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February 21, 2019


Angie Poss, Assistant Commissioner of Communications


Memorial to Study Oil and Gas Infrastructure Bonding Amounts Fails to Pass House

State Land Office Prepares to Move Forward With Study and Rule Change

SANTA FE, NM – House Memorial 29, the Energy Operation Bonding Amounts Memorial, sponsored by Representative Matthew McQueen (D – District 50) and supported by the State Land Office, failed to pass the House during the recent session.

The Memorial had three components: (1) conducting a statewide bonding adequacy study to determine New Mexico’s shortcoming in terms of bonding requirements on all oil and gas operations, (2) required collaboration between the State Land Office, the Oil Conservation Division and the Environment Department, to evaluate the results of the study and review adequate bonding amounts for each agency, and (3) the creation of an advisory group of all stakeholders, including multiple members of the oil and gas industry, to evaluate the best path forward.

The amount of bonding that is needed to assure that New Mexico taxpayers are not left footing the bill for the clean-up and restoration of lands after their mineral resources have been extracted is currently unknown. The State Land Office has not seen an increase in bonding amounts since the 1970’s. As the agency’s rule currently states, one operator can have a single “megabond” of $25,000 in place that is meant to cover thousands of wells, hundreds of miles of pipe, and millions of dollars of equipment. The average cost of plugging and abandoning one well costs an average of $28,000.

Commissioner Stephanie Garcia Richard released the following statement regarding the failure of the House to pass House Memorial 29 and the Land Office’s intention to move forward with a study and rule change:

“There is a financial crisis looming over our heads that demands action. We have already secured the funding to conduct a study on this urgent issue that would leave taxpayers and our state trust land beneficiaries on the hook for potentially millions of dollars. We have posted our notice to move forward with the bonding study on state trust land. Unfortunately, we won’t be able to determine the shortfalls on private land, which is home to equally as many oil and gas wells as state trust land. After we have the right information to determine what bonding amounts are needed to cover existing infrastructure on state trust land, we will begin the rule making process to ensure that bonding amounts adequately protect New Mexico taxpayers, our Land Grant Permanent Fund, and our public schools that rely on us to act in their best interest every year.”

Oil, gas, and mineral production, ranching and farming, and commercial development on State Trust Lands support public schools, seven universities, New Mexico Military Institute, New Mexico School for the Deaf, New Mexico School for the Blind and Visually Impaired,  three hospitals, correctional facilities, water conservation projects, and public building construction and repair.  In fiscal year 2019, the State Land Office collected $1 billion from lease payments, oil and gas lease sale earnings, rights-of-way, permits, interest, fees, and oil, gas and mineral royalties.