New Mexico slashes routine gas flaring allowances

Sergio Chapa March 26, 2021
Gas flaring, Permian basin
Gas flaring, Permian basin

(Bloomberg) --New Mexico, home to the most prized portion of the Permian basin shale formation, became the latest state to impose stricter rules to combat the flaring and venting of natural gas.

The three-member New Mexico Oil Conservation Commission voted unanimously on Thursday for rules that are set to go into effect as early as May. Oil companies, gas processing plants and pipeline operators will have until 2026 to get their gas emissions down to 2% of production. The energy industry accounts for 53% of the state’s greenhouse gas emissions.

The two counties that make up the New Mexico part of the Permian have seen flaring and venting soar as drillers move past legacy acreage in Texas to the newer -- and gassier -- Delaware sub-basin. Governor Michelle Lujan Grisham, a Democrat, made tackling methane emissions one of her top priorities immediately upon taking office in 2019.

“Alaska, Colorado and now, New Mexico, have all banned the wasteful practice of routine flaring,” said Daniel Grossman, Rocky Mountains regional director for the Environmental Defense Fund. “Other states, like Texas, are now on notice that leading practices include cracking down on unnecessary flaring.”

The rules are being touted by as a compromise between regulators, industry and environmentalists to curb emissions of methane, a potent greenhouse gas that traps 83 times more heat in the atmosphere than carbon dioxide. Thursday’s vote follows two years of debate, including two weeks of public comments in January.

“We will strive for full compliance with the final rule, and we commend this commission for undertaking a collaborative approach throughout this two-year process,” said Robert McIntyre, a spokesman for the New Mexico Oil & Gas Association.

New Mexico operators vented and flared an estimated 36 billion cubic feet of natural gas in 2019, which if it had been sold on the market, would have generated $10 million in revenue to state coffers, New Mexico Oil Conservation Division figures show.

“Our rule creates a level playing field for the industry,” said Sarah Propst, cabinet secretary for the New Mexico Energy Minerals and Natural Resources Department. “Some companies are already investing in that takeaway capacity up front and doing everything right while others maybe aren’t because they didn’t have to before.”

New Mexico’s new rules will impact drilling and production on federal lands, which is viewed as the next major front in the debate over flaring.

“The Trump administration rolled back strong regulations,” Grossman said. “But now with the Biden administration, that’s probably something that the Department of the Interior will address with the new leadership of [Interior] Secretary Deb Haaland, who is from New Mexico and understands the issue better than most.”

Click here to subscribe to the World Oil energy newsletter, and receive exclusive industry news and analysis in your inbox each weekday.


Connect with World Oil
Connect with World Oil, the upstream industry's most trusted source of forecast data, industry trends, and insights into operational and technological advances.