Abandoned well cleanup bill predicated on industry dying – which it isn’t, says New Mexico Oil and Gas spokesman
(The Center Square) – Supporters of the proposed Orphaned Well Cleanup and Jobs Act of 2021 see the bill as a necessary step as the oil and gas industry declines, but oil and gas representatives say the industry is growing, not dying.
The proposed federal law would allocate $14.25 billion in federal funds to the cleanup and plugging of oil wells and raise oil and gas companies’ bond rates – money held to cover cleanup costs in the case that a company abandons a well.
In an op-ed in the Albuquerque Journal, Taos resident Jim O’Donnell argued that the federal measure is vital because he contends the abandoned rigs of an archaic industry will soon be everywhere.
“The oil and gas industry is dying,” O’Donnell said in the column. “New Mexico will lose 38% of our oil and gas jobs by the end of this summer.”
Robert McEntyre, spokesperson for the New Mexico Oil and Gas Association, said the job loss statistic is nothing but an activist talking point.
“The bottom line is this: remediation and reclamation is a process that takes place after oil and gas production ceases,” he told The Center Square. “It seems like a lot of this conversation is being driven by the idea that oil and gas is going to stop immediately and that we’re going to need to remediate all of these sites at one time, and that’s just not true.”
New Mexico’s oil and gas industry isn’t dying, McEntyre said. In fact, this year’s production is higher than ever, he pointed out. Barring new state or federal policy that could hinder growth, he said the end of the year will see that New Mexico’s industry grew.
“I think the numbers will bear out by the end of this year that we will have grown quite a bit through the economic recovery of 2021,” McEntyre said.
O’Donnell clites 60,000 inactive wells statewide, but the State Minerals and Natural Resources Department recently reported New Mexico has just over 700 abandoned wells, according to McEntyre.
He said the industry has a problem with the proposed higher bond rates. McEntyre holds states are the best determiner of how high their bonding rates should be, as they can accurately base it on the cost of cleaning up a well in their area.
New Mexico recently adjusted their rates in 2019, he adds.
“We believe for New Mexico we’ve got a good system in place, it was updated less than two years ago,” he said. “We should give it some time to work before we decide those financial assurance rates require an update.”
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