A New Mexico water board member with ties to the oil and gas industry announced Monday she will abstain from a final vote on statewide rules developing additional uses of oil and gas wastewater.

The Water Quality Control Commission (WQCC), an oft-overlooked body of 13 members tasked with shaping and enforcing state water policy, is reviewing proposed rules to expand uses for oil and gas wastewater.

Currently, there are 12 members, with one vacant seat.

Rulemaking on the issue has been a monthslong process. The commission resumed hearing testimony and cross examination of witnesses supporting or challenging proposed rules on Monday, after a week of testimony in May.

In the opening minutes of the meeting Monday, Commissioner Krista McWilliams stopped short of recusing herself, saying there is no basis for allegations of personal or corporate gain from her position on the WQCC. She said she would listen to hearings and offer her opinions, but she’ll abstain from voting.

“If the commission would allow, I intend to remain a participant in the hearing and remain committed to serve New Mexico,” she said. “However, I do not want to stand in the way of due process. In order to allow science to have its day in court, I will abstain from the final vote.”

How did we get here?

McWilliams’ statement follows months of questions about unclear disclosure rules for commission members, and a motion for McWilliams to recuse herself filed by an environmental group opposing the rules’ adoption.

In June, Navajo Nation citizens Daniel Tso and Samuel Sage and New Energy Economy, a nonprofit organization opposing the rules, filed a motion requesting McWilliams recuse herself, alleging conflicts of interest with oil and gas interests.

The issue escalated as additional motions were filed in July.

McWilliams called the allegations “baseless” on Monday, further saying that neither she, her husband, nor their Farmington-based oil and gas company LOGOS Energy receive any gain from her sitting on the rulemaking body.

She said she would not receive a financial benefit from the rulemaking, and said that LOGOS Energy or her husband Jay Paul McWilliams had not participated with the New Mexico Oil and Gas Association since 2022.

“Despite my industry background, I remain committed to the Water Quality Act objective of protecting public health and enhancing water quality,” she said. “My obligation is to serve the public interests, not personal or corporate gain.”

She further said a six-year-old video “aimed to inform the public about fracking,” a process of injecting liquid at high pressures for oil and gas instruction, was done on a voluntary basis and had no relation to the rule-making process.

In the video, which is no longer on the website, McWilliams said she supports the controversial drilling practice, saying at one point: “Fracking, it’s a sensitive subject. I get it. But I feel good about fracking.”

Missi Currier, the president and CEO of the New Mexico Oil and Gas Association, which lobbies on behalf of the industry, filed testimony saying that McWilliams did not know the video was still on the nonprofit’s website.

Mariel Nanasi, the executive director for New Energy Economy, told Source NM that McWilliam’s abstention doesn’t go far enough.

“She’s only abstaining from the vote, she’s not abstaining from the deliberation,” Nanasi said, adding that she feels that could taint the commission’s ultimate decision, and could be brought up in an appeal.

Tso echoed those concerns in a call after the hearing, saying he’s concerned her participation will still “slant the final rules.”

No statements from party members or the public were allowed in the hearing, according to the Hearing Officer Felicia Orth, who’s acting as the judge in the matter.

Orth said in the hearing, that she was deferring any ruling on the recusal issue to the commission, and said the issue may be explored by other state agencies. But it appears the issue is closed before the WQCC.

A mirror complaint that New Energy Economy submitted to the State Ethics Commission is part of a separate proceeding, which is not open to the public at this time.

In a copy of McWilliams’ response to the ethics complaint obtained by Source NM, she requested that a hearing be postponed until after the Aug. 5 WQCC proceedings.

What is produced water?

Oil and gas wastewater, often called produced water, is at the center of the rulemaking.

As New Mexico water sources are expected to become increasingly strained by more demand and shrinking supplies from a hotter, drier climate – the relationship between oil and gas and its wastewater is drawing more public attention to the deliberations.

The state generates billions of gallons of toxic wastewater from oil and gas production. The wastewater is often extremely salty and includes hazardous chemicals used in fracking such as PFAs, arsenic, benzene and more.

