Members of New Mexico’s Congressional delegation want the federal government to fund the plugging of the state’s abandoned oil and gas wells as numbers grew due to the COVID-19 pandemic and its negative impact on the oil and gas industry.
Democrat U.S. Reps. Xochitl Torres Small and Ben Ray Lujan (D-NM) of New Mexico were joined by Republicans Reps. Mike Kelly and Glen Thompson of Pennsylvania in sending a letter to House leadership calling for federal funds to be set aside to plug wells abandoned by operators in future COVID-19 economic relief packages reported the Carlsbad Current-Argus.
In New Mexico, the State reported 708 such wells existed, while the New Mexico Oil Conservation Division (OCD) had about $2 million in financial assurance from operators to pay for plugging and remediation of the land along with $1 million per year in revenue from the Bureau of Land Management.
OCD Director Adrienne Sandoval said the State can plug about 50 wells per year at a cost of about $35,000 per well not including the $50,000 to $80,000 in costs with remediating the land once a well is plugged.
If the land has historical environmental problems, the OCD estimated it could cost millions to remediate.
In their letter, the Congresspeople pointed to 3 million abandoned wells across the country that many state agencies reportedly do not have the funds to mitigate.
“Along with the environmental impacts of abandonment, this situation has created new economic suffering throughout the industry, especially for small rural producers which historically operate on tight profit margins and oil and gas workers who have lost their jobs,” the letter read.
“Congress should respond to this challenge with strong funding for state and tribes to help address the current backlog of orphan wells put thousands back to work and clean up our environment.”
Torres Small, who represents the 2nd Congressional District spanning the southern half of the state argued states like New Mexico need additional financial assistance from Congress to solve the problem.
She said a federal program to plug wells could create thousands of jobs in producing regions like southeast New Mexico suffering from unemployment as oilfield workers were laid off during the market downturn.
She said oilfield workers had lost up to $500 million in lost wages amid the downturn.
The State of New Mexico reported in May that about 4,100 oil and gas workers had filed for unemployment during the pandemic, resulting in about $20 million in lost income tax revenue.
“It will help rebuild our economy with a shovel-ready project,” Torres Small said of the proposal. “It’s deeply important that rebuild southeast New Mexico and have its energy workers go back to work. As we rebuild, we need to make sure southeast New Mexico is not left behind.”
Source: Carlsbad Current-Argus
