructure also disrupts and harms wildlife habitat vital to ecosystem resiliency, and threatened species like the Sagebrush lizard are on the verge of extinction due to industrial operations.
In 2023, the New Mexico State Land Office issued an executive order banning new leases on state trust land within a mile of schools, daycares, and other youth-centered facilities. While a significant step, other vulnerable populations and natural resources, including wildlife habitat, watersheds, and population centers, should also be evaluated for appropriate setback distances.
Legislation introduced this session, House Bill 133 – Oil and Gas Act Changes (Sponsored by Rep. Ortez and McQueen), will assist in modernizing the state’s oil and gas statute. The bill has its first committee, the House Environment, Energy and Natural Resources Committee, tomorrow, January 25, 2024. HB133 makes long-overdue amendments to better protect New Mexico taxpayers, our public health and the environment through the following:
- Provides greater authority for the Oil Conservation Division (OCD) within the Energy, Minerals, and Natural Resources Department (EMNRD) to regulate the transfer of oil and gas assets
- Increases bonding requirements to ensure that oil and gas operators provide the adequate financial resources associated with costs of clean up and reclamation ● Increases civil penalties for oil and gas operators who break the Oil and Gas Act ● Codifies the 2021 methane waste capture rules, which require the capture of 98% of natural gas produced during operations starting in 2027
HB 133 is a crucial first step to achieve much-needed modernization of the Oil and Gas Act. Updating penalties, bonding, and assets transfer authority will allow the state to hold bad actors and heavy polluters accountable while ensuring that communities are protected from industry pollution. Though we need more comprehensive oil and gas reform, including setback requirements from oil and gas operations, HB133 gives New Mexico a much-needed start. With these aforementioned changes, we can bring the Oil and Gas Act into the 21st century and require industry to pay its fair share – not New Mexico taxpayers.