COVID-19 has disrupted life across the globe in almost incalculable ways. In New Mexico, the drop in oil prices has had a huge impact on our state’s budget and the oil and gas industry. With low prices and reduced travel across the nation for the foreseeable future, there is less demand for oil and so wells sit idle and workers are out of jobs.
As of early May, approximately 4,100 oil and gas workers in New Mexico have applied for unemployment. Many oil companies have responded to low oil prices by temporarily shutting in wells, and the Oil Conservation Division (OCD) within the Energy, Minerals and Natural Resources Department (EMNRD) has been working diligently to keep up with well shut-in requests due to economic conditions.
I recently had the chance to participate in a House Natural Resources Committee virtual forum which discussed how Congress could help. Here in New Mexico, we have identified 708 orphaned wells, and that number is likely to increase due to the economic downturn. When an operator goes bankrupt, their wells become “orphaned,” and the responsibility to plug and reclaim the site falls to the state. This will strain our funding sources for orphaned well clean-up. The forum, in which Reps. Deb Haaland, Ben Ray Luján, and Xochitl Torres Small participated, focused on the need for Congress to provide federal funding for oil-producing states to plug and reclaim orphaned wells. A fully funded program would ensure we can properly reclaim these orphaned wells in a timely fashion and put some of those 4,100 laid off oilfield workers back to work. Orphaned wells also pose environmental threats; a program to plug these wells is an important part of environmental protection.
While the urgency of this reclamation crisis is immediate, it is equally important to take this opportunity to examine how we got here and ask ourselves what we can do to make sure states are more adequately prepared for downturns in the future. At the state level, EMNRD is working with the state Land Office to evaluate whether state oil and gas bonds are sufficient to fund our orphaned well cleanup program. However, that’s only one piece of the puzzle because approximately half of New Mexico’s orphaned wells are located on federal lands and are subject to federal bonding rates. Updating the federal bonding rates, which haven’t been updated in over 60 years, would put states in a better position to clean up legacy sites.
Putting people to work right now to address the economic and environmental challenges resulting from the global economic situation is a bipartisan issue. Acting now would put hundreds of oil and gas employees back to work, protect our environment and boost local economies.
I applaud our Congressional leaders – and the New Mexico delegation in particular – for speaking up on this issue and encourage fast action be taken so New Mexico can put people back to work and protect our resources.