Oil and gas operations on state lands continued to be a major contributor to New Mexico’s revenue, helping to support the $ 24 billion Land Grant Permanent Fund to pay schools and communities. statewide health care.
But recently heads of state have expressed concern that volatile fossil fuel markets could pose a risk to state coffers, as evidenced by a reported shortfall of $ 400 million in 2020 when the COVID-19 health crisis has led to a historic drop in fuel demand across the world.
New Mexico is “well positioned” to diversify the state’s land uses and reduce its dependence on fossil fuels, according to a recent study released Tuesday.
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The study published by Headwaters Economics recommended diversifying the land use of the state of New Mexico in four ways: renewable energy, business development, outdoor recreation, and conservation.
The study aimed to recommend land uses other than oil and gas leases to be carried out by the New Mexico State Land Office, and to better support the Permanent State Land Grants Fund, which holds currently $ 23 billion – mostly generated from oil and gas revenues – v while some lawmakers have expressed concerns about industry volatility that could threaten the fund’s continued growth.
About 5 percent of the fund is earmarked annually for Land Office beneficiaries, including public schools, universities and hospitals.
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To continue using the fund to support needed public services in New Mexico, the study recommended that the land office expand how State Trust land is used.
The study noted that renewable energy was already a priority for the land office, but could be expanded through transmission and storage facilities on State Trust lands.
In April, the latest maps from the Land Office showed 16 active leases for wind projects in the state with a total capacity of 619 megawatts.
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According to the records, 12 more lease applications were pending, which would add an additional 2,570 megawatts of wind power to the New Mexico grid.
For solar power, the Land Office had 11 active leases for 303 megawatts of capacity, according to records, and 35 requests that would add 3,146 megawatts of capacity to the state.
Renewable energy manufacturing could also push state land into business development, as well as space technology, film, media and real estate, the study found.
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Outdoor recreation could also create a boom in state trust land income, read the study, as well as conservation activities.
The report also recommended increased staff at the land office and more partnerships with local communities and landowners.
“The Land Grant Permanent Fund is a culmination of New Mexico’s public land policy, and now the state has a unique opportunity to ensure it can continue to provide sustainable and predictable funding to beneficiaries like schools. public, ”said Mark Haggerty, lead author of the report. and economic geographer at Headwaters Economics.
“The permanent fund protects school funding from unanticipated disruptions and provides flexibility to diversify income – and the state economy – beyond fossil fuels.”
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Angie Poss, deputy commissioner for communications at the State Land Office, said if the agency worked to diversify its activities, the additional activities were unlikely to completely replace oil and gas.
In total, it has been estimated that oil and gas operations account for as much as 45 percent of New Mexico’s revenue, and the state is the nation’s second-largest oil producer, with most of its extraction activities. taking place on public land managed by the Land Office or the Land Office. Federal Bureau of Land Management.
“The caveat, and we’ve been transparent about this in the past, is that all of these efforts combined will not be able to achieve or replace oil and gas revenues,” Poss said. “This is not going to stop us from doing the work necessary for diversification. ”
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Poss said the partnership with local municipalities was particularly helpful in diversifying land use, highlighting recent agreements with the town of Las Cruces to install solar panels to power the municipal water supply, and the rental of land. near Mesa del Sol by the city of Albuquerque to expand the Netflix studio.
“This is important because state trust lands are specifically designed to benefit New Mexicans, and where we may have multiple uses on those lands or get a business entity to consider trust lands for expansion. , it only serves to benefit our state, ”she said. noted. “This can and is being achieved through the efforts of staff to address renewable energy demands and attract new businesses. “
State Lands Commissioner Stephanie Garcia Richards, who heads the office, said diversification will ensure the agency can continue to provide the necessary income to the state regardless of changes in commodity markets, expecting that such efforts will enable the Permanent Land Subsidy Fund to provide up to $ 1 billion per year in credits “for years to come.”
“Diversification is in the best interest of our public schools and other vital institutions that depend on funds from the State Land Office,” she said. “And, it is in the best interests of New Mexico taxpayers, who without this money and the efforts of the State Land Office, would pay a higher tax bill to pay for our state’s needs.”
Adrian Hedden can be reached at 575-618-7631, [email protected] or @AdrianHedden on Twitter.