State of Waste

In the name of millions in lost royalties and reduced environmental impacts, the federal government has taken several stabs at recouping this wasted natural gas—lost through industry practices called flaring and venting, as well as through leaks. An analysis of the methane emissions in New Mexico indicates the state missed out on $50 million in royalties since 2010, according to a report released in March by the Western Values Project, which campaigns for balancing energy development and conservation.

"Fixing these leaks will stop the waste of the federal natural gas resource that's supposed to be produced to the benefit of the taxpayers. Keeping that in the pipeline and not in the air means more revenue for states like New Mexico that rely on that as a big source of budget revenue for state services," says Jon Goldstein, senior policy manager for the Environmental Defense Fund.

Every day, the oil and gas industry brings more than $6 million in taxes and royalties to the state of New Mexico and local governments, according to the New Mexico Oil and Gas Association.

Of about $330 million in natural gas lost through flaring and leaks in the entire US in 2013, roughly $100 million of it came from New Mexico, according to an analysis that ICF International conducted for the Environmental Defense Fund.

"The state is in a problematic budget environment right now," Goldstein says. "The state Legislature is looking at cuts to schools and services and things like that, and capturing more methane would mean more revenue back to the state."

New federal rules will take a crack at reducing emissions, which have contributed to a methane cloud the size of Delaware over northwestern New Mexico.

The US Environmental Protection Agency and the Bureau of Land Management have each drafted a plan for reducing those emissions, the first coming at it from the perspective of air pollution, given methane's role as a potent greenhouse gas, and the second from the lost royalties angle, with the BLM estimating that nationwide, states, tribes and federal taxpayers lose as much as $23 million annually in royalty revenue through flaring and leaks.

"I think most people would agree that we should be using our nation's natural gas to power our economy—not wasting it by venting and flaring it into the atmosphere," US Secretary of the Interior Sally Jewell said in the press release announcing the proposed rules. They update 30-year-old regulations for the industry that predate the horizontal drilling and hydraulic fracturing techniques now popular. The BLM estimates its proposed rule would save enough natural gas to supply 760,000 homes each year.

But in northwestern New Mexico, when the BLM hosted a public hearing on the proposed regulations, oil and gas employees and local elected officials spoke against the rules as hampering the local economy, arguing that the price of capturing methane will cause companies to abandon the San Juan Basin.

"Because many natural gas wells in northwest New Mexico are older, low-volume producers, these new costs would make them uneconomical," four mayors for San Juan County towns wrote in a letter to the editor of the Farmington Daily Times. They anticipate 3-5 percent of gas wells would close, costing the state and federal government $300 million in royalties.

"Colorado already implemented these rules at the state level, and in that same period of time from when those rules were implemented to now, Colorado saw increases in the number of wells and production, not decreases," says Camilla Feibelman, with the Rio Grande chapter of the Sierra Club. "So this argument that somehow these rules are going to kill the industry didn't play out in Colorado."

In the two years since those regulations were adopted, some 60,000 tons of methane emissions have been captured, according to Coloradans for Responsible Energy Development, founded by oil and gas industry leaders Anadarko Petroleum Corp. and Noble Energy to educate the state's voters about fracking.

"You have to hire people or hire third parties to fulfill the requirements of the law," says Patrick Von Bargen, executive director of the Center for Methane Emissions Solutions, an organization that represents the businesses that work to capture the gas. "Is that a net job creator or not? I don't know."

But Von Bargen says he can point to a company in Oklahoma that retrains laid-off oil and gas workers to use infrared cameras to check for leaks, and there are additional jobs for inspections and repair at wells.

"There is a lot of gas that's going into the atmosphere, but we don't know where they are, we don't know how big they are, and that's why a regulatory system of inspecting for leaks pays off," Von Bargen explains.

Four of New Mexico's five congressional delegates have called for an end to wasting natural gas through venting, flaring and leaks and recapturing that lost revenue, and 40 elected officials throughout the state have echoed them.

Methane traps more radiation than carbon dioxide and pound-for-pound exacts a comparative impact on climate change at a rate more than 25 times greater in a 100-year period. Most methane comes from human activities, and natural gas and petroleum systems now contribute the greatest share.

In addition to the proposed rules from the BLM and EPA, Canadian Prime Minister Justin Trudeau and President Barack Obama announced in March an agreement to reduce methane pollution from the oil and gas industry by 40 to 45 percent over the next 10 years, which will require new EPA rules for existing wells. Current EPA draft-stage rules would only affect new and modified wells.

Public comment for the BLM rules is open until April 22.

Santa Fe Reporter