Home News Local News NM business leaders argue against oil, gas lease freeze

NM business leaders argue against oil, gas lease freeze

In this April 24, 2015 photo, pumpjacks work in a field near Lovington. Oil and gas development infused $2.8 billion into New Mexico coffers during the 2020 fiscal year and marked its second-highest total revenue ever reported despite a global price war and plummeting demand amid the coronavirus pandemic. (AP File Photo)

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The head of the New Mexico Chamber of Commerce is among those saying that a cessation of oil and gas leases or permits on federal lands likely will mean hundreds of millions in lost tax revenues each year.

A moratorium on oil and gas leases on federal land and waters, except tribal properties, was announced Wednesday, along with many other actions intended to decrease greenhouse gas emissions, improve climate conditions and protect land, water and air.

A White House statement said the moratorium and other actions were intended to “drive our nation toward a clean energy future, creating well-paying jobs with the opportunity to join a union, and delivering justice for communities who have been subjected to environmental harm.”

Industry leaders talked Tuesday, ahead of a decision, believing that the moratorium was likely.

Rob Black, president of the New Mexico Chamber of Commerce, voiced his view that a moratorium or ban would not have the desired effect of reducing oil and gas demand, and therefore, he said the action will not reduce carbon emissions.

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“What it will do is shift what would have been federal and state tax revenues to private landholders in Texas and to other countries, like Saudi Arabia, Russia and Iran,” Black said.

He noted that 37% of New Mexico is federal land, and more than 60% of its oil and gas production is on federal land. That’s a very different picture than just “a few miles down the road” in Texas, he said, which has about 2% federal land and recorded 0% of onshore oil and gas production on federal property in 2017.

Black participated in a press call along with Marty Durbin of the Global Energy Institute of the U.S. Chamber of Commerce; Stephen Waguespack, president of the Louisiana Association of Business and Industry; and Diane Schwenke, chief executive officer of the Grand Junction Chamber of Commerce in Colorado.

Black said that New Mexico shares the Biden Administration’s sense of urgency regarding climate protection. He said the state leads the country in renewable energy production and is continuing its work to enhance methane-control rules that could become a model for other states and regions.

He explained that the oil and gas industry contributed 39% of the revenues to the state’s estimated $7.3 billion budget for the upcoming fiscal year.

Durbin said that U.S. Chamber of Commerce members want to make progress on climate protection efforts, but think the better way is for the presidential administration to work with industry and other parties on additional legislation to curb emissions and protect federal property.

“The administration may refer to their actions as a moratorium, but the industry and the jobs that go with it can’t sit idle for a year or longer while people in Washington argue over whether they can continue,” Durbin said. “Once production is ramped down and not permitted to occur, there is no guarantee that it will come back.”

He and others also said that even ongoing activity on federal property could be affected if supporting and ancillary permits are not allowed during a moratorium. The Biden Administration’s actions include a review of all fossil fuel production on non-tribal federal property.

Black and the other press call participants referred to a December 2020 report by Professor of Energy Economics Tim Considine of the University of Wyoming.

The report looked at the fiscal effects of bans or moratoriums on eight Western states. It included the projections that New Mexico will lose $2.6 billion a year in industry investments from 2021-25 if a leasing moratorium is established and $3.1 billion in investments during the same period with a drilling ban. Lost oil and gas revenues each year for that timeframe would average about $946 million, which would be about 13% of the estimated budget of $7.3 billion for the upcoming fiscal year.

The executive director of the Independent Petroleum Association of New Mexico, based in Roswell, said the association is urging the Biden Administration to reconsider the drilling and permitting moratorium. He also said that state oil and gas producers equated the actions with the “dropping of a bomb” on their operations. He, too, predicted that foreign countries will see increased oil and gas activity.

“Domestic oil and gas production ensures environmental protections,” Jim Winchester said, “whereas foreign actors, including Russia and China, have far fewer regulations in place.”

New Mexico Sen. Martin Heinrich, D-Albuquerque, has said that Jennifer Granholm, the nominee to head the U.S. Department of Energy, has given her commitment that federal investments will be available to retrain workers and rebuild communities impacted by fossil fuel industry changes.

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 351, or at reporter02@rdrnews.com.

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Lisa Dunlap is a general assignment reporter for the Roswell Daily Record.