Without fanfare or mainstream news coverage, S&P Global Market Intelligence recently reported that oil and gas companies in New Mexico wasted more natural gas than is consumed by the state’s nearly 600,000 residential customers.
Wasting natural resources is not the New Mexico way. Leaks, venting and flaring from the tens of thousands of wells across New Mexico amount to hundreds of millions of dollars a year in lost profit and tens of millions more in lost revenue to the state. Treating natural gas as a waste product instead of capturing and marketing this valuable energy resource is bad for business and bad for New Mexico taxpayers, and it has dire consequences for our children’s education, the health of our communities and the climate.
It is important to understand that methane is the main component of natural gas. It is the primary energy resource used to generate about one-third of our nation’s electricity. Without oversight, methane can leak at every step in the gas supply chain and throughout the oil production process.
When natural gas is vented, flared or leaked due to faulty oil and gas operations, New Mexico taxpayers lose out on tax and royalty revenue that could fund our schools and critical public services. Recapturing estimated annual losses of $40 million in taxes and royalties would allow the state to increase pre-K enrollment by 80% and offer more than 7,000 additional New Mexico kids access to quality early childhood education.
Wasted natural gas is also ruining our air and harming our climate for future generations. Methane is a powerful climate change pollutant, responsible for 25% of the warming we experience today. And the hundreds of thousands of tons of smog-producing volatile organic compounds (VOCs) released alongside oil and gas methane emissions in New Mexico can trigger asthma attacks and worsen respiratory diseases such as emphysema.
Eddy, Lea, San Juan, Rio Arriba and Chavez counties – the five New Mexico counties home to 97% of the state’s oil and gas wells – are all at risk of violating the federal ozone standard of 70 parts per billion.
The status quo is not a viable option. Unlike other top producing oil and gas states, New Mexico has no requirements prohibiting methane waste and associated pollution from escaping. In Colorado, Wyoming and Utah, leaks from oil and gas facilities must be monitored and fixed promptly. With rules in place, the industry can reduce emissions while it continues to grow.
Businesses operate best when they have clear, fair guidelines that reward good actors and hold everyone accountable to the same set of standards. Leading oil and gas producers, such as BP, recognize the need for action to cut methane and are taking concrete steps – including installing methane measurement at processing sites – in part because they recognize their investors are demanding it. Pioneer Natural Resources CEO Scott Sheffield recently called on investors to sell shares or pull funding from companies that have high rates of natural gas flaring. Meanwhile, a top 10 asset manager in the world, Legal & General, has said it will push energy companies to have zero tolerance for methane leaks.
Fortunately, Gov. Lujan Grisham is committed to reducing methane waste and pollution. New Mexico’s methane challenge is big, but strong state regulations are an opportunity to improve state revenue, economic growth and the health of our communities.
And New Mexico is well-positioned to realize economic gains from a growing methane mitigation industry. We are already home to several companies involved in the manufacture and deployment of technologies used to limit methane waste from the oil and gas industry. State methane rules would spur growth in this promising new industry.
We support Gov. Lujan Grisham’s efforts to create a cleaner, more robust economy for future generations in the Land of Enchantment.
Alexandra Merlino of Santa Fe is executive director of the Partnership for Responsible Business. Johann A. Klaassen is executive vice president and chief investment officer for Horizons Sustainable Financial Services, also in Santa Fe.