Can New Mexico hold oil and gas accountable? Some fear State budget lacking

Concerns lingered that oversight of oil and gas industry was inadequately funded in New Mexico, despite an almost $9.6 billion budget approved by lawmakers during this year’s legislative session that concluded March 18.

House Bill 2, the General Appropriation Act of 2023, was passed by lawmakers in the State House and Senate three days before the session concluded and was awaiting signature into law by Gov. Michelle Lujan Grisham.

The State’s two main regulatory agencies for oil and gas, the New Mexico Environment Department (NMED) and Energy, Minerals and Natural Resources Department (EMNRD), both saw increases in state appropriations via HB 2 at 21 percent and 14.7 percent, respectively.

More:Oil giants fueling refinery expansions as Permian Basin oil production to grow in April

But Santa Fe-based environmental group WildEarth Guardians said increasing spills and other environmental impacts from New Mexico’s booming oil and gas industry meant more resources were needed from the state.

The group pointed to 1,450 liquid spills throughout the state last year, averaging four spills per day and totaling about 5.4 million gallons of contaminants.

These largely included oil and gas wastewater, also known as “produced water” by the industry, and WildEarth Guardians said the “vast majority” occurred in Eddy and Lea counties – the two counties that contain the Permian Basin in southeast New Mexico.

More:$440K in fines issued to Carlsbad-area oil and gas company for air pollution violations

It’s the U.S.’ most active oilfield, shared by New Mexico and West Texas but in a March 21 letter to NMED and EMNRD officials, the group said expanded production meant greater efforts from the State to prevent pollution while transitioning to lower-carbon fuel sources.

“In this climate, our state has but one pragmatic choice: to meaningfully decrease oil and gas production and work towards a just transition away from energy generation that offloads its toxic burden onto communities and the environment,” the letter read.

“The toxic legacy of current oil and gas production in New Mexico is already staggering. We urge you to adopt the recommendations above to prevent your agencies from making it worse.”

More:Carlsbad, New Mexico activists demand stronger oil and gas rules in Washington, D.C.

The letter also called on the State to prevent the use of produced water outside of the oil and gas industry, amid efforts to increase treatment and reuse of the water, and asked NMED and EMNRD to enact greater oversight for the State’s ongoing research.

Melissa Troutman, climate and energy advocate at WildEarth Guardians said despite “shortfalls” in its enforcement capabilities, the State continued to permit new oil and gas wells that threatened the environment.

She said EMNRD’s Oil Conservation Division (OCD), it’s main compliance arm, was especially underfunded.

More:More than 3,000 acres of New Mexico public land being sold for oil and gas amid protests

“Permitting thousands of new oil and gas operations despite massive shortfalls in law enforcement is unjust, wasteful, and incongruent with climate goals,” Troutman said. “At four spills a day and a years-long backlog of spills that still need remediation, it’s impossible for the OCD to handle the oil and gas industry’s pollution problem.”

The State of New Mexico banned spills of liquid or gas waste two years ago, meaning such events would immediately incur fines, but Soni Grant of the Center for Biological Diversity based in New Mexico said the State had so far failed to enforce its recently tighten restrictions.

These also included a ban on routine flaring – the burning of excess natural gas – and required all operators in the state to capture 98 percent of produced gas by 2026.

More:Pollution bills struggle in New Mexico legislature. Here's what passed and failed

The NMED also added increased leak detection and repair requirements in rules enacted last year, but Grant said the state had not properly issued penalties to operators in violation.

“Although New Mexico prohibited toxic liquid waste spills in 2021, the oil and gas industry has had thousands of spills since then and state regulators haven’t issued penalties for the pollution,” Grant said.

“To curb pollution and protect public health and the environment, the Oil Conservation Division needs to hold the industry strictly liable for its spills.”

More:Oilfield lawmakers claim success in killing bills aimed at energy pollution in New Mexico

As oil booms, New Mexico could need more oversight

EMNRD spokesman Sidney Hill said the OCD's added funding from the session would prove helpful, although continued expansion in the state's oil and gas production expected in the "next few years" would mean the agencies need would grow along with the industry.

"Most predictions that we have seen forecast continued growth in the industry at least for the next few years," Hill said. "If those predictions prove accurate, OCD will likely continue to seek funding for staffing, equipment, and other technology to provide resources to try and keep pace with some of that growth."

He said OCD's budget requests were largely for increased staffing for its engineering, inspection, legal, permitting and environmental oversight activities attempting to address its incident backlog.

"These additional resources certainly will enhance OCD’s ability to conduct its very important regulatory functions," Hill said. "For instance, additional field inspectors will enable us to increase the number and cadence of site visits/inspections.

The Division would also use the funds for better technology to look for leaks and increase its oversight of operators throughout New Mexico.

"OCD continues to investigate the potential for new tools and technology to enhance its work," Hill said. "When we find evidence that a specific tool will be helpful, we will submit a request for funding."

NMED Cabinet Secretary said during the legislative session that HB 2 did not give his agency enough resources to do its job.

He pointed to a $2 million special appropriation NMED requested from lawmakers to help fund expected increased permitting activities in advance of tighter restrictions expected from U.S. Environmental Protection Agency in response to worsening ground-level ozone, or smog, in the Permian Basin.

The higher ozone levels were believed the result of volatile organic compounds (VOCs) release by oil and gas facilities in the region.

Kenney said the bill was also inadequate to allow the agency to increase staffing, address groundwater contamination and worker safety throughout the state.

“We have plenty of oil and gas operators who do comply with state and federal law. We have many that do not, which contributes to our ozone problem,” Kenney said. We’re just continuing to pave the way for deeper levels of regulatory oversight from the federal government. We can’t hold the companies accountable because we don’t have the budget to do that.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.

This article originally appeared on Carlsbad Current-Argus: Does New Mexico have the money to hold oil and gas accountable?