New Mexico GOP 'concerned' for oil and gas after 2020 General Election

New Mexico’s oil and gas industry could be on defense again during the States’ upcoming 2021 Legislative Session after Democrats maintained their majority in the State House and Senate after the 2020 General Election.

While Republican gained a seat in the House and dropped one in the Senate, with a Democrat majority in both chambers and the continuation of Gov. Michelle Lujan Grisham’s environmentally-focused administration, oil and gas leaders and the GOP worried policy could continue to threaten the industry that contributes more than a third of the state’s finances.

House Republican Leader Jim Townsend said he was concerned Democrats could again propose a moratorium on hydraulic fracturing after a bill was introduced to do so last year, and the administration’s continued efforts to transition away from fossil fuels could bring higher energy costs and even weaker revenues for New Mexico.

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Revenue from oil and gas already plummeted this year after the COVID-19 pandemic led to a decline in the fossil fuel market and production operations in New Mexico.

In 2019, New Mexico lawmakers had an almost $2 billion budget surplus to work with, led by oil and gas, but was likely to face a deficit of up to $400 million going into the 2021 Legislative Session which runs from January to March.

Townsend said he was also concerned with the administration’s efforts to adapt more stringent regulations on methane and other emissions from oil and gas facilities – efforts he said that could stymie an already struggling industry the state depends on.

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“The industry serves New Mexico very well and we’ve got to protect that,” Townsend said. “I think the industry will be okay, but I’m a little concerned with some of the things I’ve been seeing.”

In 2019, Lujan Grisham signed into law the Energy Transition Act, aimed at moving New Mexico toward increased renewable energy and setting benchmarks for the state to reduce its carbon-based energy.

The move could lead to up to a 15 percent increase in energy costs for New Mexicans, Townsend said, which he expected the GOP to oppose in 2021.

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“There’s not a single thing that you can do for a family on a fixed income that’s worth raising their electrical costs,” he said. “It’s going to get ugly.”

The current downturn in the industry, which followed record production levels and revenue last year, could last for years, Townsend said, and the industry needs all the policy support it can get as refineries close and drilling rigs are pulled from the oilfields.

“You’re going to see more of that trickle across,” he said. “I’m really worried that with the demand side of our business being so flat, when the economy recovers we’re going to be hard pressed to fuel everything.”

Larry Behrens with Power the Future, a New Mexico-based advocacy group for energy workers said the Democrats’ success in maintaining a majority in the Legislature was “disturbing” for the oil and gas industry.

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He said the while some Democrats have shown an appreciation for the industry’s contributions to New Mexico, he expected next year’s session to see more legislative attacks on oil and gas.

“I’m concerned we’ll see a continued assault on energy workers and New Mexico’s working families,” Behrens said. “There are too many lawmakers in Santa Fe that are beholden to radical environmental groups.”

Behrens said the Democrats’ efforts to transition to renewable energy would mean shrinking budgets for public services such as education and law enforcement.

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“To transition away from fossil fuels is to transition away from 40 percent of the state’s budget,” he said. “It’s the height of arrogance to tell energy workers and their families that they must transition to something new when they’ve done so much for the state.”

Playing defense could mean educating Democrat lawmakers, many from urban areas far from the oilfields and communities that rely on extraction, Behrens said, on the importance of oil and gas not only to the state’s bottom line but to New Mexicans in the southeast and northwest corners of the state.

“It’s clear there’s a disconnect between Santa Fe and what energy does for the state,” he said. “As more in the Legislature learn about its contributions, I think there will be real opportunities to look at these bills and ask if its really good for New Mexico or a power grab for radical environmentalists.”

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Robert McEntyre with the New Mexico Oil and Gas Association argued lawmakers need only look at the state’s budget to see the impact of oil and gas and problems that could be brought through policy that would hamper production.

“Both parties have historically demonstrated a willingness to work with and prioritize the industry,” he said. “Especially those who craft the budget, they know the importance of our industry.”

McEntyre also worried that policies such as the fracking moratorium or a ban on federal oil and gas land leasing, as many have suggested would be enacted if Democrat Former-Vice President Joe Biden was elected President, could devastate New Mexico’s economy where more than half of oil and gas production occurs on federal land.

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Lujan Grisham has maintained that she would prefer federal energy policy be considered on a state-by-state basis rather than a sweeping national ban.

“We’ve certainly seen what a devastating impact some of the proposals could have, and it’s also important we highlight the environmental responsibility the industry has shown,” he said. “We can’t divorce a federal leasing ban from the financial impact on New Mexico.

“If an administration pursued that path, it would be devastating.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.