Much of the water is currently disposed of by injecting it underground, which has been linked to earthquakes. Some of the wastewater is recycled for further oil drilling.

Currently, there is no approved use for produced water off of the oilfields.

Inside Climate detailed the week’s worth of debate from the hearings in May. Across hours of testimony, New Mexico Environment Department experts proposed using produced water in industrial processes, such as power plant cooling, manufacturing or hydrogen production and developing smaller demonstration projects to study treatments.

Oil and gas industry representatives argued too-restrictive rules, including the proposed rules, will drive companies from New Mexico to other states and environmental groups oppose using the wastewater for industry, citing health and safety concerns.

This news release constitutes a “designated news release” for the purposes of Emera’s prospectus supplement dated November 14, 2023, to its short form base shelf prospectus dated October 3, 2023.

HALIFAX, Nova Scotia & BATON ROUGE, La. & ALBUQUERQUE, N.M., August 05, 2024–(BUSINESS WIRE)–Emera Inc. (“Emera”) (TSX:EMA), an international energy and services company, today announced it has entered into an agreement to sell its wholly owned operating company, New Mexico Gas Company, Inc. (“NMGC”), to Bernhard Capital Partners (“BCP”), a services and infrastructure-focused private equity management firm, for an aggregate transaction value of $1.252 billion USD, including the assumption of approximately $500 million USD of debt and subject to customary closing adjustments.

“This transaction strengthens Emera’s balance sheet, supports our ambitious capital plan and reinforces our strategic decision to optimize our portfolio and reallocate capital to our highest growth markets to drive long-term value for our shareholders,” says Scott Balfour, President and CEO, Emera Inc. “New Mexico Gas is a strong regulated utility with a customer-focused team. We’re proud of the work we have done together over the past eight years to drive customer growth and enable nearly $800 million USD in strategic capital investments to expand and maintain a safe, reliable system that will serve New Mexicans for decades to come.”

Emera acquired NMGC as part of its acquisition of the TECO group of companies in 2016. Under Emera’s ownership, NMGC has grown and remains the largest natural gas utility in New Mexico, serving over 545,000 customers and safely managing more than 12,000 miles of transmission and distribution pipelines.

“As an operator of premium electric and gas utilities in high-growth jurisdictions, we have compelling opportunities ahead of us, driven by electrification, decarbonization and the need for increased resilience against climate-related challenges,” adds Balfour. “We will move forward to execute on these opportunities with a stronger balance sheet, a more focused operating model and a disciplined capital investment plan.”

The purchase price and transaction value respectively represent approximately 23x last 12 months earnings and 1.42x rate base. Estimated after-tax net proceeds of approximately $750 million USD will be used to repay holding company debt and support its investment opportunities in its regulated utility businesses. The transaction is expected to improve the company’s CFO to debt metrics by 50 bps and reduce its proportion of holding company leverage by 200 bps.

“This investment directly aligns with Bernhard Capital’s strategy to invest in infrastructure assets and utilities that are critical to building more resilient communities,” says Jeff Jenkins, Founder and Partner at Bernhard Capital Partners. “We value the strong history of New Mexico Gas Company and are committed to retaining the invaluable institutional knowledge of its employees. The leadership team and all employees will remain in place after closing, and we anticipate creating approximately 70 new, local jobs. Our priority is ensuring the continuation of reliable, affordable natural gas service to customers and communities across the state. This agreement also reinforces our commitment to fostering economic opportunities and growth in New Mexico. Albuquerque-based Strategic Management Solutions (SMSI), another BCP portfolio company, has operated in New Mexico for 25 years and generated both positive economic growth and job opportunities across the state.”

BCP has an extensive operation footprint across the United States. It also recently announced agreements to acquire multiple leading natural gas LDCs that serve communities in the Gulf South. To date, BCP has invested in nearly 70 companies across 20 platforms, including several utility companies, that collectively employ approximately 20,000 people globally.

The transaction is subject to regulatory approval by the New Mexico Public Regulation Commission (“NMPRC”) and pursuant to the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close in late 2025, but will not close before September 30, 2025, unless otherwise authorized by the NMPRC.

