Home News Local News Proposal to suspend new fracking permits passes committee

Proposal to suspend new fracking permits passes committee

State Sen. Bill Burt, R-Alamogordo, speaks during a Republican gathering at the Hi-Q Venue in Roswell in July. Burt warned that enacting a ban on new permits for hydraulically fractured wells could be disastrous for both the state’s economy and the budget. (Alex Ross Photo)

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A proposal to temporarily suspend the granting of state permits for new oil and natural gas drilling that involves hydraulic fracturing passed out of its first legislative committee, with southeast New Mexico lawmakers warning that such a measure could have dire implications.

Senate Bill 149 (SB 149) narrowly made its way out of the Senate Conservation Committee on a 5-4 vote.

The bill, should it become law, would prohibit issuance of new licenses for oil and natural gas drilling in New Mexico that involve hydraulic fracturing, or fracking, from July 2021 to June 2025.

“It’s to pause those (new permits) for four years to give us two long (legislative) sessions and two short sessions to hear from our regulating agencies about what is the impact of this technology on our land, air and water and also make recommendations on what should happen,” state Sen. Antoinette Sedillo Lopez, D-Albuquerque, said during the committee hearing. Sedillo Lopez is one of the sponsors of the bill.

Fracking is a widely used but controversial technique for spurring production and extraction of oil and natural gas by pumping liquids and chemicals into shale formations, which in turn allows a well to produce energy for years and even decades, according to a description of the process posted on the website of the Independent Petroleum Association of America.

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Critics of fracking say the process contaminates water, has an adverse impact on air quality and poses a risk to public health. According to the Fiscal Impact Report for SB 149, the New Mexico Department of Indian Affairs, some tribes and tribal organizations are concerned about what fracking could do to sacred sites as well as tribal and cultural lands.

Opponents of such a moratorium though forecast that such an action will deal a blow to New Mexico, which is heavily dependent on fees from permits, royalties and production taxes for much of its revenue.

“It would be devastating to NM’s economy and to our budget,” state Sen. Bill Burt, R-Alamogordo, said in a text message Monday when asked about SB 149.

The fiscal impact report estimates that in Fiscal Year 2022, which begins in July, the freeze on new fracking permits would cost the state $1.65 billion, increasing each year until reaching $3.8 billion in 2025.

Lawmakers say revenue from oil and natural gas activity is crucial for communities throughout the state.

“That is what pays our bills up here. That is what builds our roads, libraries, hospitals, the list goes on and on and on,” state Rep. Candy Ezzell, R-Roswell, said Monday.

House Minority Leader Jim Townsend, R-Artesia, whose House District 54 includes Eddy County, one of the state’s leading oil-producing counties, said Monday that a significant amount of education spending in the state comes from revenue generated by the oil and gas industry.

During the public comment period of the hearing, Jerry Fanning, public and government affairs director for Eddy County, said SB 149 would “kill” the oil and gas business in Eddy County and have implications for the state. He cited a study from New Mexico State University’s Arrowhead Center, which found that from 2012 to 2018, Eddy County contributed $6.4 billion in revenue to the state.

“If Senate Bill 149 is enacted, a large part of that money will immediately go away and for what? To allow four years to evaluate the possible impacts of fracking,” he asked.

Critics of SB 149 also faulted the bill for not having a plan in place that would replace the revenue that would be lost to a fracking ban.

“It’s disheartening that we would, that the Legislature would pass a bill that would so gravely affect our economic status without first trying to figure out what would replace it,” Townsend said.

Sedillo Lopez during the hearing rebutted critics, saying the estimate in the fiscal impact report, which is prepared by the non-partisan Legislative Finance Committee, is not accurate.

Though a moratorium would be placed on permits for new hydraulically fractured wells, Sedillo Lopez noted her bill does not put a freeze on all oil and natural gas activity or on existing permits.

Townsend though said the impact on the state’s economy and levels of oil and natural gas production would still be severe. Production levels spike early when a new well goes into operation, which means having a steady stream of new wells is crucial.

“New wells come on at a very high rate and over time their production goes down pretty sharply. That’s why you need all these new wells coming online if you are going to maintain production,” he said.

Should SB 149 become law, Townsend warns, the energy industry and its investors could view operating in New Mexico as too cumbersome, leading on many to look to other states where the regulatory climate is less burdensome.

Because of advances in extraction technology, Burt said energy companies might not have to look too far and could access New Mexico’s oil reserves in the Permian Basin without even setting foot in the state.

“With horizontal drilling, you can poke as many holes as you want in Texas and come under, come underneath into New Mexico and take a lot of our God-given assets out of this state. And we will never see a dime from any of those,” he said.

SB 149 still faces a long road to be signed into law, next heading to the Senate Judiciary Committee and then the Senate Finance Committee.

Townsend said he believes the odds of SB 149 becoming law are “less than 50/50.”

“I think calmer, cooler heads will prevail,” he said.

Breaking news reporter Alex Ross can be reached at 575-622-7710, ext, 301, or breakingnews@rdrnews.com.

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