A coalition of environmental advocacy groups filed a petition Monday urging the state’s Division of Petroleum Conservation to raise bond rates for oil and gas companies. They say raising bond rates will reduce the amount of taxpayer money that must be spent cleaning up abandoned oil and gas facilities. This request arises after (…)
A coalition of environmental advocacy groups filed a petition Monday urging the state’s Division of Petroleum Conservation to raise bond rates for oil and gas companies.
They say raising bond rates will reduce the amount of taxpayer money that must be spent cleaning up abandoned oil and gas facilities.
This petition comes after a study commissioned by the State Land Office found a gap of more than $8.1 billion in financing available through bonds and the costs of cleaning up oil and gas sites if companies go bankrupt. The results of the study were published in 2021.
The bond essentially serves as an insurance policy in case the company responsible for cleaning the site fails in its duty. This can be seen in the event that a producer declares bankruptcy.
“Taxpayers should not be responsible for cleaning up oil and gas wells and infrastructure, but that is the current reality of our state,” Camilla Feibelman, director of the Rio Grande Chapter of the Sierra Club, said in a news release.
According to the 2021 study, existing financial guarantees or bonds can cover about two percent of oil and gas infrastructure on state and private lands in New Mexico.
Often, larger companies sell low-producing wells to smaller companies that are more prone to bankruptcy and less financially resilient.
In the petition, the groups ask that OCD require bonds of $150,000 per well for facilities that are considered high risk. This rate is based on OCD estimates that it costs $150,000 to plug each well.
Additionally, the groups want time limits on how long a well can remain inactive or inactive before the company is required to plug and reclaim it.
Advocates are also pushing for oversight of operator transfers that they say will ensure companies have the financial resources to clean up, plug and remediate well sites.
And, they say, these changes will benefit the state by creating jobs for displaced oil and gas workers, protecting water supplies and reducing emissions.
“Abandoned and orphaned oil and gas wells, or those that are not properly treated, accelerate climate change, threaten health, harm future generations and burden ordinary people. Stronger bonding in the oil and gas field in New Mexico is an ethical action and helps the industry with its moral cleanup responsibility,” Sister Joan Brown, executive director of Interfaith Power and Light-New Mexico, said in a statement. and the El Paso region. Press release. “Aren’t we all called to care for our neighbors and for this sacred land, water and air that is a gift?”
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