Energy industry goes on the defense in New Mexico

The oil and gas industry and its supporters in New Mexico might take a cue from Thunder star Russell Westbrook when it comes to dealing with new legislative bills they fear will end up harming investments in the state. They’re forced to be on the defensive as the Texas Energy Report indicated this week.

Bills, regulatory and royalty fee changes are being considered in New Mexico that some consider threatening to the state’s booming oil and gas industry.

“Many of us who support the industry are playing defense,” Republican state Senator Gay Kernan told the Carlsbad Current Argus, for instance.

She represents Lea and Eddy counties, two of the top oil and gas producing counties in the state.

“There are a number of bills introduced that I would call destructive to the industry. We’re aggressively fighting those bills.”

She pointed out Senate Bill 459, proposing a four-year ban on hydraulic fracturing, and Senate Bill 15, calling for a drastic increase the state’s renewable portfolio.

But there are also potential legislative amendments to New Mexico’s Oil and Gas Act that would allow the state Oil Conservation Division to directly impose penalties and fines on operators who violate environmental laws.

Also being considered are statutory changes in leasing policies to allow royalty rates for production on state lands to rise from 20 percent to 25 percent. The state’s first rules and regulations to control methane emissions in oil and gas operations are also on the horizon.

“Folks down here are worried about the direction things could take,” Raye Miller, president of Regeneration Energy Corp. in Artesia said, and “I hope officials are cognizant of how much our industry contributes to the state economy.

 

The biggest fear: “With punitive policies, capital will flow across state lines into Texas.”

The oil and gas industry provides more than 90 percent of school capital investment across New Mexico, Sen. Kernan reminded the legislature in a proclamation. calling attention to oil and gas contributions to the state.

Among the concerns: Eliminating due process in the courts for enforcing the environmental laws, both current and those to come.

The New Mexico Energy, Minerals and Natural Resources Department wants to give its Oil Conservation Division authority to impose sanctions in enforcing those regulations, which it would consider an improvement over the current system of suing violators through the attorney general’s office, which slows down the process.

But it also makes the process more fair, oil and gas industry representatives say, leaving judgments up to judges rather than state inspectors.

Also being talked about: Criminal sanctions against those who knowlingly violate the New Mexico Oil and Gas Act, the Albuquerque Journal reports.

And to top it off, there are efforts to raise the raise royalty rates, with advocates such as Land CommissionerStephanie Garcia Richard proclaiming it’s time to update the New Mexico leasing statutes, which go back to the 1970s.

The New Mexico Oil and Gas Association‘s executive director said in response to the onslaught of proposed changes that the industry just wants fairness and is ready to cooperate with state lawmakers.

Executive Director Ryan Flynn added that the proposed royalty increase, which would raise it to equal that of Texas, is unnecessary because it could lower investment in energy in the Crescit eundo state.

Still, the New Mexico Oil and Gas Association‘s Robert McEntyre said oil and gas operators are remaining optimistic about investing in the state.

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