New Mexico congresspeople led a group of U.S. representatives in a push for Congress to provide funding to states to plug abandoned wells while the industry faced steep declines amid the COVID-19 pandemic and operators in major oil-producing regions such as the Permian Basin scaled back operations.
Democrat U.S. Reps. Xochitl Torres Small and Ben Ray Lujan (D-NM) of New Mexico were joined by Republicans Reps. Mike Kelly and Glen Thompson of Pennsylvania in sending a letter to House leadership calling for federal funds to be set aside to plug wells abandoned by operators in future COVID-19 economic relief packages.
In New Mexico, the State reported 708 such wells existed, while the New Mexico Oil Conservation Division (OCD) had about $2 million in financial assurance from operators to pay for plugging and remediation of the land along with $1 million per year in revenue from the Bureau of Land Management.
OCD Director Adrienne Sandoval said the State can plug about 50 wells per year at a cost of about $35,000 per well not including the $50,000 to $80,000 in costs with remediating the land once a well is plugged.
If the land has historical environmental problems, the OCD estimated it could cost millions to remediate.
In their letter, the Congresspeople pointed to 3 million abandoned wells across the country that many state agencies reportedly do not have the funds to mitigate.
They wrote that it was Congress’ duty to step in and contribute to the solution.
“Along with the environmental impacts of abandonment, this situation has created new economic suffering throughout the industry, especially for small rural producers which historically operate on tight profit margins and oil and gas workers who have lost their jobs,” the letter read.
“Congress should respond to this challenge with strong funding for state and tribes to help address the current backlog of orphan wells put thousands back to work and clean up our environment.”
Torres Small, who represents the 2nd Congressional District spanning the southern half of the state argued states like New Mexico need additional financial assistance from Congress to solve the problem.
She said a federal program to plug wells could create thousands of jobs in producing regions like southeast New Mexico suffering from unemployment as oilfield workers were laid off during the market downturn.
She said oilfield workers had lost up to $500 million in lost wages amid the downturn.
The State of New Mexico reported in May that about 4,100 oil and gas workers had filed for unemployment during the pandemic, resulting in about $20 million in lost income tax revenue.
“It will help rebuild our economy with a shovel-ready project,” Torres Small said of the proposal. “It’s deeply important that rebuild southeast New Mexico and have its energy workers go back to work. As we rebuild, we need to make sure southeast New Mexico is not left behind.”
New Mexico was joined in a coalition of 31 states, she said, in demanding the funding and supportive members of Congress represented both political parties.
“When it comes to oil and gas production, a lot of states are concerned,” Torres Small said. “Folks want to make sure it’s done responsibly and one of the best ways is to address aging infrastructure that is no longer used but can still be harmful.”
Orphaned wells are known to leak chemicals into groundwater sources and methane into the air, causing unchecked pollution when they are abandoned, she said.
Providing better support to plug the wells would protect the environment, Torres Small said, from the risks that could be exacerbated when the industry busts and operators cut operations.
“This is something we can all do together for responsible energy production,” she said. “We all use this energy, so we need to work together to prevent groundwater contamination and methane leaks.
“Protecting our groundwater resources is important and one of the biggest threats is this aging infrastructure. And it’s damage that isn’t monitored.”
Lujan touted the inclusion of $2 billion in funding for remediating orphaned wells in infrastructure funding package proposed by U.S. House Democrats known as the Moving Forward Act.
The wide-ranging, $1.5 trillion proposal also included $100 billion to increase broadband access for low-income communities and connect school buses to Wi-Fi to address a “homework” gap Lujan said Native American students often face during long bus rides from their rural communities to school.
Another $70 billion was added to invest in renewable energy and “modernize” America’s renewable energy infrastructure while increasing the nation’s solar capabilities, read a news release from Lujan’s office.
The bill would also provide $5 billion in construction, modernization and renovations for healthcare facilities.
Torres Small said she had some concerns that the ambitious legislation might have opposition in the House and Senate.
“My goal is to make it something that can pass both the House and Senate,” she said.
But Lujan, whose 3rd Congressional District represents the northern half of New Mexico said the bill would provide needed relief for New Mexicans suffering under the economic hardship of the pandemic by ensuring adequate access to public services and creating new jobs in multiple sectors.
“Ensuring that New Mexicans can access up-to-date public health and education resources during this pandemic is crucial,” he said. “I’m also glad this package addresses the critical need to clean up orphaned oil and gas wells across New Mexico, which will help put New Mexicans back to work and protect our environment.”
Adrian Hedden can be reached at 575-628-5516, email@example.com or @AdrianHedden on Twitter.
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