Oil & Gas Act update losing steam

three pump jacks in desert setting
Pump jacks extract oil from wells in a field west of Lovington.

By Brody Foster, Elijah Barela and Kyle Smith

With less than a week left in the 30-day session, a trimmed-down effort to reform the state’s 1935 law has yet to clear the state House.

With some of its most ambitious elements stripped away, what remains is an effort to hold producers accountable for cleanup and reign in methane emissions.

“There are so many inactive or super low-producing wells that have leaky wellheads, broken tanks or oil on the ground, and that’s bad for the environment,” said Andrew 

Forkes-Gudmundson, the senior manager for state legislative and regulatory affairs at Earthworks, a climate action group. “Everywhere you see oil and gas production, you see rampant non-compliance.”

House Bill 133 would give state watchdogs more teeth by updating the Oil and Gas Act, which first became law in 1935

But the Roundhouse has been buzzing with industry lobbyists quietly working to kill the bill, or at least get rid of some of the most painful elements.

“Small producers strongly oppose this bill due to the extreme regulations that will disproportionality hammer New Mexico’s small producers,” said Jim Winchester, the executive director of the Independent Petroleum Association of New Mexico

The proposal would require oil and gas companies to make higher bond payments to the state in case their wells are abandoned and require cleanup and give officials the authority to enforce harsher penalties.

Over the last five years, the state has spent more than $9 million to plug orphan wells, while collecting only $250,000 in forfeited bonds, a legislative analysis notes. The bill aims to shift that responsibility to the industry.

“If you’re an oil company with 10,000 wells, you could have literally a billion dollars in plugging costs,” Forkes-Gudmundson said. 

The state currently requires companies to have a maximum $250,000 “blanket bond,” no matter how many wells they operate. HB 133 would keep that the same for operators with fewer than 50 wells but scale the bond up so that a company running 500 wells would need $10 million in coverage.

Increasing Penalties

Representatives tamed parts of the bill in committee, lowering the proposed maximum daily penalty from $25,000 to $10,000 per violation. That’s still much higher than the current $2,500. Only in cases where there’s a serious risk will operators be potentially on the hook for $25,000.

Still, Forkes-Gudmundson said fines might not have the impact lawmakers are hoping for. “Monetary fines for oil companies tend to be a way to just pay to violate the rules,” he said.

Some representatives and oil and gas representatives are still deeply concerned about some elements, especially the potential effects on smaller companies.

“The way I see this bill is it gives distinct advantages to larger operators,” said Rep. Jared Hembree, a Republican from Roswell.  

Industry representatives also said they were anxious about giving more power to Oil Conservation Division of the Energy Minerals and Natural Resources Department. If the changes are successful, OCD would have more authority to prevent the transfer of facilities to companies with a history of violations. 

Opponents who spoke against the proposal said the changes could hurt the industry, kill jobs and decrease revenue for the state.  

Proposed Setbacks Fail

Meanwhile, a push to keep oil and gas production away from children and schools stalled after pushback from the industry. 

“New Mexico is trying to get ahead of the curve by adopting a strong setback,” Forkes-Gudmundson said. “A whole array of studies that have shown that basically the farther you get from the oil and gas facility the better it is.” 

The Democrat-sponsored Oil and Gas Health Protection Zones (House Bill 32) never got a hearing.

But Albuquerque-area Democratic Reps. Mimi Stewart and Brenda McKenna want the state to study the setback idea. If Senate Memorial 8 passes, the evidence in the study could add fuel to a setback proposal next year.

Follow: Brody Foster (@BrodyFo44871511) on X/Twitter

Follow: Kyle Smith (@KyleSmithReport) On X

Follow: Elijah Barela on Facebook