A 30-day legislative session is currently taking place in New Mexico. It provides insight into the challenges of balancing state budgets, energy needs, and the environment.
Stephen Robertson, executive vice-president of the Permian Basin Petro Association, spoke at the monthly Oilfield Strong webinar hosted by OTA Environmental Services. He discussed the New Mexico legislature’s bills and how they could affect the region’s oil and gas industry.
Robertson stated that the PBPA is currently tracking 20 bills during the session. This primarily focuses on the state budget. He said that the industry supports a particular bill, which would pay for improvements to Highway 380 which runs from Tatum (New Mexico) to the Texas border.
Robertson said that everyone knows it’s dangerous and was excited to see Robertson push for funding.
Another bill was supported by the Governor of New Mexico. Michelle Lujan Grisham would create a hydrogen energy development center.
This is because it has been subject to criticism from the left, as it relies too heavily on hydrogen from hydrocarbon development. He explained that not all left-leaning parties want to support the oil industry and see the dependence on hydrogen from hydrocarbons supporting oil and gas.
He added that New Mexico is moving toward zero emissions and clean fuels and that any effort to remove the state from the oil-and-gas industry is not supported.
He said that New Mexico’s southeast corner, which is part of the Permian Basin is a challenge because it heavily depends on the oil and gas industry for its revenues. The state is dependent on the energy industry for both its energy supply and its economy. State officials can see that reducing your dependence on hydrocarbons for energy will not only impact your energy provider but also your budget. You must replace your dependence on hydrocarbons with an industry that creates jobs and generates revenues.
A session will also include a constitutional amendment known by the green amendment. This amendment would guarantee New Mexico residents the right of a clean environment.
Robertson stated that this is a problem because there is no definition of what it really means. Is the amendment ensuring that everyone has clean water and pure H2O? This is not what comes out the ground from water wells, and it certainly not what comes out the ground when the oil-and-gas industry drills.
He said that those who supported the amendment to such questions were to leave the courts to determine the answers.
He said that this would help educate people about the dangers and worrisome nature of these issues, not only for industry and business, but also for citizens. He said that it appears that the amendment will not be moved forward but warned that there is still time for the bill to move forward, either by amending its language to another bill or using other vehicles to do so.
Robertson warned that New Mexico is now a state with the most stringent regulations for methane emissions. He explained that the state used a dual approach to the problem, with the state’s environmental agency and the oil conservation department. Both agencies worked together initially to develop a single framework, he explained. But as the work progressed, the two agencies diverged. Robertson said that there are two distinct rules: one from the Oil Conservation Division, and one from environmental regulators. Robertson also stated that the PBPA has highlighted several instances in which they don’t work well together. He stated that operators must follow both.
The PBPA has been drafting comments to proposals for the Environmental Protection Agency on methane emissions at a federal scale.
The EPA has published a document stating that this is what it wants to achieve and is seeking comments. It is difficult to make meaningful comments without knowing the full details of the regulation. Robertson stated that we don’t know how the regulation will affect the industry.
He stated that the main concern is the general approach. Anyone who has ever worked in the oil and natural gas industry knows that “one size fits all” doesn’t work. He said that regulations should be tailored for upstream, middlestream and downstream operations. They should also be applicable to private entities versus public companies, as well to operators operating in the Midland Basin relative to the Central Basin Platform relative to the Delaware Basin.
One example is the proposed regulations that would require optical gas imaging camera operators to take breaks during certain periods. He stated that this doesn’t take into account how equipment is operated or how operators work.
Innovation is a hallmark of our industry. Not for innovation sake, but for actual improvement in operations. These rules would require handheld OGI inspections. What about companies that use multi-faced methods of emission detection? These companies use aerial, ground, or satellite imagery to prove emission. The EPA would limit the scope of observations that can be made. What about technology of tomorrow and the day after? What technology will be created down the road that won’t be useful simply because we have to do it in a certain manner?
He stated that while the end goal is to increase emissions capture, it is possible that domestic operations will be reduced.
Anyone paying attention to what happened during pandemic should know that oil and gas demand around world dropped by 10%, and that was all it took.
He said that demand has returned to pre-pandemic levels, and will continue to rise. US oil producers can meet this demand efficiently and in a more sustainable manner. However, if US operations are outsourced, production will take place elsewhere and most likely without the US’s environmental focus.
You are not improving the world’s emissions. Instead, you are harming the environment and causing more pollution. It’s one thing to want improvement, but it’s another to want an end goal that is not justified by the process you use, he said.
