New Mexico oilfield lawmakers ready to defend oil, gas from 'tightening noose' of regulation
Lawmakers from southeast New Mexico said they are again expecting to defend the region-defining oil and gas industry from environmental regulations likely proposed during the upcoming legislative session, while pursuing other priorities like gun rights and road funding.
Ongoing growth in New Mexico’s oil and gas industry was credited with leading to about $12.8 billion in recurring revenue in fiscal year 2024 and about $13 billion in fiscal year 2025, according to the latest state financial projects.
The report published by the Legislative Finance Committee also showed about $3.5 billion in “new money” brought in – an about 36.4 percent growth between the two fiscal years.
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New Mexico fiscal years run from July 1 to June 30 of each year, named for the year they end in.
In the coming fiscal years, the report warned revenue growth could slow as oil prices “soften” and production growth lessens.
The price per barrel of oil could decline from an average of $80 per barrel in 2023 to $75 a barrel in 2025, read the report.
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New Mexico’s daily production growth slowing to a minor increase of 1.8 million barrels per day to 1.9 million bpd in 2024 and holding there in 2025, the report read.
This could mean declining but still strong revenue streams tied to the industry both in taxes and federal royalty payments made to New Mexico, read the report.
“With cooling prices and slowing production, forecasts for severance tax and federal royalty payments have been reduced but continue to contribute a significant portion of the general fund's growth for FY24,” the report read.
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Oilfield lawmakers call for state to support industry
Amid these financial headwinds for the oil and gas industry, which was estimated earlier this year to produce between a third and half of New Mexico’s General Fund budget, state Rep. Jim Townsend (R-54) of Artesia said he and other lawmakers from the southeast region will work to support the industry.
Southeast New Mexico is home to almost all of the state’s oil production in Eddy and Lea counties on the western side of the Permian Basin along the state’s border with West Texas.
Townsend said that despite the fiscal focus of the 30-day session starting in January, he expected Democrats to bring forth environmentally charged bills that Townsend worried could further burden the oil and gas industry.
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He said oil companies are working themselves to reduce pollution such as from methane or other gas emissions, and that those market-driven solutions are more effective than government mandates coming out of Santa Fe.
“I’ve really been impressed with industry’s ability to continue to reduce emissions. I think the industry is doing really well in that regard,” Townsend said. “Most of the things I see the industry doing, they’re moving in the right direction.”
He pointed to recent efforts to reduce flaring, or the burning of excess gas, as the State of New Mexico in 2021 banned to routine use of the practice and operators sought to improve gas-capturing technology and other measures to curb their environmental impacts.
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The industry should be buoyed by state laws, Townsend said, to help companies afford more infrastructure to reduce emissions.
“I think for the most part, there’s no operator I know of that wants to flare. That flared gas is still gas that they pay a royalty on. They would rather have the income than burn it,” he said. “I think that having the infrastructure so that more gas can be taken from the system would be beneficial.”
Lawmakers strategize spending fossil fuel cash windfall
Rep. Cathrynn Brown (R-55) of Carlsbad said strong oil and gas revenue was indicative of the industry’s importance to New Mexico.
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She said much of the oil money should go to one-time expenses, so that cuts to state programs can be avoided, should fossil fuels face a downturn in the future.
“That’s a tremendous amount of money. So much of it comes from oil and gas revenue. Things are riding pretty high right now,” Brown said. I think we should not spend all of it of course. We need to be thoughtful and judicious so when oil and gas does ultimately decline we’re not in a pickle.”
She said she planned to propose a “transportation trust fund” that could take in revenue from oil and gas and other sources and earmark it for road improvements, namely in the southeast corner known for heavy industrial traffic.
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“That’s looking at the benefit for New Mexicans and good roads,” Brown said. “I think the trust fund is something we need to do.”
Specifically, Brown pointed to improvements at the intersection of U.S. Highways 285 and New Mexico State Road 31.
It’s a junction frequently traveled by oil and gas workers but drawing recent concern for its safety as workers turn left off the highway onto the State Road enroute to job sites – fears that grew as oil production, and thus traffic, grew in recent years.
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“The volumes of traffic are now higher than they were pre-pandemic,” Brown said. “Definitely the volumes are higher now and that ups the necessity.”
She said she would oppose measures like the “green amendment,” introduced repeatedly via bills in past sessions to establish “environmental rights” in New Mexico’s constitution but drawing concerns it could open the state up to lawsuits.
Brown was also against a recent mandate by the state to increase the required percentage of electric vehicles sold in New Mexico and said she would be critical of any bills intended to further such an agenda.
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“The benefit you get from tightening the noose on energy companies does more harm than good. We have to look at all of the impacts of legislation,” she said. “There are of course people who just don’t like oil and gas. We will always need oil and gas. It has so many uses beside transportation fuel.”
Guns, taxes, tuition. What else are lawmakers prioritizing?
Along with supporting the industry that leads the economy of southeast New Mexico, Brown said she would also seek to completely eliminate state taxes on social security.
The state previously lifted such taxes for 90 percent of taxpayers, but Brown said she hoped to go further and remove the tax altogether.
She argued those receiving social security already pay an income tax on it, and the existing laws unfairly “double tax” recipients.
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“I would like a full repeal. It’s their money,” Brown said. “The people who fed into that system, they already paid tax when it was a payroll tax. It’s their money and it should come back to them.”
Other priorities Brown listed were expanding New Mexico’s Opportunity Scholarship, which pays college tuition for many students in the state, to also include those enrolling in trade schools.
She said she was also looking into requiring air conditioning on school buses in “high temperature areas” mostly in southern New Mexico.
Townsend said his focus would be on the rights of gunowners in New Mexico, amid a push from Democrats to ban automatic rifles and Gov. Michelle Lujan Grisham’s recently struck-down executive order that banned concealed carry in Albuquerque.
He said he would look to block bills aimed at increasing wait times for gun purchases, limiting magazine capacities or requiring registration for ammo sales.
“The constitution speaks directly to the right people have to bear arms. That shall not be infringed upon,” Townsend said. “A gun as a tool is not worth much without ammo, so I think those go hand in hand.
“There is not waiting period in the constitution.”
Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on X, formerly known as Twitter.
This article originally appeared on Carlsbad Current-Argus: New Mexico oil, gas industry faces threats from Democrat-led bills: GOP