J.P. Morgan Securities LLC is acting as exclusive financial advisor to Emera in this transaction. Davis Polk & Wardwell LLP is serving as Emera’s legal advisor. Jefferies LLC is serving as the exclusive financial advisor to Bernhard Capital with Kirkland & Ellis LLP serving as their legal advisor.

About Emera
Emera is a geographically diverse energy and services company headquartered in Halifax, Nova Scotia with approximately $39 billion in assets and 2023 revenues of $7.6 billion. The company primarily invests in regulated electricity generation and electricity and gas transmission and distribution, with a strategic focus on transformation from high carbon to low carbon energy sources. Emera has investments in Canada, the United States and the Caribbean.

About Bernhard Capital Partners
Bernhard Capital Partners is a services and infrastructure-focused private equity management firm established in 2013. Bernhard Capital Partners has deployed capital in four funds across several strategies and has more than $4 billion of gross assets under management. Bernhard Capital Partners seeks to create sustainable value by leveraging its experience in acquiring, operating, and growing services and infrastructure businesses. For more information, visit www.BernhardCapital.com.

Forward Looking Information
This news release contains forward‐looking information within the meaning of applicable securities laws, including statements concerning Bernhard Capital Partners’ acquisition of NMGC and the timing for closing. Undue reliance should not be placed on this forward-looking information, which applies only as of the date hereof. By its nature, forward‐looking information requires Emera to make assumptions and is subject to inherent risks and uncertainties. These statements reflect Emera management’s current beliefs and are based on information currently available to Emera management. There is a risk that predictions, forecasts, conclusions and projections that constitute forward‐looking information will not prove to be accurate, that Emera’s assumptions may not be correct and that actual results may differ materially from such forward‐looking information. Additional detailed information about these assumptions, risks and uncertainties is included in Emera’s securities regulatory filings, including under the heading “Business Risks and Risk Management” in Emera’s annual Management’s Discussion and Analysis, and under the heading “Principal Risks and Uncertainties” in the notes to Emera’s annual and interim financial statements, which can be found on SEDAR+ at www.sedarplus.ca.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240805118025/en/

Contacts

Emera Media
Dina Bartolacci Seely
media@emera.com

Bernhard Capital Partners Media
Ed Trissel / Erik Carlson
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449

The National Interagency Fire Center predicts New Mexico will have typical wildfire risk in August, but it could increase in September and October. (Photo courtesy NIFC)

New Mexico’s respite from wildfires will likely continue through August, according to a new forecast, but experts warn the already long fire season here could stretch into September and October. 

The National Interagency Fire Center publishes monthly fire risk outlooks across the country. Early monsoon rains in early July blunted what forecasters had predicted would be elevated wildfire risk across the state, particularly in the central mountain chain and in southern New Mexico. 

But the new forecast released Aug. 1 shows that average temperatures and substantial precipitation mean New Mexico won’t have high fire risk for August, either. But that doesn’t mean New Mexico is out of the woods. 

“An uptick in large fire activity very well could re-emerge by late August or early September, then linger much longer than usual,” forecasters wrote in their predictions for the Southwest area.

Fire season in the Southwest typically lasts until monsoon season. The forecasts this year have said hot, dry conditions might persist well into October, bucking that typical trend. 

At the moment in New Mexico, there are two active fires, according to the Southwest Coordination Center, including the Tanques Fire in the Southwest Fire, which has burned about 6,500 acres. In the Gila National Forest, the Ridge Fire has burned about 4,200 acres. 

The forecast is released as major wildfires burn elsewhere in the West. There are 94 large, uncontained wildfires across the country, according to the NIFC.

Four fires that began last month in Oregon and California each have burned more than 100,000 acres, including the Park Fire in northern California that has reached nearly 400,000 acres. That’s already bigger than New Mexico’s biggest-ever wildfire, which burned about 340,000 acres, and it’s just 24% contained, according to the NIFC. 

So far in New Mexico this year, 580 wildfires have been detected that burned more than 84,000 acres.