Home New mexico state By not hiring enough staff, New Mexico is leaving private contract money on the table

By not hiring enough staff, New Mexico is leaving private contract money on the table

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It started as a simple question by Adrienne Sandoval, director of New Mexico’s Oil Conservation Division (OCD): How much money would be generated if her division had enough staff to clear its backlog of oil spill remediation plans and gas?

Last fall, she contacted the University of New Mexico’s Bureau of Business and Economic Research (BBER) to figure this out, and last week her office and the BBER announced the answer.

Almost half a billion dollars.

According to the report, if the state of New Mexico paid the salaries of nine other people at OCD, in addition to the five currently working on cleanup applications in the agency’s Office of the Environment, his office could approve the remediation work around the state BBER has an approximate value of $456 million.

That’s $426 million in direct economic impacts — things like hiring people and buying things to do cleanup jobs — and another $30 million in gross receipts taxes.


Although crude oil production has more than doubled over the past seven years, the budget growth of the Petroleum Conservation Division has increased at an annual rate of 4%.



As part of the New Mexico Department of Energy, Minerals and Natural Resources, OCD receives its money from the state’s general fund. Currently, a state budget proposed by Governor Michelle Lujan Grisham’s office has enough money for five new positions, but the state budget proposed by the Legislative Finance Committee (LFC) does not. . (The governor’s proposal was drafted before the BBER report was released.) A version of the budget passed the House last week, but it offers only a nominal increase over the LFC proposal — and not enough for the new posts. Further debates in the House and Senate are underway before the OCD’s budget is finalized at the close of the February 17 legislative session.

The BBER report notes that although crude oil production has more than doubled over the past seven years, “OCD budget growth has been moderate, growing at an annual rate of 4%.”

However, staff aren’t just dealing with 3,939 pending oil and gas spills.

OCD still has 16,000 pending remediation cases ranging from the years 2000 to 2018, when reporting rules changed. Sandoval says the rule change makes removing these tasks unique and significantly different from the ongoing remediation work that is the subject of the BBER report.

OCD also requested a one-time expense of $400,000 to settle these 16,000 cases. That money is also pending approval in ongoing budget battles in the Legislative Assembly.

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The situation is an example from the old business chestnut: Sometimes you have to spend money to make money. In this case, hiring more civil servants would lead to a lot of work in the private sector.

BBER’s numbers are based on statewide estimates of cleanup costs that average $108,314 per incident, according to the report.

The report also noted that the remediation works would, in turn, directly employ 1,800 people.

The 3,939 pending incidents are mostly spills — OCD calls them “discharges” — running the gamut from oil and chemicals to produced water, the highly toxic, chemical-laden brine that comes from oil and gas wells. They’re caused by things like equipment failures, fires, human error, “a lot of different things,” Sandoval says.


The BBER report says the backlog of unchecked cleanup plans will grow by 1,300 cases a year if the state doesn’t hire more people.



The operators themselves report these releases to OCD, then file a remediation plan. This is the first part of the bottleneck: OCD has to review and approve plans before the company can start cleanup, and there aren’t enough people to review and approve all the reports that come in. There are 3,939 such cases now, but “we also get new ones every day,” says Sandoval. “We’re a little behind in those reviews.”

Once the company has completed the job, the OCD must approve what has been done before the case can be closed – this is the second bottleneck.

The BBER report says the backlog of unchecked cleanup plans will grow by 1,300 cases a year if the state doesn’t hire more people.

There is a lot to consider in a cleaning plan. “What is the extent of the spill, both in terms of area but also depth? How do they propose to clean it? What technology? said Sandoval. “Is the plan adequate? And if the plan isn’t adequate, we’ll either make changes or suggestions, or we’ll reject the plan, depending on how it turns out.

Oil and gas operators then hire or contract a remediation team that cleans up the mess and also tries to clean up the affected environment. The money that these operators spend on clean-up operations is the source of the $426 million. OCD must then verify the remedial work carried out to close the file.

“We know how much our work contributes to New Mexico’s overall economy,” Sandoval says, “but putting a specific amount on incremental revenue provided a useful perspective.”

BBER director Dr. Michael O’Donnell says the jobs will be local, where the wells are. This includes the Permian Basin in southeastern New Mexico and the San Juan Basin in the northwestern corner of the state. “They’re going to spur growth in those places.”

Not to mention the environmental benefits of remediating those thousands of spills that contaminate public lands, pollute groundwater and affect the health of people living nearby. “It’s not quantified in the report, but it’s definitely there,” he says.



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