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New Mexico Earned $1.2B in Oil Production Revenue Last Year

The earnings broke a record for oil and gas royalties, which have been recovering since the pandemic. But the state is still increasing its climate regulation enforcement of the industry.

(TNS) — Oil production on New Mexico state land led to a record $1.25 billion in revenue in the last fiscal year.

The New Mexico State Land Office reported Fiscal Year 2021 revenue estimates showed $1.2 billion or 96 percent of those funds came from oil and gas royalties.

Since January, when the oil and gas industry began recovering from a downturn brought on by the COVID-19 pandemic, monthly royalty payments were at least $100 million, with June’s early projection at $135 million – a new record.

New Mexico State Land Commissioner Stephanie Garcia Richard said relief the Office granted to oil and gas operators in allowing them to idle or shut in wells without forfeiting leases during the pandemic meant they were able to resume production when the market recovered.

“At the onset of the pandemic, we worked to put safeguards in place in order to assure that active oil and gas leases would be as successful as possible for the institutions we support,” Garcia Richard said. “Those efforts paid off in the long run.”

Garcia Richard said she worked to diversify the office’s revenue streams by advocating for more renewable energy projects and technology companies operating on state land.

The Office of Renewable Energy within the State Land Office was established in 2019 as Garcia Richard took office, and in FY 21 it awarded four wind farm leases and the first battery-storage facility while also creating the first municipal solar projects located on state land.

In FY 2021, revenue from renewable energy grew by 40 percent, records show, and Garcia Richard expected the Community Solar Act passed in New Mexico’s 2021 Legislative Session would provide a boon for expanded access to solar power throughout the state.

The Act called on the State to create a community solar program, which allows low-income or renting electricity customers to tap into shared solar installations known as “solar gardens” bigger than residential rooftop solar and larger utility-scale developments.

“The dollar amounts grow every year, and as we see more success, the industry is taking notice. We are moving full force ahead, working with companies on projects large and small,” Garcia Richard said or the state’s growing renewable energy sector.

“With the Community Solar Act becoming law, we envision state trust land playing a huge role in bringing affordable renewable power to communities across New Mexico.”

Since 2019, the Office reported 15 new renewable energy leases were signed with lifetime revenue project at more than $87 million.

The Office also touted a deal to bring a Netflix facility to 130 acres of State Trust land at Mesa Del Sol, and Garcia Richard said she planned to further diversify land use into film, space and technology industries while also pushing for increased outdoor recreation and agriculture.

State Lands generated at least a billion dollars in previous two fiscal years: $1.11 billion in 2019 and $1.05 billion in 2020.

The year-revenue total was estimated at about $3.4 billion, going to public schools, universities and hospitals.

“The Land Office serves a very unique purpose – managing your state trust land to financially support some of New Mexico’s most vital institutions, while simultaneously working to protect that land for future generations,” Garcia Richard said.

As the production of fossil fuels on state lands and the revenue generated from them ramped up, so too did enforcement of environmental safeguards on extraction operations throughout the state.

On Thursday, the State’s Oil Conservation Commission, which directs policy for the Oil Conservation Division – New Mexico’s main oil and gas oversight agency within the Energy, Minerals and Natural Resources Department (EMNRD)– announced it unanimously voted into its regulations a clause outlawing spills of any kind or size.

The new rules would immediately impose financial penalties on companies that spill substances like oil, natural gas or produced water, amending the regulations that previously allowed companies to avoid fines if the spill was self-reported and steps were taken to mitigate the impacts and remediate the land.

“The vote today will give EMNRD’s Oil Conservation Division another tool to uphold our statutory authority to protect human health and the environment,” said EMNRD Cabinet Secretary Sarah Cottrell Propst.

“Multiple stakeholders came together to finalize this common-sense change that will benefit New Mexicans, another example of this administration’s commitment to collaboration and problem-solving.”

Under the new authority, the Oil Conservation Division (OCD) filed 23 complaints with nine resolved in FY 2021, after regaining the authority to issue penalties in February 2020 through Legislative action.

The resolved penalties resulted in $263,000 paid directly into the State’s General Fund.

The complaints included 13 operators who the state found did not comply with bonding requirements for about 200 inactive oil and gas wells.

The OCD also plugged 49 abandoned wells in FY 2021, costing an average $35,000 per well.

“In the past two years the OCD has reinforced its commitment to compliance and that has only accelerated in the past fiscal year,” said OCD Director Adrienne Sandoval.

“Compliance actions and orphan well plugging requires hours of work across the Division and I’m proud of the work done by our team to identify necessary actions and see them through to the end.”

(c)2021 the Carlsbad Current-Argus (Carlsbad, N.M.) Distributed by Tribune Content Agency, LLC.
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