Jerry Redfern
Drilling rigs dot the Permian Basin between Carlsbad and Loving.
Over the past four years, producers have applied for more than 10,000 permits to drill for oil and gas on federal land in New Mexico. Recent data provided to Capital & Main by the US Bureau of Land Management (BLM) shows that Applications for Permit to Drill slowly rose quarter by quarter from 2017 through the start of 2020, then more than doubled in the last half of the year.
And just a few companies are behind the jump.
“We’ve already locked in decades of warming and catastrophic climate change,” says Jesse Prentice-Dunn, policy director at the Center for Western Priorities. “And when these permits are drilled, we’re locking in decades more of it.”
He calls the number of permits “pretty much an all-time high.”
If the BLM approves all those permits, and companies use them within their four-year maximum time limits, it would increase the total number of active oil and gas wells in the state by roughly 20%—and that doesn’t count new wells on private, tribal or state lands.
The likely result: a major increase in fossil fuel production and carbon emissions at a time when climate science clearly shows that any new drilling and production should instead be winding down.
Trey Cowan, an oil and gas analyst with the Institute for Energy Economics and Financial Analysis, says the dramatic increase in permits is “basically piling on ahead of the worry that they won’t be able to get them anymore” in light of possible future climate and environmental restrictions.
And they piled on in the closing months of the extraction-friendly Trump administration.
Permit applications are the second critical bit of bureaucratic approval needed to drill on federal land. First, an operator buys a mineral lease, which allows a company to extract the oil and gas on a particular patch of ground.
Soon after taking office, President Joe Biden paused the federal lease sales program to allow for a review. Industry cried foul and said the pause hurt business, even though they had stockpiled thousands of leases that could keep drills spinning for years. Then, in June, a federal judge declared the pause illegal and called for lease sales to be restarted. This week, the Department of the Interior said it would resume the leasing program, pending an appeal.
While purchasers must begin production on leases within 10 years, drilling permits represent more imminent oil and gas activity—they give operators two years to drill a well, with the possibility of a two-year extension.
According to the BLM records, 107 operators applied for permits in New Mexico in the past four years, with five of them far outstripping the rest.
EOG Resources of Houston—already New Mexico’s largest oil and gas producer—has nearly 2,700 of those 10,000 applications either approved or pending approval. Devon Energy of Oklahoma City—the state’s second-largest oil and gas producer—is a distant second with a little more than 1,100 permits either approved or pending.
When asked about EOG’s plans in New Mexico and its thoughts on settled climate science, Kimberly Ehmer, a company spokesperson, writes in an email: “We have been building a backlog of permits in the Delaware Basin [within the Permian] for a number of years primarily to provide flexibility for future development planning as our operations in the basin expand over time.”
Cowan says that while some of the smaller producers on the list might be gambling on whether the market and their land will bring them money, EOG is not.
“EOG over the years has been a leader as far as operating margins,” he says. “And the only way you get to have good operating margins is by selecting good rocks to drill and doing it cheaper than your peers.”
Tom Zelenka, a petroleum engineer with the BLM state office in Santa Fe, says companies plan well in advance to have drilling permits lined up when leases approach their expiration dates. These permits cost about $11,000 a pop, and companies aren’t collecting them by accident.
Companies like EOG and Devon are “not some prospector on the back of a mule with a pickaxe,” says Tom Singer, senior policy adviser at the Western Environmental Law Center. “They know where the good geology is. They’ve already bought it.”
And it’s in the top oil-producing region in the country, the Permian Basin.
New Mexico also has a large, self-imposed role to play in monitoring and regulating the more than 53,000 active oil and gas wells already in the state. When she first came into office, Gov. Michelle Lujan Grisham pledged to reduce the state’s carbon footprint by 45% by 2030.
According to a report commissioned by the state, those wells and their associated transport and production operations leaked or burned the equivalent of 60 million metric tons of CO2 in 2018—more than half of all greenhouse gases emitted in the state.
State regulatory agencies have new and pending rules to cut emissions, but their full impact is years away. Adding another 10,000 or more wells to the state’s inventory before the monitoring rules are fully enforced could be a significant blow to the state’s emission reduction goals.
Pending and recently enacted state Oil Conservation Division and Environment Department rules should protect New Mexico from any future oil and gas development problems, the agencies say.
“New wells coming online must meet the strict requirements laid out in the natural gas capture rules, which prohibit routine venting and flaring, require 98% gas capture and additional reporting and monitoring through every step of the process,” they wrote.
Singer is unconvinced that the rules are enough. For example, the 98% gas capture comes in 2026 following years of incremental increases. He also says the drilling permit bonanza should prod Lujan Grisham to further increase oversight.
The Oil Conservation Division reviews all permits approved by the BLM. And while the state agency cannot revoke the permits, it can require additional conditions and restrictions. But the division’s staff is tiny: six people for the entire state, compared to 64 BLM employees checking applications in its Carlsbad office.
Zelenka at the BLM says the agency tries to clear applications within 60 days—but like a pig in a python, the permit application binge at the end of 2020 created a massive backlog, with more than 3,300 applications still pending review.
This story is republished from Capital & Main, a nonprofit that reports on the most pressing economic, environmental and social issues of our time.
