Eddy County approves sale and issuance of industrial revenue bonds for new gas plant
Eddy County’s approval of $200 million in industrial revenue bonds for a new natural gas processing plant near Carlsbad could meet increasing demands, said Richard Cargile, chief executive officer of Durango Midstream which plans to operate the facility in Eddy County.
Eddy County’s Board of County Commissioners approved a declaration of intent in November with Frontier Field Service LLC for the Kings Landing Project processing plant. Commissioners approved the final issuance and sale of the industrial revenue bonds (IRBs) Dec. 20.
Frontier Field Services is an affiliate of Durango Midstream based in the Woodlands, Texas near Houston. Cargile said the new processing plant would help move natural gas from the Dagger Draw facility, located in Eddy County.
More:Eddy County prepares $300M of industrial revenue bonds for new natural gas plant
He said Dagger Draw processes around 50 million cubic feet (MMcfd) of natural gas per day.
“We operate our system as a super system. As we plumb up Kings Landing to Maljamar plant we’re able to reroute gas for better reliability,” Cargile said.
He said production would increase at Dagger Draw until Kings Landing is in operation.
“Volume will be moved from Dagger Draw to Kings Landing,” Cargile said.
He said New Mexico was a growth area for natural gas gathering and processing over the past two years and the company’s employee base expanded nearly 68 percent.
The U.S. used about 31 trillion cubic feet (Tcf) of natural gas in 2021, according to the U.S. Energy Information Administration (EIA).
"In 2021, the electric power sector accounted for about 37 percent of total U.S. natural gas consumption, and natural gas was the source of about 32 percent of the U.S. electric power sector's primary energy consumption," EIA's website cited.
Natural gas accounted for about 38 percent of total utility-scale U.S. electricity generation by all sectors in 2021.
Eddy County Manager Allen Davis said as Frontier’s system grows natural gas transportation reliability improves.
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Kings Landing would be located nearly 27 miles northeast of Carlsbad, according to Davis.
What are IRBs and how do they work?
IRBs are government backed loans with a guarantee from a city or county government, stated the CFA Journal, a financial based website.
Local governments issued IRBs to attract investment and create jobs. IRBs allow the local government to share the cost of the new project, noted CFA Journal.
IRBs are backed by taxes collected by local governments. Part of the revenue is used to pay back the bonds, according to CFA Journal.
“Frontier Field Services, LLC will pay all property taxes that would otherwise be due to the school districts in the County and an annual payment of $112,000 in payment in lieu of taxes (PILT) to the County for a period of 30 years, or as long as the bond remains outstanding,” Davis wrote in a memorandum to commissioners.
The Carlsbad Department of Development (CDOD) supported issuance of the IRBs as an economic development boost for Carlsbad and Eddy County.
“They’ve come up with a plan to produce gas and it put it to good use for the country. We look forward to seeing a long relationship with Frontier in Eddy County,” CDOD Executive Director John Waters said during the Dec. 20 meeting.
More:New Mexico environmentalists, industry debate impact of EPA oil and gas methane rule
Mike Smith can be reached at 575-628-5546 or by email at MSmith@currentargus.com or @ArgusMichae on Twitter.
This article originally appeared on Carlsbad Current-Argus: Eddy County approves $200M in bond sales for new natural gas plant
