Nov. 21–New Mexico State Land Commissioner Aubrey Dunn said he was worried that while increased oil production in the state means more profits, it could also be coming at the expense of the environment.
The New Mexico State Land Office recently reported its highest earnings from a monthly lease sale in the history of the office.
But Dunn said environmental regulations are being ignored by the oil and gas industry, and some companies are operating outside the law.
“On one hand, money is being generated at an unprecedented rate but the flip side is that with the increased productivity comes problems,” Dunn said. “I’ve already gone on record to say that our environment is suffering as a result of unenforced environmental regulations and unscrupulous business practices in the oil patch and beyond.
“As a result, the land, its resources and the citizens of New Mexico are not being afforded the protection they deserve.”
The November oil and gas lease sale generated about $43.3 million, surpassing the previous record of about $30 million in July 2017.
“What a way to usher in the holidays,” said New Mexico State Land Commissioner Aubrey Dunn. “We anticipated having a good month, but I am truly surprised by how successful the sale was.”
Thirty-five tracts — 7,969 acres — were offered in Lea, Chaves and McKinley counties, and all but one was sold, read a news release from the New Mexico State Land Office.
Katy, Texas-based Percheron Energy was the highest bidder in the sealed auction, leasing 1,999 acres for about $26 million.
BETA Land Services, based in Louisiana, made the highest in the open format, purchasing 320 acres for about $5.1 million.
Thirty-two bidders from eight states participated in the sale, with nine bidders combining for the monthly total, at an average price of $5,431 per acres.
Dunn said the Land Office’s goal is to generate $1 billion in revenue by the end of fiscal year 2019, and the November sale left him optimistic that such a priority could be reached.
“I am thrilled that the land office and its beneficiaries continue to reap the benefits of the tremendous boom in production in the Permian Basin,” he said. “This month’s sale will go a long way toward achieving our FY19 goal of generating $1 billion in revenues.”
Despite the concerns, Robert McEntyre with the New Mexico Oil and Gas Association, said the environment is a priority for the industry and those who violate laws and regulations should be punished.
“I would challenge the notion that the environment is being damaged,” he said. “All operators are seeking to comply with the laws. When people are not playing by the rules, they should be held accountable.”
Staffing at state agencies, particularly the Oil Conservation Division — which enforces state law regarding extraction — is also an issue, McEntyre said, as the State of New Mexico begins to come out of a recession.
“You’re still seeing (state) agencies still working to staff up again,” he said. “It’s a challenge our industry is dealing with. It’s certainly an area we need to beef up on the regulatory side.”
Adrian Hedden can be reached at 575-628-5516, firstname.lastname@example.org or @AdrianHedden on Twitter.
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