Oil and gas companies struggled to adhere to New Mexico’s and the federal government’s recent restrictions on methane emissions, said industry supporters concerned the new rules could stymie energy production and the economic benefit it brings to the state.

An about $3.5 billion infusion of “new money” was recently reported by the state’s Legislative Finance Committee, largely credited to growing oil and gas production in the Permian Basin of southeast New Mexico.

Grant Swartzwelder with OTA Environmental Solutions said during a meeting with oil companies and the Independent Petroleum Association of New Mexico (IPANM) that recent regulations could be difficult for operators to navigate as they produce oil and gas but also remain compliant with state and federal laws.

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New Mexico in 2021 and 2022 passed new regulations via the Oil Conservation Division (OCD) and New Mex Environment Department (NMED) aimed at limiting air pollution from the fossil fuel industry.

The OCD rules outlawed routine flaring, the burning of excess natural gas, while calling on all operators in the state to capture 98 percent of produced gas by 2026.

Meanwhile, NMED added stricter requirements for leak detection, repair and reporting of emissions of volatile organic compounds (VOCs) and other chemicals believed to form ground-level ozone, or smog.

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At the same time the Environmental Protection Agency last year enacted rules to increase requirements for the use of low-emission technology at oil and gas facilities around the U.S. and require states to develop air pollution reduction plans for not only newly installed but also existing extraction operations.

And New Mexico Democrat lawmakers proposed multiple bills to increase regulations on the industry, a week ahead of the 2024 Legislative Session. Those proposals sought to increase royalty payments, restrict the use of freshwater in drilling and block oil and gas facilities from areas within a mile of schools.

Swartzwelder said increased state and federal rules were making it a challenge to continue producing fossil fuels in the Permian Basin, arguing the industry was already taking successful actions to address its environmental impacts.

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“As you know, New Mexico is trying to be a leader in regulatory actions. It really creates a lot of challenges for operators,” Swarzwelder said. “What’s frustrating about all the regulatory changes, is its really in light of some positive things in the industry. The industry up to this point has done a very good job of limiting its emissions.”

He said a recently enacted “methane tax,” a policy by the EPA to charge operators for methane emissions would affect 65 percent of operators in U.S., mostly small operators, threatening their financial viability.

The EPA announced in last year it will charge $900 per metric ton for methane waste emissions in 2024, rising to $1,200 in 2025 and $1,500 per metric ton in 2026 and after for operators reporting more than 25,000 metric tons of emissions per year.

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“It really affects the smaller producers,” Swarzwelder said. “There’s a lot of small producers out there. It really puts you in a sensitive situation.”

President of American Petroleum Institute Mike Sommers said lawmakers should pursue policies that encourage, not restrict, oil and gas producers in the U.S.

He said recent requirements could curb American energy production without providing adequate environmental benefit.

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Sommers’ comments came during the Institute’s annual “State of the Energy” conference that sees oil companies, political leaders and others convene to discuss global energy market and policy trends.  

He called on government leaders to lease more public land to the industry, speed up permit approvals and walk back policies that tightened environmental requirements.

“We produce more energy than any country in the world,” Sommers said. “This benefits our economy, our national security and is our insurance in a volatile time. This is our American energy advantage. It didn’t happen overnight, and it can’t be sustained without the right policies from Washington.”

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New Mexico Gov. Michelle Lujan Grisham, herself an ardent supporter of tougher environmental rules, voiced support for the EPA’s latest regulations during the United Nations Climate Change Conference last month in Dubai.

She touted New Mexico’s rules as laying the groundwork for federal action to address the purported damage oil and gas was causing to the environment.

“New Mexico embarked on drafting our oil and gas rules at a time when the United States’ climate leadership was lagging. Thanks to President Biden and his administration, we are once again leading,” Lujan Grisham said in as the rules were announced in December.

“We are proud to have laid the foundation for this national rule, which will not only reduce emissions, but spur innovation and economic development across the country.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on the social media platform X.