Adrian Hedden
El Rito Media
achedden@currentargus.com

Oil companies in New Mexico could be required to capture more gas produced during drilling operations, should a bill approved by a House committee Tuesday become law.

House Bill 258 would codify into law a policy enacted in 2021 by the Oil Conservation Division, the state’s main oil and gas compliance agency, that required operators to capture 98% of natural gas produced at well sites by the end of 2026.

It was granted a “do pass” recommendation by the House Energy, Environment and Natural Resources Committee on a 7-4 vote. The bill must get approval from another House committee before facing a vote by the full chamber and proceeding to the Senate for a similar process.

New Mexico’s oil wells often draw natural gas, known as “associated gas,” to the surface with crude oil. This gas, high in methane, can either be captured and sold for energy, released into the air via venting, or burned during the flaring process. Associated gas can also increase the pressure of the well, so some emissions are necessary for safety.

State agencies, acting under a 2019 executive order signed by Gov. Michelle Lujan Grisham, took steps to reduce greenhouse gas emissions and air pollution, which led to the conservation division’s policy on capturing natural gas.

That agency’s rule was followed by one enacted by the New Mexico Environment Department in 2022 to increase leak detection, repairs and reporting requirements for operators.

But both are state rules that could be rescinded by a future administration. If HB 258 is passed, the division’s requirement will become a New Mexico state law, meaning it could only be undone through another bill approved by the Legislature.

Sponsor Rep. Matthew McQueen (D-50) of Santa Fe, who also serves as the committee’s chair, said ahead of the vote on HB 258 that the rules should be statutory requirements to ensure future oil and gas operations do not unduly pollute the state’s air.

Ashley Wagner of the New Mexico Oil and Gas Association said the industry was already taking steps to reduce emissions and move toward meeting the 98% gas-capture requirement. She said 88% of operators had already reached the mark and saw “significant” reductions in venting and flaring. Flaring is the process of burning excess natural gas when an operator lacks the capacity to store or transport the gas or must eliminate it from the system to depressurize a well.

“The bill is unnecessary,” Wagner said. “Operators are paying more attention to infrastructure and takeaway. Overregulation creates a potential for lost production in New Mexico.”

Travis Kellerman, senior climate policy advisor to Lujan Grisham, said the 98% rule has already proved successful in causing energy companies to increase investments in gas-capture technology and limiting impact on the environment. He said making the rule a law would ensure the benefits continue in the future.

“This return on investment by operators has been seen already and we hope to codify this rule,” Kellerman said. “This is an important priority for the governor and the state.”

Rep. Rod Montoya (R-1) of Farmington argued that by tightening regulations on the oil and gas industries, New Mexico officials could dissuade companies from producing oil and gas in the state.

Like other opponents of the bill, Montoya pointed to the 88% compliance rate with the rule already in place, saying that showed the industry was working to comply without making the requirement state law.

“The goal posts get moved constantly. Regulatory certainty, which all businesses need to have, just continues to be removed,” Montoya said. “The rule we have in place is working.”

Rep. Elaine Sena Cortez (R-62) of Hobbs echoed concerns that more requirements could mean less oil and gas production, which she argued generates almost half of the state’s budget.

“If we keep moving the goalposts, they might just pack up and leave. We better pray they don’t, because they bring almost 50% of the state’s revenue,” she said before voting against the bill.

Bill aims to ban ‘forever chemicals’ in oil and gas

Another Democrat-led bill was introduced this week to force oil and gas companies to report the contents of fluids used in hydraulic fracturing, currently protected as trade secrets, to root out the use of per- and polyfluoroalkyl substances, or PFAS.

The industrial byproducts, nicknamed ‘forever chemicals” because they do not break down in the environment, have been linked to various cancers and other health impacts to wildlife and to humans, including high cholesterol and low birth weights.

While environmental groups worried the chemicals could be used in oil and gas drilling operations, industry officials denied their presence.

Rep. Andrea Romero (D-46) of Santa Fe sided with the environmentalists in introducing House Bill 222, which will go before the House Energy, Environment and Natural Resources Committee on Saturday, Feb. 15.

New Mexico law requires oil companies to disclose many of the chemicals used in drilling but contains exemptions for some chemicals labeled by operators as proprietary.

HB222 would not only ban PFAS in oil and gas operations but also remove the “trade secret” exemptions that Romero said can allow the chemicals to go unreported.

“This bill helps protect New Mexico’s water and especially frontline communities in light of frequent spills and other potential oilfield exposures by prohibiting the use of PFAS and any undisclosed chemical in all downhole operations,” Romero said.