Copyright © 2021 Albuquerque Journal
SANTA FE – Citing heartburn over hefty possible revenue losses, Gov. Michelle Lujan is asking President Joe Biden to give New Mexico a break when it comes to crafting new federal policies on oil and natural gas leasing and permitting on federal lands.
In a Monday letter, Lujan Grisham praised Biden for taking action to address “global climate change” but said New Mexico has already taken steps to increase its renewable energy industry and tighten emission and waste standards for the oil and natural gas industries.
The Democratic governor, who was previously considered for a Cabinet post in Biden’s administration, did not directly ask Biden for an exemption or waiver, although her request could have a similar effect.
“We ask that our state-level efforts to combat climate change and ensure more responsible oil and gas development be considered and that New Mexico be granted energy transition credit as you chart a path forward on climate change and oil and gas leasing in particular,” Lujan Grisham said in her letter.
Just days after taking office in January, Biden issued an executive order to indefinitely pause all new oil and gas leasing on public lands.
The pause on new lease sales, aimed at giving the federal government time to review permitting and leasing procedures, does not affect oil and gas drilling under valid existing leases in New Mexico and other states, according to the U.S. Department of Interior.
In part for that reason, the order is not expected to have a short-term revenue impact in New Mexico, as state energy officials have pointed out more than 6,000 oil drilling permits have been acquired by operators – primarily in southeastern New Mexico — – but not yet used.
But an extended moratorium on oil and natural gas leasing could have a significant impact on the state’s revenue levels, Lujan Grisham said.
Despite recent attempts to diversify New Mexico’s economy, the state currently gets more than 40% of its total revenue – or nearly $4 billion annually – from taxes and royalties on the oil and natural gas industries.
And the governor said an analysis conducted by the state Department of Finance and Administration shows New Mexico would lose an estimated $709 million over the next four years if there is a 10% decline in state oil production levels.
“Financial losses of that magnitude could have real impacts on our ability to achieve major goals like universal access to early childhood education,” Lujan Grisham wrote in her letter.
She also said New Mexico, the nation’s third-highest oil producing state, would be “disproportionately” affected by federal policy changes on oil and gas leasing and permitting, saying 55% of the state’s oil and gas wells and 63% of its total production are on federal lands.
The governor’s letter was sent one week after top Governor’s Office staffers and state environment officials had a telephone discussion about the federal order with U.S. Department of Interior staffers.
That came after state Energy, Minerals and Natural Resources Secretary Sarah Cottrell Propst said in a February letter that uncertainty caused by the order has already caused oil rigs to leave New Mexico for Texas, where federal land is more sparse.
Meanwhile, a fellow New Mexican could end up playing a key role in shaping the Biden administration’s policy on drilling on public lands.
That would be two-term U.S. Rep. Deb Haaland, who was confirmed Monday as U.S. interior secretary after being nominated to the post by Biden in December.
Haaland, a fellow Democrat, has previously said she supports a ban on hydraulic fracturing – or fracking – in oil production and other policies to reduce greenhouse gas emissions.
An Interior Department spokesman declined to comment Monday on the governor’s letter.