Bid to redo N.M. oil, gas oversight clears hurdle

SANTA FE, N.M. — An effort to modernize state oversight of a thriving petroleum industry in the nation’s No. 2 state for oil production advanced past its first committee vetting Thursday at the New Mexico Legislature.

The bill would rewrite portions of the state’s 1930s-era Oil and Gas Act in order to help regulators keep pace with the industry’s meteoric growth in recent years — as well as increasingly assertive calls to hold the sector accountable for air pollution, spills and the costly cleanup of equipment and abandoned wells.

It advanced on a 6-5 vote of the lead House committee on natural resources, over the objections of small and moderate sized oil producers but with the public endorsements of industry heavyweights Occidental Petroleum and EOG Resources.

The initiative would increase financial assurances for well plugging and cleanups, while ratcheting up administrative fees and penalties for regulatory violations. The bill also would give regulators greater authority over applications to transfer ownership of wells that often change hands when oil and natural gas output declines.

Bill co-sponsor Rep. Matthew McQueen of Galisteo urged colleagues to rally behind the bill, warning that a downturn in the industry could saddle the state with immense liabilities for orphaned wells.

Initial provisions were dropped from the bill that would have established no-drilling buffer zones around schools, residences, surface waters and critical habitats across New Mexico, to the dismay of environmentalists and community advocates who vowed to press legislators to reinstate setback requirements. The State Land Office recently imposed its own buffer around schools.