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

Days after his inauguration, President Joe Biden's administration announced that oil and gas leases would be largely blocked for the next two months on federal land – where about half of New Mexico’s production occurs.

The 60-day halt of new leases was enacted Thursday via an order from Acting U.S. Interior Secretary Scott de la Vega that suspended the authority of agencies such as the Bureau of Land Management in decision making related to extraction on federal lands and waters, shifting that authority to leadership at the U.S. Department of the Interior –the BLM’s parent agency.

Through executive order, Biden also halted development of the Keystone XL Pipeline and sought to review any energy-related policies enacted by his predecessor Donald Trump for dangers they could pose to the public and environment.

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

Trump promoted an “energy dominance” agenda for the U.S. during his term, rolling back federal regulations on methane emissions from fossil fuel developments and opening more public land to leasing.

Carlsbad’s BLM field office, which oversees permitting and leasing on federal land in the prolific Permian Basin in the southeast region of the state became the nation’s busiest in 2018 when oil and gas development began booming due to the increasingly widespread use of hydraulic fracturing and horizontal drilling.

A BLM spokesperson said the agency declined to comment on the order.

But the halt on new leases was unlikely to immediately cease oil and gas operations in New Mexico. 

As of 2019, the BLM had 6,790 active leases on New Mexico federal land on about 4.2 million acres, per the Bureau's latest available data. 

During his campaign, Biden said he planned to shift the U.S. away from the use of fracking but had not made such a move ahead of the halt on leasing.

More:As he's sworn in as President, Joe Biden urged to get tough on oil and gas emissions

The decision sent shock waves through New Mexico’s oil and gas industry and its supporters as many feared Biden’s policies could severely damage the finances of the state that relied on revenue from oil and gas for much of its budget.

New Mexico governor unclear if she'll seek exemption 

Larry Behrens, western states director based in Santa Fe for Power the Future, an organization that says it advocates for energy workers, said New Mexico must seek a waiver from the ban calling it “concerning’ and “devastating” to New Mexico’s economy.

He called on New Mexico lawmakers to demand the state be exempt from the ban.

More:Lawmakers ready to debate funding for oil and gas oversight in 2021 Legislative Session

“If New Mexico’s leaders care about our jobs and our economy, they will immediately begin the process of seeking relief including securing a waiver, from President Biden’s anti-energy agenda,” Behrens said.

“This decision is going to destroy jobs and erode revenue needed for our schools, police and infrastructure. New Mexico’s leaders need to stand up for our working families and protect them from disastrous decisions coming out of Washington.”

New Mexico Gov. Michelle Lujan Grisham’s office did not signal if the administration would do so, but spokesperson Nora Sackett said the office was reviewing the impact of the ban and understood the importance of oil and gas while also the need to diversify New Mexico’s economy and its energy industry.

More:Oil and gas to face stricter wastewater oversight if New Mexico Senate bill passes

Lujan Grisham's term as governor has been punctuated by a renewable energy industry agenda, supporting legislation aimed at broadening the state’s energy sources to include more wind and solar power and forming New Mexico’s Climate Change Task Force to review the industry’s impact on the environment and draft rulemakings for stricter regulations on methane emissions and wastewater management.  

“The administration is reviewing the federal action and the short- and long-term fiscal implications for our state,” Sackett said. “Certainly, we all understand the critical importance of this industry to New Mexico's bottom line and of the imperative to diversify our state economy and energy portfolio.”

U.S. Rep. Yvette Herrell (R-NM), who represents New Mexico's Second Congressional District spanning the southern portion of the state where most of its oil and gas development occurs, wrote a letter to Lujan Grisham and state lawmakers Monday urging the governor to oppose the halt on leasing. 

"The oil and gas industry is the lifeblood of our state's economy, especially in the Second Congressional District," Herrell wrote. "Economic analysis shows a long-term leasing ban on federal lands would be devastating to our state's economy. 

While other members of our congressional delegation have been reluctant to speak out against the president's action, I hope you will join me in urging President Biden to reconsider any moratorium on oil and gas leases in New Mexico. 

New Mexico Republican Party Chairman Steve Pearce said Biden’s policy could reverse Trump’s efforts, which he said strengthened America’s energy industry and reduced its reliance on foreign countries.

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

“President Biden continues to attack the precious and vital oil and gas industry,” Pearce said. “In the last two years, America has become more energy self-sufficient under President Trump.

“But with this brazen move, President Biden could soon force the United States to depend on foreign nations—many of which fund terrorism--to sell us their oil which would help destabilize the world. This foreign dependence will also damage our economy and will cost U.S. jobs.”

Oil and gas industry, environmentalists clash over federal land use

Oil and gas industry trade groups representing operators in the Permian from both sides of the Texas State Line argued the halt on leasing could cost jobs and public revenue needed for services such as education.

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

New Mexico Oil and Gas Association President Ryan Flynn said the move could cost New Mexico 60,000 jobs and $800 million in revenue.

The day after Biden’s inauguration, Flynn said the industry was already worried his policies could be problematic for the fossil fuel industry, and increase the U.S.’ reliance on foreign energy sources developed with less environmental oversight.

“Yesterday, we were encouraged to see President Biden stand on the steps of the United States Capitol with a message promising to unite our country and accelerate our economic recovery,” Flynn said the day the halt was announced.

“But to be clear: any action to restrict oil and gas activity in the United States only serves to reward other countries who do not share our commitment to environmental leadership and undercuts American energy security.”

More:Permian Basin oil and gas companies continue to merge, as market recovers from COVID-19

Todd Staples, president of the Texas Oil and Gas Association said suspending permits both onshore and offshore could imperil the industry’s ability to produce energy from the Permian Basin, across Texas to the waters of the Gulf Coast.

Disrupting offshore production in the Gulf of Mexico region, which the Association reported accounted for 15 percent of U.S. oil production, could cost 200,000 jobs by 2022, Staples said and “millions of dollars in revenue.

TXOGA also predicted offshore production of natural gas would fall by 68 percent and 44 percent for oil, while imports of oil would grow by 2 million barrels per day.  

More:Debate continues on New Mexico's tightening of oil and gas emissions rules

"Banning energy development on federal lands and in offshore waters not only threatens thousands of the best-paying jobs but needlessly erases much needed revenue that helps pay for schools and other essential services," Staples said.

"American oil and natural gas is safe, clean and abundant, and misguided policies will only stifle our nation’s energy and environmental progress."

Environmental groups applauded Biden’s order, calling for a permanent leasing ban to follow.

More:Hearings begin on New Mexico's proposed oil and gas methane venting and flaring rules

A Bloomberg report citing four anonymous sources said the administration planned to enact such a ban as early as Wednesday.

Jeremy Nichols at Santa Fe-based WildEarth Guardians said Biden should end the sale of public land to oil and gas companies, calling the U.S.’ leasing program and “injustice.”

“It’s critical for President Biden to take swift action to not only end the sale of public lands for fracking, but undo the damage done by the Trump administration,” Nichols said.

“With record legal challenges, the federal oil and gas program is nothing but an injustice, President Biden needs to put public lands to work for people and the climate, not for the fossil fuel industry.”

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