As the state of New Mexico wraps up the first of probably two weeks of hearings on newly proposed restrictions on oil and gas emissions that create ground-level ozone pollution, the New Mexico Department of the Environment Mexico argued that the cost of complying with the proposed rules would be much lower. than industry leaders suggested.
Hearings were held before the Environmental Improvement Board (EIB) which will consider NMED’s proposal and hear testimony from stakeholders before a subsequent vote on the rules.
In a letter to lawmakers this week, Cabinet Secretary James Kenney of the New Mexico Department of the Environment (NMED) estimated that complying with the new rules proposed by NMED would cost up to $ 338 million in revenue. states and local governments.
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The agency’s estimate was less than half a cost analysis recently devised by economic research firm John Dunham and Associates commissioned by the New Mexico Oil and Gas Association (NMOGA) trading group which estimated that the cost would be around $ 780 million.
The NMOGA report raised concerns from state lawmakers in the House and Senate, and the Legislative Finance Committee sent a letter to NMED to reassess the tax impacts of the rules on the industry – l one of the largest in New Mexico providing about a third of the state’s budget revenue.
In Kenney’s response on September 20, he wrote that the agency was required by law to act when areas of New Mexico exceeded federal air quality standards.
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Several counties in southeastern New Mexico, known for heavy oil and gas production in the Permian Basin, were found to exceed the Federal Ambient Air Quality (NAAQS) standard for ozone. and many believed that the spike in air pollution was related to the increase in fossil fuel operations. in the areas.
Kenney said the proposed rules increasing the requirements for leak detection – shortening the period an operator must repair a leak and requiring the use of new technology to capture more gas produced – were intended to address the issues ozone and air pollution in the state and were necessary measures to protect public health and the environment.
He said budget cuts and vacancies meant NMED struggled to resolve the issue under the previous administration.
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“Due to severe budget cuts in general funds, the sweeping of special income funds and the resulting loss of staff, the ministry has not been able to fulfill these responsibilities under the administration. from the previous state, ”Kenney wrote.
“In addition, the Department has not been able to engage in meaningful compliance assurance activities to deter emissions from the expanding oil and gas industry. As a result, ozone levels have reached unhealthy levels in the oil and gas producing regions of New Mexico. “
The rules proposed by the NMED after about two years of public discussions and meetings with industry leaders, advocacy groups and local stakeholders could still be changed, Kenney said, potentially addressing the unique concerns of Wells at low production or extraction that many supporters of the industry feared. unduly affected by the added regulations.
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“The higher the emissions, the more important the air pollution control practices. Conversely, a source with a low potential to emit air pollution has lower requirements, ”Kenney wrote. “A ‘small business facility’ as currently defined in the proposed draft rule is subject to at least regulatory requirements. “
In a September 17 letter from 15 Republicans in the New Mexico Senate, lawmakers warned that tougher rules could hamper oil and gas production in New Mexico and negatively impact the country’s economy. State and those of local communities who depend on fossil fuel income.
Senators cited the NMOGA report’s claim that the ozone rules as drafted would result in a 12.9% drop in oil production and a 22.8% drop in natural gas production.
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“Given our state’s dependence on oil and gas revenues to fund our public schools, vital infrastructure and public safety, these massive and declining production numbers are of great concern to us,” the letter said. “As written, this rule may very well jeopardize the sustainability of New Mexico’s energy economy, as well as the stability of our national and local economies.”
In testimony earlier this year from the National Park Service based on air monitoring data at Carlsbad Caverns National Park, oil and gas production was a major cause of local air pollution and park service staff called for more stringent requirements.
According to the Park Service testimony, the precursors of ozone – chemicals that form the pollutant when they interact with sunlight – were generated during the production of fossil fuels.
“Volatile Organic Compounds (VOCs) measured at Carlsbad Caverns National Park indicate that the main sources of VOCs affecting ozone formation are from oil and gas operations,” read the Park Service technical testimony.
“The measures proposed in this rule will help reduce elevated ozone concentrations – additional measures or more stringent measures are likely needed to get below the NAAQS – this is a necessary step. “
Adrian Hedden can be reached at 575-618-7631, [email protected] or @AdrianHedden on Twitter.