Between the start of the year and March 7, oil and gas producers reported more than 7,125 spills across New Mexico—about 111 a day on average. Those spills include oil, produced water, other chemicals and natural gas, the last constituting the overwhelming majority of cases.
In fact, companies lost as much natural gas through venting and flaring in that period as is used in more than 12,000 homes and small businesses in New Mexico for a year. That is despite state rules that prohibit routine venting and flaring. But none of that burned or vented natural gas flowed into the state budget. All of it flowed into the state’s skies, contributing to New Mexico’s—and the planet’s—ongoing climate crisis, which is costing the state dearly.
Most of that gas was released during the New Mexico Legislature’s current session, where some legislators have proposed bills that would reduce those emissions. But so far, the Legislature has killed bills that would further reduce climate-warming emissions or new regulations for the oil and gas industry, the state’s largest greenhouse gas emitter. The Legislature is controlled by Democrats, and as they promote oil and gas production, they also appear to be milking the industry for all they can.
Between Feb. 24 and March 7, three bills creating new oil and gas regulations died. Sen. George Muñoz (D-Gallup), Rep. Nathan Small (D-Las Cruces) and Rep. Meredith Dixon (D-Albuquerque) voted with House Republicans to end the bills. Those votes follow a pattern that began earlier in the session.
Of the six oil and gas bills that passed committee hearings in those two weeks, only one proposed a new regulation, requiring oil and gas companies to disclose the chemical composition of drilling fluids. Another bill codifies the state’s existing methane capture rules. (Both await hearings on the House floor.) Two bills would support the state’s efforts to take over carbon sequestration well certification from the federal government. And the last two would raise fees and taxes on the industry—one by a little, the other by a lot.
The first of the tax bills, Oil and Gas Royalty Rate Changes, was shot down in last year’s legislative session and has returned this year in much slimmer form. It again would raise oil and gas royalty rates from 20 to 25%, but this version would raise rates only on new wells on state lands in the Permian Basin, the highest-producing region in the country. Rep. Matthew McQueen (D-Galisteo) was the main sponsor last time. This time he’s joined by Muñoz and House Speaker Javier Martínez (D-Bernalillo), two of the most powerful politicians in the Roundhouse and the two Democrats in the Legislature who receive the most in oil and gas donations.
In a hearing before the House Energy, Environment and Natural Resources Committee, industry lobbyists spoke against the bill, saying the rate increase would make drilling unappealing to companies. But Sunalei Stewart, deputy commissioner of operations at the State Land Office, which manages leases on state lands, said the state will have no problem selling the parcels “because there will be a ton of profit.” As if to prove the point, a representative from EOG Resources, the state’s biggest oil and gas producer, called in to the hearing to voice the company’s support for the bill. It now awaits debate on the House floor.
The Oil and Gas Equalization Tax Act, authored by Small and Dixon, would ”equalize” the tax rates charged between oil and gas, currently 3.15% and 4%, respectively. According to Small, back in the 1990s, the rate on gas was bumped up a bit and the oil rate didn’t follow suit.
Numerically, it’s a small increase of 0.85%, but according to the bill’s fiscal report, it could net the state $400 million or more annually starting next year, because it increases the tax on the state’s biggest, most valuable mineral resource.
During the bill’s first hearing on March 3 before the House Energy, Environment and Natural Resources Committee, Small seemed unclear on the need for the dramatic increase in revenue, saying it could go to the state’s General Fund.
But 72 hours later, speaking before the House Taxation and Revenue Committee, Small had firmed up the reason: chaos from the federal government.
“The Federal Administration right now … has the potential to reduce the New Mexico state budget by a billion-plus dollars,” he said. “That’s a huge headwind.”
The bill passed both committees but has not yet been added to the House floor calendar.
Dixon defended the two carbon sequestration bills before the House Energy, Environment and Natural Resources Committee on March 1. She co-sponsored the bills with Small and a trio of Republican representatives. The first bill would create the necessary legal framework for the state to take over licensing of so-called Class VI wells, which are used for long-term geologic sequestration of carbon dioxide. Currently that is the purview of the federal government and a few other states. The second bill primarily sets up the financing and regulatory framework for the first. Both bills had strong support from the oil and gas industry—the head of the state’s Petroleum Recovery Research Center at New Mexico Tech spoke as a technical expert on the bill—though Dixon took great pains to say that “energy generation is not the only source of CO2.”
She said that the Intergovernmental Panel on Climate Change, National Academy of Sciences and the International Energy Agency “are unequivocal that carbon capture and storage is an absolutely necessary strategy to meet emissions reduction goals by 2050.” Most of those emissions have been caused by burning fossil fuels—like oil and gas. And those agencies also say that the quickest, most efficient way to reduce greenhouse gas emissions is to not emit them in the first place. That includes cutting methane emissions from places like New Mexico’s oilfields.
According to a study last year from the National Academies (which includes the National Academy of Sciences), “Most of the reductions in methane emissions from the oil and gas sector can be done at no to low cost to deliver fast climate and air quality benefits.” And in its latest report, the Intergovernmental Panel views carbon capture and storage as among the most expensive carbon abatement options with the smallest carbon reductions for the near future. It’s a view reflected by other groups as well.
Another contentious issue: The bills would transfer liability for the wells to the state five years after companies have filled and plugged them, leaving New Mexico vulnerable to lawsuits and cleanup costs should the wells leak. Rep. Miguel P. Garcia (D-Bernalillo) said the deal is “not offering the state anything of value but the state is taking the eventual liability.”
Mike Eisenfeld, the energy and climate program manager at San Juan Citizens Alliance, is a watchdog on fossil fuel industry projects in the northwest corner of the state, where large sequestration wells are being studied. He said transferring the liability to the state is “just ridiculous” and that the bill sponsors are “trying to figure out what to do with all the pollution rather than stop the pollution.”
Camilla Feibelman, director of the Rio Grande Chapter of the Sierra Club, said that the problem—and the liability—rests with industry, not the state. “Your pollution, your job,” she said at the hearing.
In the end, Dixon and Small voted with the committee Republicans to pass the sequestration bills. The second bill passed its House floor hearing 51-11 on Tuesday, with only Democrats voting against it. The first now awaits a House floor hearing.
Meanwhile, New Mexico is wrapping up a shockingly dry winter, with 60% of the state currently experiencing some level of drought. At the end of February, 12 out of 27 snow monitoring stations reported no snow, breaking records across the state.
Even so, “The Legislature is doing really good work on really good work,” Feibelman said later. “We’re talking about how to pay to protect people’s homes from unprecedented fires. We are facing literal climate sticker shock from increasing insurance rates. Dwindling water supply. Extreme heat.” And all of those state programs come out of the state budget buoyed by oil and gas revenues.
One of those, the Innovation in State Government Fund, would spend $10 million to help seven state agencies promote net-zero emission policies and climate change mitigation projects. It passed a contentious Senate floor debate on March 6, with all Republicans voting against it.
“Good, innovative bills are moving forward,” she said, but “we are absorbing the cost so oil and gas can keep profiting.”
This story was published by journalism nonprofit Capital & Main, which reports on economic, environmental and social issues in the West. capitalandmain.com
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