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Group of Dem lawmakers laud federal pause on drilling leases

Methane gas is burned off at the site of three oil wells near Carlsbad. The state gets more than 40% of its revenue from taxes and royalties on the oil and natural gas industries. (Eddie Moore/Albuquerque Journal)

Copyright © 2021 Albuquerque Journal

SANTA FE – A federal pause on new oil and natural gas leases on public lands has generated concern among some top New Mexico elected officials, but it’s also drawing support.

A letter sent by two dozen Democratic lawmakers to President Joe Biden says the moratorium could ultimately benefit New Mexico, due to possible changes to royalty rates levied on drilling operations and an expedited transition to renewable energy sources.

“We must ensure that, as we transition, our hard-working oil and gas workers do not get left behind,” the letter says. “Together, we must incentivize new opportunities for good-paying union jobs in clean energy and other emerging industries.”

However, the support for the federal pause puts the legislators at odds not only with their Republican colleagues at the Roundhouse, but also with Gov. Michelle Lujan Grisham and other prominent Democrats.

The first-term Democratic governor in March urged the Biden administration to grant New Mexico “credit” for state-level climate change efforts, citing concern the state would be disproportionately impacted by federal policy changes on oil and gas drilling since 55% of its oil and gas wells are on federal land.

Despite 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.

Sen. Carrie Hamblen, D-Las Cruces, who led the effort to draft the letter and was among the 24 legislators who signed it, said the letter is not aimed at contradicting Lujan Grisham.

Instead, she said the federal leasing pause presents the “perfect opportunity” to take more action toward diversifying the state’s economy while also protecting the environment.

“We’ve got a budget system that’s been reliant on oil and gas for decades,” Hamblen told the Journal.

She also said it’s vital to create job opportunities for oil and natural gas workers in renewable energy and other fields once extractive industries are phased out, though she said that won’t happen overnight.

“The reality is we’re not going to stop it tomorrow – that’s not practical or realistic,” Hamblen said.

However, an oil and natural gas industry advocate criticized the letter and said the legislators who signed it should put forth a plan for replacing any lost revenue.

“Until these legislators give up their gas-powered cars and only use 100% wind or solar power in their own homes, this letter is nothing more than an exercise in pathetic political hypocrisy,” said Larry Behrens, Western states director of Power the Future, a group that has opposed renewable energy mandates.

No Republican lawmakers signed the letter, as Hamblen acknowledged she had reached out solely to fellow Democrats who she thought might support its sentiment.

The executive order to indefinitely pause all new oil and gas leasing on public lands was issued by Biden just days after he took office in January.

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, according to top legislative and executive branch economists.

Concern over the revenue impact to the state also prompted Senate Finance Committee Chairman George Muñoz, D-Gallup, to formally ask Biden in February that New Mexico be given a waiver from the federal moratorium.

However, the federal review is still ongoing and the Department of Interior is expected to issue an interim report this summer.

The agency is led by Deb Haaland, a former New Mexico congresswoman who was nominated by Biden and confirmed by the U.S. Senate in March.

She was also sent a copy of the letter, which was signed by eight first-term legislators out of the 24 in total.


Letter from NM State Legisl… by Albuquerque Journal

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