Oil companies need to clean up on the way out
There is an urgent need for state and federal regulators to update requirements that ensure energy companies clean up after themselves when they leave a drilling site. Failing to update these requirements could leave New Mexico’s taxpayers and wildlife in a perilous situation.
New Mexico lawmakers have just gathered for a special session in Santa Fe to address a $2 billion budget shortfall, and predictions for the coming year’s budget are not much better.
The state’s budget crisis is largely the result of a downturn in oil and gas revenues brought about by the head-on collision of international market factors and the pandemic that’s still ravaging the world population.
Against that reality, now’s the time for New Mexicans to take real steps to protect taxpayers against future losses. And not incidentally, it’s also time to ensure better protection of our state’s wildlife.
During the financial turmoil this spring, oil futures briefly entered negative territory — meaning that producers actually had to pay to get refineries and others to take the “black gold” off their hands for a while.
While oil markets have stabilized in the months since, the situation lays bare the boom-andbust nature of energy production.
New Mexico has over 45,000 oil and gas wells in active production and another 60,000 that are inactive. Although the state requires energy companies to post a bond to cover the costs of reclamation when they drill a new well, those bonds fall far short of the actual cost of reclamation.
That means if energy companies go bankrupt or simply walk away, New Mexico taxpayers could be left holding the bag.
New Mexico Land Commissioner Stephanie Garcia Richard recently voiced concern that state taxpayers could be on the hook for billions in cleanup costs if energy companies abandon their wells.
“We never dreamed that we would be in this position,” Garcia
Richard said this month of New Mexico’s posture with the energy companies that produce here.
Adrienne Sandoval, head of New Mexico’s Oil Conservation Division, told the Santa Fe New Mexican that the state is currently working on cleaning up 700 wells at a cost of over $24 million.
New Mexico’s congressional delegation is pushing welcome legislation that would help the state address the backlog of abandoned wells.
Yet, if even a small number of companies go bankrupt, New Mexico would be looking at millions of dollars on top of the existing backlog of abandoned wells the state is working on cleaning up.
On the ground, such a default by energy companies would mean more pollution and more damage to New Mexico’s public lands, waters and wildlife. The abandoned well sites likely would be left untouched for years due to the state’s dire financial situation.
The U.S. Fish and Wildlife Service has noted that abandoned oil field equipment can harm wildlife. “Abandoned tanks and separators can leak and contaminate soil, water and vegetation,” the federal agency has warned. “Open-topped tanks and buckets and other containers with oil and water can attract and entrap wildlife, especially insects, small mammals and songbirds.”
As proud New Mexicans, we live here because we love our state. We need to protect it and leave it in better shape than we found it for our children and future generations.
To do so, we have to not only plug abandoned wells but also address the outdated policies that enable energy companies to abandon wells in the first place. Fixing one without the other assures we’ll be in the same position a few years from now.
Let’s hold our energy companies to the same standard as we hold ourselves.
If even a small number of companies go bankrupt, New Mexico would be looking at millions of dollars on top of the existing backlog of abandoned wells the state is working on cleaning up.