A Changing Climate for the New Mexico Oil and Gas Industry | Local news
Speaking at an oil and gas conference in Santa Fe last week, a panel of state lawmakers expressed sympathy and appreciation for fossil fuel producers, but they also conveyed that the New Mexico political landscape is changing and the industry needs to adapt .
A clear signal of this change came when State Representatives Patty Lundstrom, D-Gallup, and Kelly Fajardo, R-Los Lunas, offered lobbying advice.
Both women emphasized the importance of making a concise and coherent request to lawmakers and their staff, all of whom are unpaid and have limited time to respond to a hodgepodge of questions and concerns.
The state has a long tradition of not paying its legislators, who in turn are often understaffed. What is different is an industry that has been valued so highly for the massive revenue it offers the state that it needs to improve its lobbying.
“Absolutely. I would say yes,” Lundstrom said during a phone interview about the trend.
Many newer lawmakers are younger, more concerned about climate change and better informed about it, which means they’ll be asking tougher questions, Lundstrom said. “They are not ready to say, ‘Give them a pass’.”
This reflects the uncharted territory the industry is in as climate change causes longer drought, lower river flows, and shortened growing seasons, leading environmentalists to push for reduced greenhouse gas emissions and making voters more political about the climate when choosing Give leaders a higher priority.
Industry officials recognize the need to limit the release of methane – a powerful greenhouse gas – and other toxic chemicals. They also agree that a transition from fossil fuels to renewable energies is inevitable, but they believe that the change should be gradual and should take many years or even decades.
For the foreseeable future, oil and gas will continue to be in high demand and will continue to be an important part of the New Mexico economy as the industry works to get cleaner to help address climate change, said Leland Gould, interim executive director of the New Mexico Oil and Gas Association.
“There is no doubt that the future of our industry is less carbon and fewer emissions,” said Gould. “But I know our members in New Mexico can play a huge role in meeting growing needs around the world and further reducing emissions.”
An environmentalist said conservationists are using the current political climate to push harder for greater climate and public health protection.
“I think there is a moment now when these climate and air pollution issues come to the fore,” said Jon Goldstein, state director for the Environmental Defense Fund. “It has a lot to do with the general public understanding how serious these issues are.”
Increased regulation and production
State, state, and international reports predicting the effects of climate change are alarming. Climate scientists agree that greenhouse gases that trap heat in the atmosphere must be reduced in order to avert the most devastating effects.
The dire predictions have led environmentalists to push for faster measures such as government subsidies for renewable energy systems, incentives to switch to electric vehicles, and stricter rules on oil and gas deals.
A new generation of state and federal legislators are advocating everything from the Green New Deal to anti-fracking laws and CO2 savings targets.
Democrat Michelle Lujan Grisham issued an executive order in 2019 calling on the state to cut greenhouse gases by 45 percent by 2030.
In March, the state enacted methane regulations that limit the venting and flaring of natural gas to emergencies. In addition, the operators have to intercept 98 percent of their methane by the end of 2026.
Meanwhile, the state environment ministry is proposing new rules for the fossil fuel industry to contain ground-level ozone, a toxic gas that can cause breathing problems. And the U.S. Environmental Protection Agency is expected to announce stricter methane rules in the coming weeks.
Gould said the industry has seen constant new regulations for the past two decades, and this is just the latest.
His association worked with government regulators on rules that reduce methane and ozone emissions but aren’t too cumbersome, he said. At the same time, the group is working to prop up the industry, which brings in approximately $ 2.8 billion in the state budget annually.
“I believe New Mexico is able to do both,” said Gould. “It’s not an either-or.”
Many of the association’s oil and gas producers have developed plans to reduce carbon emissions and develop new technologies that are more efficient and less polluting, he said.
The public should know that oil production is cleaner and greener than ever, he said. “And progress continues every day.”
Five years ago, during a market slump, New Mexico’s oil production fell to 150 million barrels a year and has since declined to more than 370 million barrels – a record production that ranks the state second only to Texas, according to the US Energy Information Administration.
“The remarkable growth we have seen over this period has enabled the state to experience unprecedented economic expansion,” said Robert McEntyre, spokesman for the New Mexico Oil and Gas Association. “We think we should use that as we move into the low-carbon future.”
The industry enjoyed more relaxed oversight under Republican Governor Susana Martinez, who cut budgets and regulators’ staff.
