Carlsbad Current Argus (April 2, 2024) – Recently announced federal air pollution restrictions drew the ire of New Mexico oil and gas leaders arguing intensifying regulations intended to address climate change were unduly burdening fossil fuel producers.
The Environmental Protection Agency proposed its “waste emissions charge” rulemaking in January, and the New Mexico Oil and Gas Association joined onto a letter led by the American Petroleum Institute opposing the rule it described as a “tax on American energy.”
The proposal was intended to follow provisions of the 2022 Inflation Reduction Act to charge “high emitting” oil and gas facilities $900 per metric ton of methane emitting in 2024, increasing to $1,200 per ton in 2025 and $1,500 per ton in 2026, according to fact sheet published by the EPA.
In the March 26 letter to the EPA, NMOGA and API argued the rule would create regulations problematic to continued fossil fuel production in the U.S.
New Mexico shared the world’s most active oilfield the Permian Basin with Texas, producing about half of the U.S.’ crude oil at about 6.1 million barrels of oil per day (bopd), records show. That production could be put a risk, read the letter, through federal action driving up costs for oil companies.
And oil companies are taking steps to reduce emissions, the letter read, but higher costs would “disincentivize” such technologies.
More:EIA report: Permian Basin will produce 6.1 million barrels of oil per day by April
“This tax on American energy is a serious misstep that could jeopardize our nation’s energy advantage and weaken our energy security,” said API Senior Vice President Dustin Meyer. “U.S. oil and natural gas is innovating throughout its operations to reduce methane emissions while meeting growing energy demand. Yet this proposal creates an incoherent, confusing regulatory regime that will only stifle technology advancements and hamper energy development.”
Oil and gas restrictions coming from other federal agencies
Meanwhile, the Bureau of Land Management published the final version of its methane waste rule March 27, drawing support from conservation groups but similar concerns from energy industry leaders.
That rule added requirements for operators on federal and tribal land to adopt certain technologies to limit methane emissions, targeting capture of 100 percent of produced natural gas. Royalties would be charged for any waste gas, according to the new rule, and companies will be required to reduce gas flaring or venting except in emergencies.
The BLM said it could deny permits to drill for any company that does not comply with the rule. The agency estimated the rule will generate more than $50 million a year in royalty payments to the federal government.
“Strong Interior Department methane waste rules are integral for the United States to protect taxpayers from wasted energy resources,” said Jon Goldstein at the Environmental Defense Fund. “Taking action to limit methane waste on public lands offers a win-win-win for taxpayers, producers and communities harmed by this waste and associated pollution.”
President of the Western Energy Alliance Kathleen Sgamma said the industry does plan to reduce air pollution from operations. She said the BLM’s latest rule improved upon similar regulations during the administration of former-President Barrack Obama by add language to determine if gas is “unavoidably lost” and thus exempt from royalty payments.
“The oil and natural gas industry and the BLM share the goal of reducing waste of natural gas through venting, flaring, and leaks,” Sgamma said. “Western Energy Alliance appreciates that with the waste prevention rule, BLM is attempting to achieve clarity on how to classify waste gas as avoidably and unavoidably lost, and hence whether it bears royalties or not.”
The Obama-era rule was overturned by a Wyoming District Court, and Sgamma said the alliance was reviewing the new regulation to ensure they adjusted previously issues satisfactorily to the industry.
“Even without the rule, companies have joined together to reduce methane emissions, venting, and flaring, with every major basin showing significant declines,” Sgamma said. “Our industry is proud to continue that work with or without new rules.”
Industry defends feds permitting oil and gas drilling
The proposed rules came as more federal land was being leased by the BLM to the oil and gas industry in New Mexico and throughout the American West. Most recently, the agency announced a sale in June 2024, offering 19 parcels of land totaling in 3,128 acres in New Mexico and Kansas.
Federal oil and gas leases came under fire after the administration of President Joe Biden resumed the practice in 2022 following a halt on news leases imposed when Biden took office in January 2021. The first lease sale of the administration, including federal lands in New Mexico, was challenged in court but upheld in a March 22 verdict from the U.S. Court for the District of Columbia.
The court deemed the June 22 sale, including 520 acres in New Mexico, saw the BLM conduct proper environmental reviews, and found the impacts of oil production on the offered lands were within federal standards. The court also said the conservation groups challenging the leases could raise additional concerns when companies apply for drilling permits on the leased lands.
“Accordingly, the Court concludes that BLM did not violate its duty under the (Federal Land Policy and Management Act) to avoid “unnecessary and undue degradation” when authorizing the challenged lease sale,” read the decision.
Sgamma said the Western Energy Alliance successfully argued in court to support the leases, and that oil and gas production on federal land undergoes rigorous oversight to prevent damage to the environment.
“Oil and natural gas developed on federal lands is some of the most sustainably produced in the world, subject to many more environmental protections than nonfederal lands and especially in comparison to other major producing countries,” she said.
New Mexico oil and gas industry criticizes Biden ‘tax’ on oil drilling air emissions
