- New Mexico enacted new rules in 2021 to reduce air pollution from oil and gas production.
- The State sought to gather emission data from operators so it could set annual goals
- While many companies did report their emissions properly, several failed to file reports
Oil and gas regulators in New Mexico struggled to gather accurate data on the industry’s methane emissions as the State implemented new regulations intended to prevent natural gas waste and pollution.
In May 2021, the Oil Conservation Division (OCD) of the Energy, Minerals and Natural Resources Department (EMNRD) enacted the new rules after years of public meetings and input from local leaders, environmentalists and industry officials.
The new rules banned routing venting and flaring when excess natural gas is released into the air and set a requirement that all oil and gas operators in New Mexico capture 98 percent of produced gas by 2026.
To that end, the OCD began collecting emissions data in October 2021 from operators throughout the state, in the southeast Permian Basin region and the northwest San Juan Basin, aiming to set individual baseline emissions rates for each operator and annual goals toward the 2026 requirement.
“The first phase of the rule was really built on data capture and collection,” said OCD Director Adrienne Sandoval. “The OCD needed better data. The first phase was a lot of data collection and reporting.”
Deadlines for companies to submit quarterly reports were Feb. 15 and May 16, and should have included how much gas was vented or flared from wells, completing the data-collecting first phase of the program.
The second phase began this month, per a Thursday announcement from the OCD, and will entail the operators taking steps to attain the annual goals through the next four years.
Yet, many operators continued to lag in reporting their data to the State, or provided data that appeared inaccurate, the OCD reported, meaning the agency planned to use third-party firms to audit oil and gas emissions.
“The audits OCD is requesting today are sort of represented both in company size and geographic location and will likely inform subsequent evaluations of the data,” said EMNRD General Council Dylan Fuge upon Thursday’s announcement. “We have pretty broad discretion to trigger a third party audit. It’s going to depend on what was provided and the context.”
The OCD said it was requiring 10 companies to retain auditors approved by the State as reports received so far were concerning to the regulator.
Seventy-four letters were sent to operators that reported gas capture rates of more than 100 percent, which Sandoval said was “not physically possible.”
If that isn’t rectified by the companies, the OCD could require more independent audits.
Nine notices of violation (NOVs) were sent to operators who did not file their second quarterly report in May, along with warning letters to 154 operators.
There were about 600 operators in the state, Sandoval said, meaning about a quarter of the state’s oil and gas operators were asked to recheck their numbers.
Two operators reported gas capture rates less than 60 percent, records show, and the OCD gave them 30 days to increase gas capture to comply with state requirements and avoid potential fines.
Despite its struggles with data collection, the OCD reported that operators correctly reporting their emissions accounted for 98.9 percent of natural gas produced in New Mexico.
“I think we are recognizing some potential problems with the data,” Sandoval said. “What we have found is the majority of the percentage of gas being produced in the state is being reporting. All of the major operators, the larger operators are reporting. We do still have operators who are not reporting.”
The rules do not specify how an operator must reach the 98 percent gas capture rate they require, allowing for flexibility in technology used or operational adjustments to meet the State’s goal.
All that is required is that they increase their gas capture rates every year, Sandoval said.
“We will need to certify that gas capture targets are being met annually,” she said. “We don’t tell operators how you get to your gas capture percentage. There may be consequences if you don’t get there, and you have to report and prove that you’ve gotten there.”
The OCD is still studying the data its received so far, and Sandoval was unsure which basin – the Permian or San Juan – had the most emissions and where, geographically, enforcement would likely target.
She said she expected more gas capture in the San Juan region, as that area is primarily a natural gas field which means capturing the gas is already baked into most operators’ business models.
In the Permian, mostly oil is produced with associated gas brought up incidentally from underground.
That could mean, Sandoval said, that operators in the southeast could be releasing more gas.
“We haven’t yet done a comparison between the San Juan and Permian Basin,” she said. “My expectation is that there will be more gas capture in the San Juan because that’s how they do business, while the southeast might be a different story.”
But despite New Mexico’s efforts to require more control of air pollution from the industry, some critics argued rules at the state level would have no bearing on extraction activities in neighboring states like Texas, which shares the Permian Basin with New Mexico.
Most of Texas’ oil and gas operations occur on private land, meaning if that state government enacted similar rules as New Mexico’s, they would likely not apply to most of Texas’ operators with many drilling and pumping oil and gas just over the state line.
That’s why environmentalists argued for stronger federal rules that could standardize air pollution requirements, regardless of the state where emissions occur.
The U.S. Environmental Protection Agency was developing new regulations for methane produced during oil and gas operations, expanding requirements to include reductions not only at new facilities but existing sources.
That could mean companies would be required to retrofit their wells, pipelines and other infrastructure with new technology, like “low-bleed” valves that release less gas.
“It would be great to have federal rules to bolster what New Mexico already has,” said Kayley Shoup with Carlsbad-based environmental group Citizens Caring for the Future. “Pollution does not follow borders.”