New Mexico oil and gas supporters fear 'fracking ban' bill could send companies to Texas

A bill that would block the use of hydraulic fracturing on state land was introduced to the 2021 Legislative Session by New Mexico Sen. Antoinette Sedillo Lopez of Bernalillo County intended to cease the practice while the state studies its impact on the environment.

Hydraulic fracturing, or fracking, is the practice of injecting water, sand and chemicals underground to break up subsurface shale deposits so that oil and natural gas can be pumped to the surface.

The process, along with horizontal or directional drilling, was credited with creating New Mexico’s recent boom in production that brought multi-billion-dollar budget surpluses to the state but also drew concern from environmentalists as to the effects on New Mexico’s land and water.

More:President Joe Biden halts oil and gas leases, permits on federal land and water

Sedillo Lopez introduced the bill first during the 2019 Legislative Session but it was defeated before being brought to the Senate floor.

An analysis that year from New Mexico’s Legislative Finance Committee found the moratorium could lead to a $3.5 billion loss in revenue.

It failed to gain traction in the 2020 session as well, but Sedillo Lopez said she hopes the bill could gain some momentum as New Mexico’s already-Democrat-controlled Legislature appeared to lean further to the left after the 2020 General Election.

More:New Mexico oil and gas leaders slam Biden's federal leasing halt as 'devastating' economy

She said the bill, which had not been assigned a committee or number as of Monday, would not impact any current or ongoing fracking operations but was meant to give the state some breathing room in addressing the practice’s impact on water and air quality.

Opponents characterized the proposal as a “ban” that could devastate New Mexico’s bottom line as the oil and gas industry was already struggling to recover from an historic collapse of the fossil fuel market created by the COVID-19 pandemic.

“It’s actually not a ban. It’s simply a pause on future fracking permits so we can look at the impacts of fracking,” Sedillo Lopez said. “It does not require the closure of any wells. It’s just a pause so that the state can do its duty to regulate this new technology.”

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She said she was especially concerned with pollution in southeast New Mexico, where most of the state’s drilling occurs in the Permian Basin region – an area suffering with widespread drought and worsening air quality.

The Carlsbad and Hobbs areas were listed as having some of the highest levels of ground level ozone in the state – created when volatile organic compounds (VOCs) interact with sunlight.

Oil and gas development was considered a major contributor of VOC pollution by the state, and if the federal government deems the area’s level exceed federal limits, permits for development could be blocked or incur greater costs.

More:'Fracking ban' reintroduced in New Mexico Legislature for third year

Long-term exposure to ozone can cause breathing difficulties and illness in humans.

“No piece of our state should be a sacrifice zone,” Sedillo Lopez said of the southeast region. “When people say that it’s already trashed, let’s forget it, that’s offensive. The oil and gas industry has a responsibility to remediate its impact and clean up after itself.”

New Mexico Sen. Gay Kernan, a Republican from Hobbs represents voters in that region of the state, and she fears that disrupting the oil and gas industry could not only lead to shortfalls at the state level, but also decimate local economies like those in Carlsbad and Hobbs.

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A ban on fracking could mean thousand of lost jobs, opponents worried, and shrinking gross receipts taxes that fund public services on the county and city level.

“If you’re from southeast New Mexico, you know the impact it would have on drilling. It would have a terrible effect,” Kernan said. “It’s a significant concern for the local communities.”

And with a more liberal lawmaking body this year, Kernan worried the bill could gain more momentum and move through the Legislature.

More:Permian Basin sees uptick in oil and gas activity, market recovers past $50 per barrel

“I think we’re more at risk today than we were before because we do not have the moderate Democrats in place to stop this bill,” she said. “Things have changed. I was very confident last year, but this year I’m not as confident this bill won’t move.”

But even before the bill passes the Legislature or gets signed into law, Kernan said it already sends a bad message to oil and gas companies considering investing in New Mexico.

Kernan said the industry is already fearful following a 60-day suspension of oil and gas leasing of federal land announced by the administration of President Joe Biden last week – half of New Mexico’s oil and gas operations is on federal land – and similar policy on the state level could mean major oil companies simply cross the border to Texas where most Permian Basin development is on private land.

More:New Mexico holds final sale of federal land to oil and gas under Trump administration

“The oil and gas companies have to go where they can produce. (If the bill passes) that wouldn’t be southeast New Mexico,” Kernan said. “We’re always concerned with the oil and gas industry and want them to be good partners. I think they are, but they’re going to go to locations where they can operate.”

Industry groups also voiced opposition to the bill.

Larry Behrens, western states director based in Santa Fe for Power the Future, a group that advocates for energy companies, said stymying energy development in New Mexico would create dire financial losses for schools and other public services.

"It is extreme arrogance to call a massive moratorium on fracking reasonable because it’s for a limited time,” Behrens said of Sedillo Lopez. “We would suggest Senator Sedillo Lopez ask our schools to cut funding by over 30 percent every year for the next four years and then explain to our families how it’s ‘reasonable.’”

Robert McEntyre, spokesperson for the New Mexico Oil and Gas Association said the bill was not "a serious proposal" and would serve to only divide New Mexico policymakers and threaten the state's economy. 

"It is unthinkable that New Mexico would voluntarily choose to upend on our economy, close our public schools, and dismantle funding for critical first responders, but that’s exactly what a fracking ban seeks to do," he said. 

"Any proposal that forces New Mexico’s children and schools to suffer in such an extreme manner is no serious proposal at all, it’s the politics that most people would rather condemn than condone."

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