New oil, gas fees for applications now in effect
Charges expected to raise almost $2 million a year
A New Mexico Senate bill intended to raise funds for state oil and gas regulators -- estimated to generate almost $2 million a year -- went into effect last week, allowing the state to charge fees on various administrative applications.
The Oil Conservation Division intends to use the money to modernize its technology systems and offset hearing costs.
Senate Bill 553 called on the OCD to develop a new online payment system and begin collecting fees on July 1, read a news release from the New Mexico Energy, Minerals and Natural Resources Department.
Applicants to permit drilling, along with deepening, plugging or reentering will be charged $500, under the new law. To apply for a permit for a commercial surface waste management facility, landfill or land farms, applicants must pay a $10,000 fee to the OCD.
Fluid injection would be charged another $500 per application, along with applications for administrative hearings.
Surface waste management facilities, landfills and land farms cost $10,000 per application.
A fiscal impact report from the State’s Legislative Finance Committee predicted the bill could generate $1.9 million each year in fiscal years 2020 and 2021, by multiplying the new fees by the number of applications from last year.
In future years, the revenue generated by SB 553 will be dependent on oil and gas activity, the report read.
Modernizing the OCD’s information technology system was estimated to cost $4 million to $8 million, records show.
OCD, New Mexico’s main regulator for oil and gas on state land, was previously unable to collect fees, per state law.
Agency director Adrienne Sandoval said the bill will allow the division to generate more revenue and provide more “efficient” service to oil and gas operators.
“My goal is to make the OCD a modern, efficient division, and this is the first of many steps in making that a reality,” she said.
Environment Department Secretary Sarah Cottrell Propst said the legislation had support from the industry, and would provide an even stronger economic benefit from one of the state’s biggest industries.
“The oil and gas industry is a significant part of New Mexico’s economy, the fees generated from applications will go a long way in modernizing the OCD,” she said.
Dollars paid under the fee schedule are to go into the newly-created Oil Conservation Division Systems and Hearings Fund.