New Mexico: If you made the mess, you clean it up: State pushing oil and gas operators to plug and restore abandoned sites

Part two of a four-part series on abandoned oil and gas wells in New Mexico.

PERMIAN BASIN — Her eyes through dark sunglasses focusing on the ground, a state environmental specialist scraped off a top layer of dirt with her boot to reveal darker, potentially contaminated soil underneath it.

She talked with other environmental experts on what still needs to be done to clean up an abandoned oil well site they thought was already restored.

It’s an example of how far New Mexico has to go in getting abandoned oil and gas sites cleaned up and restored to their original state, a job that can cost up to millions of dollars for a single site.

So who’s fronting the bill?

The New Mexico State Land Office doesn’t want it to be taxpayers.

Becky Griffin, environmental specialist with the New Mexico State Land Office’s Environmental Compliance Office, surveyed the rest of the well site, looking beyond the lone steel rod poking out of the ground that indicates a plugged well to the green grass popping up here and there, the occasional pops of color from small yellow or purple flowers .

The land around the plugged well was barren of the green colors, the dull brown of dirt alone overtaking the land.

It’s one of hundreds of abandoned well sites the New Mexico State Land Office has pushed oil and gas operators to plug and restore.

The cleanup responsibility falls to the state if the companies don’t step forward or can’t pay for it.

Around 1,600 wells on state and private land need to be plugged and cleaned up, according to the Energy, Minerals and Natural Resources Department, and there’s not enough money to get all the work done.

Making companies pay

In 2020, the State Land Office launched its oil and gas lease accountability and enforcement program, labeling 1,100 wells as chronically inactive, meaning the wells had been out of operation for two or more years.

Since then, the State Land Office has gotten oil and gas companies to plug 464 wells, agency spokesperson Joey Keefe told the Journal.

The agency is nearing a halfway point in plugging the wells, with just over 600 chronically inactive wells remaining from its original estimate.

Public Lands Commissioner Stephanie Garcia Richard said the program is going “amazingly well” and has saved taxpayers at least $46 million, based on conservative estimates, through cleanup costs the state would be forced to front.

“We really have a strong sense that the person who made the mess should be cleaning it up,” she said.

If companies aren’t willing to clean up the land, the State Land Office will take them to court.

The State Land Office has filed 31 lawsuits in an effort to get companies to clean up their sites, according to the state agency. The office has its own attorneys, though experts have been hired in a couple of cases.

Some of New Mexico’s oil and gas leases have been in place for decades, which the State Land Office doesn’t have control over. But the office can and does enforce the lease terms, Garcia Richard said.

“There’s actual terms in the statutory lease that say, ‘If I lease a parcel of state land for oil and gas development, I have to remain compliant with all environmental regulations.’ So we’re using that language to compel cleanup,” she said.

Garcia Richard said much of the well cleanup work started after she assumed the role of commissioner in 2019. She described the agency’s cleanup program as a “well-rounded, systematic approach to dealing with how actors use state land.”

“We began to methodically take a look at the state of the land, where the biggest remediation concerns were spills, inactive wells that had not been plugged,” she said.

The State Land Office prioritizes abandoned wells on state land, Garcia Richard said, as opposed to the New Mexico Energy, Minerals and Natural Resources Department’s jurisdiction on private, state and federal land.

Last resort

What’s considered to be the last resort to clean up abandoned wells is at the state’s Oil Conservation Division, or OCD, within the New Mexico energy department. Any abandoned wells on state or private land without a responsible party to restore them, such as a bankrupt oil and gas company, fall to the responsibility of the state.

EMNRD Deputy Secretary Dylan Fuge said OCD has exclusive jurisdiction on state and private land and concurrent jurisdiction with the federal government on federal land.

Fuge said OCD coordinates with the State Land Office on cleanup efforts, trying to find the entity leasing the land. If there’s not a viable lessee or other responsible party, OCD moves forward with plugging, he said.

“When we’re deciding to pay for a cleanup, we really have exhausted all other options,” he said.

Fuge said OCD has plugged and cleaned up 263 wells since 2020, with 1,600 wells that still need to be plugged.

And, he said, there’s not enough money to pay for all the cleanup that needs to get done.

Fuge said the cost of plugging wells ranges from $55,000 to $770,000, with the average sitting at $150,000.

Older and poorly maintained abandoned wells cost more to plug, he said. For example, he said there could be defective casing that needs to be repaired or a need for special rigs to get the work done.

Fuge said OCD also has remediation projects, which are more expensive than plugging wells. For example, he said, the division is currently remediating large batteries into which the product pumped out of the ground goes, and the most expensive one to repair costs more than $4 million.

“There are a whole lot of variables,” he said.

OCD uses money from the oil and gas reclamation fund to plug abandoned facilities. The fund sits at $16 million going into fiscal year 2025. Part of a tax oil and gas companies pay — the conservation use tax — goes to the fund.

As oil and gas production has ramped up over the years in New Mexico, the oil and gas reclamation fund has concurrently grown, Fuge said.

Federal dollars also play a significant role in state cleanup efforts.

New Mexico most recently secured $25 million from the U.S. Department of the Interior to continue its orphan well-plugging program and anticipates another $75 million to $100 million will be earmarked for the work.

In total, Fuge said New Mexico has gotten $90 million to $120 million in federal money. Taking into account the additional state appropriations, he said, OCD will have around $200 million to plug wells and clean up sites over the next five to 10 years.

Fuge said the agency went from using two plugging rigs operating on a part-time basis to five rigs running nearly full-time. Each rig plugs about one well per week, he said.

But it’s still not enough.

“The money that’s come from the feds and will be coming from the feds is going to help us make a dent, but it’s not going to eliminate the issues,” he said.

Four-part oil and gas series

Photos from the abandoned oil and gas wells in New Mexico series