New Mexico battles to clamp down on big oil

By Jerry Redfern, Capital & Main

As the New Mexico Legislature’s one-month session begins this week, legislators will see a half-dozen bills that could spell big changes for the oil and gas industry through new well placement restrictions, increased fines and higher royalty payments, among other possible shifts. These proposed changes are some of a slate of transformative oil and gas bills peppering the docket, following last year’s general shutout of bills aimed at reforming the fossil fuel business.

The state is the country’s second-largest oil producer and a top-10 natural gas producer as well. So despite New Mexico’s small population, state policy changes have an outsized effect on the nation’s fossil fuel industry. And since Gov. Michelle Lujan Grisham came to office in 2019 with a drive to reduce the state’s carbon emissions, New Mexico has enacted some of the toughest oil and gas production regulations in the country, but those have curbed neither production nor greenhouse gas emissions related to that production.

This year’s legislation comes at the industry from all angles. A trio of bills sponsored by Rep. Debra Sariñana would dramatically limit the use of fresh water in oil and gas operations and require detailed reports on how water is used; impose mandatory fines for spills of chemicals, oil and so-called produced water that comes up alongside oil and gas; and create child health protection zones that bar new oil and gas operations of any kind within a mile of any school facility, and require that all existing operations within those zones end by 2028. That last issue in particular gets Sariñana fired up. “Kids shouldn’t go to school and get sick,” she says.

In recent years, several studies have shown that living near oil and gas wells increases a person’s exposure to air pollution and thereby increases the likelihood of illness. Across the state, towns in the middle of oilfields have schools next to fossil fuel sites. Jefferson Elementary School in Hobbs sits on the western edge of town and in the middle of the country’s most productive oilfield, the Permian Basin. The school is surrounded by 124 active oil and injection wells within a one-mile radius. 

“By now [industry] should … know better than to put gas and oil wells right by schools because of the effect they’re going to have,” Sariñana says. “They know about this — they’ve known about it for years.” 

The New Mexico Oil and Gas Association, the state’s largest industry organization, says it’s keeping an eye on Sariñana’s trio of bills. “The safety and well-being of our communities and schools in New Mexico is paramount, particularly in the areas where the oil and gas industry operates,” Frederick Bermudez, the new vice president of communications, writes in an email. “NMOGA and its industry members support legislation that is grounded in science,” he writes, then notes that oil and gas funds much of the state’s budget.

Two of Sariñana’s three bills, in different forms and to different extents, are mirrored in the Oil and Gas Act update spearheaded by Gov. Lujan Grisham’s office and shepherded by the Oil Conservation Division, the state’s primary industry regulator. The division brought together dozens of representatives from industry and conservation groups to hammer out a bill that updates a law that hasn’t received a full review in decades. The division’s press officer has called the current law “stale.”

The bill’s sponsor, Rep. Kristina Ortez, says it reflects compromises from both sides. “It doesn’t make anybody very happy, to be quite honest … But I think it makes sense for where we are right now,” she says. “It’s targeted. And it’s reasonable. And it’s common sense.” 

Tannis Fox, a senior attorney with the Western Environmental Law Center, helped craft a previous attempt at Oil and Gas Act reform that was shot down in last year’s legislative session. She was part of the working group on this year’s bill and says it has “significant and important reforms to the Oil and Gas Act that we like,” but that her group has not yet gone through all of the wording in the final bill and can’t yet say if it will support the proposed legislation.

The bill includes measures to:

• Lock the state’s 98% gas capture target into law, thereby reducing climate-damaging methane leaks.
• Implement varying setbacks for new wells from homes, schools, hospitals and parks.
• Increase blanket bonding fees to $10 million to protect the state from getting stuck with the clean-up costs of abandoned wells.
• Triple permitting fees and create automatic annual increases tied to the Consumer Price…