Oil and gas industry attacks New Mexico's air pollution controls as feds step in

Attempts by New Mexico regulators to limit air pollution from the oil and gas industry drew immediate backlash as they took effect last week, with a trade group representing the state’s smaller producers looking to the courts for solace.

The Independent Petroleum Association of New Mexico (IPANM) announced the day the rules went into effect that it filed an appeal with the New Mexico Court of Appeals, and expected technical arguments in the case to be presented within 30 days.

Executive Director Jim Winchester said the rules would not improve the environment enough to justify the economic hardship they could bring onto New Mexico oil and gas companies.

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The Association represents smaller operators in the state, which critics of the rules argued would struggle to meet the cost of compliance.

“At a time when the public supports responsible domestic production to reduce gasoline prices and a decrease in our dependency on foreign sources of energy that are unquestionably worse for the environment, IPANM strongly feels this is the wrong rule at the wrong time,” Winchester said.

The New Mexico Environment Department (NMED), after an about two-year rulemaking process and approval from the State’s Environmental Improvement Board, enacted regulations applying to oil and gas facilities that would limit the emission of pollutants known to form cancer-causing ground-level ozone.

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The rules taking effect on Friday added requirements for operators to detect and repair air pollution emissions, report such releases to the State and use more modern gas-capturing technology like low-bleed pneumatic valves throughout the fossil fuel supply chain.

This applied to areas of the state, including the southeast New Mexico Permian Basin in Eddy and Lea counties, known for elevated ozone levels in excess of the federal National Ambient Air Quality Standard (NAAQS).

Operators in the gas-producing San Juan Basin were also subject to the new rules, as were areas in Rio Arriba, Sandoval, Dona Ana and Valencia counties – all known for ozone levels exceeding the NAAQS.

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It’s part of the administration of Gov. Michelle Lujan Grisham’s broader agenda to crack down on climate change impacts from the state’s energy sector, which leads the U.S. as the second-highest producer of crude oil.

Upon taking office, Lujan Grisham signed an executive order that called on state officials to devise ways to reduce their impact on the environment, including forming a Climate Change Task Force made up of NMED and the Energy, Minerals and Natural Resources Department (EMNRD).

EMNRD’s Oil Conservation Division last year enacted its own emissions restrictions, banning flaring – the burning of excess natural gas – while also making spills illegal and requiring all operators capture 98 percent of produced gas by 2026.

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NMED reported its rules would reduce volatile organic compounds (VOCs) and oxides of nitrogen, which form ozone when interacting with sunlight, by about 260 million pounds each year, while cutting methane emissions annually by 851 million pounds.

But Winchester said the NMED’s new rules, although devised with industry input, would serve only to put small oil and gas operators out of business.

“While IPANM does support a fair and balanced Ozone Precursor regulation, we have no choice but to appeal this version of the rule that will force operators to plug still-productive wells and will inflict economic hardship on New Mexicans with little to no gain for the environment,” he said.

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Another industry group Power the Future voiced support for the Association’s challenge of the rules, as Santa Fe-based spokesman Larry Behrens said they would only raise energy costs for New Mexicans during a time of nationwide pain at the pump.

“This rule will not only raise the cost of living on our families, but it will place a massive burden on the remaining small businesses that are already struggling,” he said. “This appeal is a critical first step to stopping Governor Lujan Grisham from taking unilateral action to raise the cost of gas even further.”

But environmentalists in the state celebrated the new rules as needed action to address pollution and its effects on the climate, pointing to extreme weather events like the wildfires raging throughout the state this spring and worsening drought.

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Samantha Kao with Conservation Voters New Mexico said the rules were “nation-leading” regulations that could provide a template for other states and the federal government to reduce the environmental impact of energy production.

“As New Mexico continues to identify pathways to comprehensively address climate pollution, the ozone precursor rule is a critical next step in meeting the state’s goals to address carbon pollution economy-wide,” she said.

Federal government taking action to cut oil and gas pollution

The U.S. Environmental Protection Agency announced in June it was considering listing the Permian Basin region in New Mexico and Texas under “non-attainment” of federal air quality standards, which would slow the permitting process for oil and gas operations in the area.

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The agency also announced it would conduct aerial surveys throughout the region in August, seeking to find which companies are polluting the air the most and potentially issuing fines and other punishments for non-compliance with federal law.

Upon the EPA’s announcement, NMED Cabinet Secretary James Kenney said the ozone rules were intended to avoid such a listing by the EPA which planned to rule in September.

He blamed the industry for failing to reduce its emissions enough to prevent federal action.

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"A designation is coming. I’m 100 percent certain they’re going to do that. The science indicates that’s where we are. The rulemaking is catching up,” Kenney said. “We won’t see the benefit of our rule going into effect in lowering ozone levels in a way that is meaningful to the EPA.”

The U.S. Department of Energy also hoped to take up the effort of reducing air pollution from oil and gas methane emissions nationwide, announcing Friday a $32 million appropriation to devise new technology to do so.

Projects across the country can apply by Oct. 4 for part of the funding to improve gas capture at abandoned oil and gas wells, pipelines, compressors and other industry facilities the DOE estimated emit about 8 million tons of methane every year.

"Methane is more destructive than carbon dioxide to our health and environment, so it’s crucial we develop solutions to identify and mitigate leaks at their source,” said U.S. Secretary of Energy Jennifer Granholm in a statement.

“Today's funding bolsters DOE’s efforts to advance next-generation technologies and systems to help make the natural gas infrastructure leak-tight, which will dramatically reduce methane emissions across the country and deliver cleaner air for all.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.