From the Carlsbad Current Argus
A New Mexico Senate bill that would place a four-year moratorium on new permits for hydraulic fracturing, or fracking, passed its first committee Feb. 13 and is now closer to becoming law.
Senate Bill 149 passed the Senate Conservation Committee on a 5-4 vote and was sent to the Senate Judiciary Committee for the further discussion and a second vote.
Sponsored by Sen. Antoinette Sedillo Lopez, the bill was intended to halt new fracking operations to allow environmental officials and lawmakers to study its environmental impact.
She introduced similar legislation that died in committee during the 2019 and 2020 legislative sessions.
The fracking process, in which a combination of water, sand and chemicals is pumped underground to break deep shale deposits so crude oil and natural gas can be brought to the surface.
The practice was credited with recent booms in oil production in New Mexico, but activist groups worried it could endanger water supplies, air quality and public health.
If passed, SB 149 would also create additional annual reporting requirements for the use of fracking and its effects from multiple state departments including the Energy, Minerals and Natura Resources Department – New Mexico’s main oil and gas regulator – the New Mexico Department of Agriculture, and New Mexico Environment Department.
The bill would also require reporting on fracking’s effects from the departments of health, transportation, Indian affairs, workforce solution and Office of the State Engineer.
Such requirements and the halt on new fracking permits until June 1, 2025, were championed by environmental groups but derided by the oil and gas industry as disruptive to an industry that provides about a third of New Mexico’s budget.
Artemisio Romero y Carver of Youth United for Climate Crisis Action (YUCCA) said the bill would add regulations needed to protect the environment.
“Fracking is an equally dangerous and unregulated process,” he said. “We must pass SB149 and pause the increasing danger of fracking to our citizens, our planet, and to future generations.”
Gail Evans at the New Mexico Environmental Law Center said New Mexico’s reliance on fossil fuel development means it must be closely regulated to protect the environment and public health.
The bill, Evans said, would move New Mexico toward adequate regulations on the oil and gas industry.
“Being a state that produces an enormous amount of oil and gas comes with an enormous responsibility to ensure that that production is done in a way that does not harm our environment, public health and freshwater resources,” she said.
Bill would cost New Mexico billions in lost oil and gas revenue
An analysis from New Mexico’s Legislative Finance Committee (LFC) estimated that during the four years of the proposed halt on fracking leases, the State would lose about more than $11 billion, increasing each year of the ban from an expected $1.7 billion in Fiscal Year 2022 to about $3.8 billion in 2025.
Revenue loss would impact the New Mexico State Land Office, which leases State Trust land for oil and gas development, along with the New Mexico Environment Department and its Air Quality Bureau which relies permit fees to fund numerous state mandates, bringing in about $2.2 million each year from oil and gas, the report read.
“Substantial changes to how this industry operates in New Mexico – such as a temporary moratorium on hydraulic fracturing – would cause severe revenue losses,” the report read. “Without a source of revenues to replace these losses, this bill would have a substantial negative budgetary impact.”
Although the bill would not affect current fracking permits, the LFC warned halting the issuance of new permits would lead to a “sharp” decline in production not offset by new wells.
Newly fracked wells peak in productivity in the first three months, the analysis showed, and then fall “rapidly” in the next two years.
New Mexico’s oil production will drop 14.8 percent in the first two months while natural gas would fall by 7.5 percent.
After a year, oil and natural gas would decline by 40 percent and 22 percent, respectively and by 70 and 45 percent by the end of the moratorium on permits.
Opposition was also heard from oil and gas trade organizations and lobbyists for major operators such as Chevron and Occidental Petroleum.
Aimee Barabe, director of government affairs at the New Mexico Oil and Gas Association said fracking had been conducted safely in New Mexico for 50 years with no incident of groundwater contamination and that the industry is already one of the most regulated in the state.
Additional burdensome regulations, Barabe said could further restrict extraction operations in New Mexico and put state revenue at risk, along with up to 100,000 jobs.
“Fracking and all the oil and gas activities are the most regulated industry with strict requirements and enforcement at the federal, state and local levels,” she said. “Because of this technology the United State has achieved its energy independence.”
Jerry Fanning, public and government affairs director for Eddy County said oil and gas was essential to the economy in rural southeast New Mexico where one of the nation’s most prolific oil and gas fields in the Permian Basin is situated.
Fanning said SB 149 would devastate the industry and local economies in oil-producing regions.
“Senate Bill 149 sets out to literally kill the oil and gas business in New Mexico and Eddy County,” he said. “We believe that Senate Bill 149 is not about conducting a study but about shutting down the oil and gas industry and hurting the citizens of New Mexico who benefit so greatly from the dollars that this industry contributes.”