New Mexico State Land Office recently held a two-day hearing on proposed regulations to increase the amount of money oil and gas companies operating on state lands would pay to guarantee plugging and cleaning inactive wells. The hearings were held May 27-28 for proposals that also would implement annual reporting requirements.
The State Land Office said currently operators are required to guarantee a minimum bond of $10,000 for a single lease, $20,000 for multiple leases and $25,000 for a so-called “megabond” that includes activities in addition to oil and gas leases. The proposal would increase the minimum to $150,000 from $10,000. Santa Fe New Mexican said more than half of active wells in New Mexico are on state lands. The newspaper added, “Supporters say the increase will help ensure taxpayers don’t get stuck with the cleanup bill, while opponents worry it will overburden small operators.”
Mariel Nanasi, executive director of New Energy Economy, said, “Heightened financial assurance is not punishment. It ensures that the polluter – not taxpayers, not ranchers, not communities and not future generations – pay the true cost of contamination and cleanup.” The state’s oil conservation division said the cost to remediate a well in New Mexico ranges from $160,000 to several hundred thousand or even millions of dollars.
Officials from New Mexico Oil and Gas Association said operators in the state have plugged more than 90 percent of inactive wells in recent years.