The state is drafting new methane regulations, but some fear that will devastate an industry

FARMINGTON — The state is developing regulations for methane emissions, but some people are concerned the regulations will destroy oil and gas production in the San Juan Basin.

Governor Michelle Lujan Grisham has ordered the New Mexico Environment Department and the Energy, Minerals and Natural Resources Department to create regulations to reduce emissions from oil and natural gas production.

State officials say those emissions are responsible for 62 percent of the methane emissions in New Mexico.

“We have an important environmental problem that we need to address while also sustaining a very important industry to our state — the oil and gas industry,” said EMNRD Secretary Sarah Cottrell Propst.

The state is in its beginning stages of making a methane rule and will form a methane advisory panel made up of industry representatives as well environmental advocacy group representatives.

NMED, EMNRD gather public input during meeting in Farmington

The two state agencies tasked with creating methane regulations met with community members for several hours on July 29 at San Juan College. People from all over northwest New Mexico crowded into the room. Some of them wore shirts reading “I stand with oil and gas.”

The meeting began with a presentation. When the presenters displayed a picture of Lujan Grisham along with the language from her executive order instructing the creation of methane regulations, many members of the crowd began to boo while others started to clap.

The crowd was so large the meeting was moved halfway through from the lecture hall in the Information Technology building to the Little Theatre.

State officials say methane emissions lead to lost revenue

State officials say these emissions contribute to climate change and result in lost royalty revenue for New Mexico. They can come from leaking equipment or venting of natural gas.

“There are common-sense things that can be done that are cost-effective,” said Aztec Mayor Victor Snover. “It may be as simple as tightening a valve, and I know that’s very simplifying of the problem, but we have the ability and the technology to do it and if we don’t do it then shame on us.”

Rio Arriba County Deputy Manager Leo Marquez said the lost revenue could fund vital public services, such as schools.

“Nowhere are those wasted methane dollars needed more than in Rio Arriba County,” he said.

Energy worker warns of unintended consequences to methane regulations

However, people in San Juan County are afraid the state will create regulations based on oil and gas activity in the Permian Basin that will make it uneconomic to continue producing from the marginal wells in the San Juan Basin.

“As we look at a major change in regulation to the oil and gas industry, please understand what it means to our region and our families,” Ryan Frost, a production foreman for Hilcorp Energy Company, told state officials during the public comment section. “One unintended consequence or flaw in a sweeping regulation like this could permanently wipe out industry here and the jobs it provides. These are how high the stakes truly are. I just urge extreme caution. This rule must take into account the vast differences between the northwest and southeast parts of the state.”

Frost said there are technical elements that need to be hashed out and he urged the state officials to use extreme caution while drafting the rule.

“This cannot be a rushed process and it cannot be based on just what we’re seeing in the Permian,” he said. “What this basin does is very different. We are making old wells new.”

Local officials express concern about job loss, tax increases

His comments were similar to other concerns voiced, including the impact unintended consequences could have on the community.

“When we see oil and gas numbers fall in our communities, we see the mill rates increase,” said County Assessor Jimmy Voita. “So what happens is oil and gas gets bad, people start to lose their jobs and all of a sudden the mill rates go up and people’s taxes go up.”

State Sen. Steve Neville, R-Farmington, said unlike other industries the oil and gas industries cannot pass the costs of equipment needed to meet new regulations onto the consumers. He said the marginal wells are more impacted by additional costs than the higher-producing wells.

“If things are not done well, if those wells end up shut down, we lose jobs,” Neville said.

Neville said the San Juan Basin is not like the Permian Basin and the economy in the northwest is not booming like the economy in the southeast.

“If you put something in statewide, it can affect one area much worse,” he said.

Sen. William Sharer, R-Farmington, said producers emit methane through practices like venting for a reason. He said the producers would not throw away millions of dollars of profits.

“There’s a couple of things that I think we should consider in anything that we do — legislation or regulations or anything else,” Sharer said. “One of those things is at what cost. We’re going to do something at what cost and we’re going to change something and compared to what.”

He said if the oil and gas industry can no longer make a profit it will lead to lost revenue to the state.

La Plata County Commissioner highlights Colorado methane rule

La Plata County Commissioner Gwen Lachelt said the methane regulations do not have to devastate an oil and gas economy.

“Colorado has a methane rule,” Lachelt said. “It implemented the rule in 2014. A year later a survey was done of 10 companies. Seven of those companies said that they were either making more money or breaking even as a result of complying with the methane rule in Colorado and that a lot of the problems were simply, as the mayor of Aztec said, tightening a valve, replacing a valve or shutting a vent. Some of the solutions were very easy to reduce emissions.”

Farmington resident Sandra Wheeler said the costs of not addressing methane emissions should also be considered.

“It is not simply jobs, as vital, as important as they are,” she said. “It is not simply the lost businesses. Our future as a species is under threat. And I do not imagine that everyone in this room is convinced that there is such a thing as climate change — global warming — but scientists are. And we somehow have to move now to do what was not done in the last 40 or 50 years to save the planet. And methane is at least ... 80 times stronger than (carbon dioxide). In the first year it is 120 times stronger than CO2 and it causes roughly a third of global warming.”

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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