Oil and gas operators must abide by their contractual obligations to run productive wells on public lands and clean up when they’re finished — or face a new enforcement hammer.
State Land Commissioner Stephanie Garcia Richard launched an effort late last year to more strictly enforce the terms of the state’s oil and gas contracts, most notably companies’ obligation to plug expired oil wells and clean up junked equipment, debris and spills when their leases end. This more comprehensive oversight differs from a past approach that Garcia Richard called “hit or miss.”
The land office has invested in new satellite technology to take aerial photographs of state lands and catch littered and contaminated sites, Garcia Richard said. And she recently banned the commercial sale of freshwater from public lands to fossil fuel companies to encourage them to use recycled water. “State land is a public resource, and it needs to remain a resource for years to come,” Garcia Richard said in a phone interview. “I take that responsibility of the office very seriously.”
The state leases lands for other purposes, such as grazing and renewable energy, but oil and gas account for more than 90 percent of the leasing revenue, putting about $900 million a year in the state’s coffers. Most of that money goes toward education. The land office is in charge of oil and gas leases on public lands, the Oil Conservation Division regulates the industry statewide, and the state Environment Department oversees the emissions, Garcia Richard said.
A legal team combed through all the oil and gas contracts to see where the operators might be out of compliance, Garcia Richard said. After researching the history, she said she’s certain none of her predecessors had done such a review. The office can’t create new leasing terms for oil and gas operators because those contracts are fixed in state law, she said, noting the Legislature set most of the provisions in the 1970s.
However, Garcia Richard said officials can make certain all the provisions are enforced, including the full remediation of the site, which might involve removing leftover well pads, batteries and other junk, and cleaning up any contamination. “If folks aren’t compliant, we are taking a series of actions to ensure they’re compliant,” Garcia Richard said.
A New Mexico Oil & Gas Association spokesman said the industry is committed to operating safely and responsibly on state lands. “Ultimately, enforcement creates opportunities for greater partnership and dialogue to ensure the well-being and longevity of these vital resources,” spokesman Robert McEntyre wrote in an email. An environmental advocate said any increased oversight of this industry in New Mexico is needed. “I’m sure what Commissioner Garcia Richard is doing is almost certainly more than what has been done in the past, and I commend that,” said Charles de Saillan, an attorney with the New Mexico Environmental Law Center.
The land office’s push to hold these operators more accountable aligns with other state efforts to regulate the industry, such as the Oil Conservation Division getting more enforcement power and the Governor’s Office drafting a climate plan that includes measures to curb fossil fuel emissions, de Saillan said. Companies that are out of compliance receive letters describing the violations and what they must do to fix them, said Ari Biernoff, the land office’s general counsel. If they fail to respond or if they deny the violations, legal action is taken, Biernoff said.
“Going to court is a last resort for us,” Biernoff said.
An operator has five years to produce oil and gas on the land after signing the lease, Biernoff said. A lease continues indefinitely as long as the site yields fossil fuel, he said, adding some of the state’s leases date to the 1950s. If an operation is idled for months or barely produces, the state can cancel the lease, Biernoff said. One example is the state’s lawsuit against Cross Border Resources, a Nevada corporation whose main business office is in Dallas.
At one site in Chaves County, Cross Border left behind junk, debris and at least five unplugged abandoned wells, the lawsuit said. The state canceled the lease in 2019 because of minuscule output for three years, the lawsuit said. The company trespassed after the lease was voided and ran wells with minimal production, according to the lawsuit. In a different lawsuit, the state sued Cross Border and David R. Stearns for similar alleged infractions of unplugged wells and discarded junk at a site roughly five miles from the other site where Cross Border operated.
The company filed for bankruptcy protection a few years ago, reorganized under Chapter 11 and operated in New Mexico through summer 2020, Biernoff said.
“This highlights one of the problems we are confronting head on,” Biernoff said. “There are not enough safeguards to prevent companies from using and damaging state trust land, failing to clean up their mess and then walking away.”
Garcia Richard wrote in an email she thought it was necessary to bar new commercial sales of freshwater from public lands as a conservation measure. Companies pumping freshwater from the ground can have a huge impact on small communities near the Permian Basin that are vying for that water, she wrote. If the wells run dry — an increasing threat amid climate change — there is no economical process to produce freshwater that is safe to drink or irrigate crops, Garcia Richard wrote.
“If we are reliant on an economy based on getting oil out of the ground, we should be prioritizing the use of recycled or produced water to do so,” Garcia Richard wrote. “Our future generations are counting on us to make smart decisions that will profoundly affect their quality of life.”
Source: “New Mexico Land Commissioner Increases Oversight Of Oil And Gas Operators”
Source: “New Mexico Land Commissioner Increases Oversight Of Oil And Gas Operators”