Is the industry waiting for the next Republican governor to pull back Lujan Grisham’s stricter regulations?
McEntyre said that was not the plan.
The group has worked with both political parties throughout its history to create sensible, flexible arrangements, he said.
“However, we fundamentally disagree with the extreme approaches and rhetoric that some groups use to influence politics,” said McEntyre. “It was difficult to find common ground with those who oppose our existence altogether or advocate policies that would effectively mine oil and natural gas in New Mexico.”
Goldstein said it is easy to label activists as extremists because they are calling for stricter regulations and a faster transition to greener energy than the industry would like.
“Whenever you paint with a brush this broad, you’ll gloss over a lot of disagreements,” said Goldstein.
Long, slow transition
During last week’s conference, a Republican State panelist, Senator Steven Neville of Aztec, noted that the US has more than 270 million vehicles, and almost all of them use traditional fuels.
“I don’t see the oil and gas industry going away in the next 10 years,” said Neville. “That’s what some of our environmental friends are trying to propose in the legislature. It’s not going to happen. These cars and trucks and so on will last a lot longer than 10 years.”
A Saudi Arabian study predicts an increase in oil demand over the next 15 years, he said.
An economist said the sheer number of gas vehicles combined with the state’s record production and rising oil prices create a healthy near-term outlook.
“Things are looking pretty good for the industry in the short term,” said Jim Peach, an economics professor emeritus from New Mexico State University.
But big manufacturers like GM, Ford, Volkswagen and Toyota are increasing production of electric cars, Peach said. “That will affect demand in a few years.”
Peach said he wasn’t surprised some industry leaders grumbled and felt attacked about stricter regulations.
They felt under siege 20 years ago when the state began requiring operators to line the pits with contaminated sewage so they wouldn’t end up in the ground, he said. Some operators threatened to move to Texas, but they didn’t, he added.
State Senator George Muñoz, D-Gallup, said more liberal, forward-thinking Democrats had removed some of the old-fashioned guards. These younger progressives are unwavering about environmental oversight, which is good until they overlook the cost, he said.
“I think things have changed for the better,” said Muñoz, who also sat on the conference panel. “I am in favor of making the world a better place. Though I agree with a lot of its things, it becomes a problem when you have trouble financing things.”
These lawmakers need to be practical and take into account how much New Mexico is still dependent on oil and gas revenues and federal funding, Muñoz said. He noted that long-term planning is required to even partially phase out such an embedded industry.
Lundstrom said there is too much focus on oil and gas when discussing the energy transition, but entire supply chains have to change when the state shifts to a different energy source.
For example, hydrogen-powered cars require completely different engines and infrastructure, and workers need new skills to fix them.
Lujan Grisham discussed a plan at the oil and gas conference to boost production of hydrogen fuel, which emits less carbon dioxide than fossil fuels. The selling point for executives was that natural gas – which they could supply – would be used to separate the hydrogen from the water.
Gould said in the interview that he needs to know more about the details of the plan, but he believes natural gas is the most efficient way to produce hydrogen.
Environmentalists reject this method because it releases more methane than burning natural gas for heating. They also say that when hydrogen is used to power turbines in electricity plants, it produces nitric oxide, a pollutant that contributes to the formation of ground-level ozone.
Camilla Feibelman, director of the Rio Grande Chapter at the Sierra Club, said this traded one form of pollution for another, and only offered the industry a way to save its infrastructure while the world switched to renewable energy.
“This is not [about] to get a little better, “said Feibelman.” That means saving the future of our children in a transformative way.
Gould pointed out that he sees hydrogen as a complement to, rather than a substitute for, fossil fuels. Again he said it doesn’t have to be one or the other.
Peach said there was no denying the industry is pumping huge sums of money into the state coffers, but he noted that there was a growing chorus of people wanting to end the state’s dependence on those revenues who are involved in a volatile market Booms and bankruptcies are bound. Instead, they want more stable sources of income that can be tapped by diversifying the economy.
Still, weaning the state off of its oil dependence will be a Herculean task, Lundstrom said, and it must be done gradually over an extended period of time to avoid workers being displaced.
It’s easy for someone in Albuquerque or Santa Fe who doesn’t work in the industry to support a change, she said.
“If you work in these oil fields and support your family,” said Lundstrom, “and suddenly this … [jobs] go away – what happens? ”