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New Mexico and Texas Officials Give Dire Warnings Over Federal Lands Ban Impacts

A ban on new oil and natural gas leasing on federal lands will have significant regulatory, political and business impacts in New Mexico and Texas, according to a recent USA Today panel discussion hosted by the Corpus Christi Caller Times and the Carlsbad Current-Argus:

  • Christi Craddick, Texas Railroad Commission Chair
  • Jason Modglin, president of the Texas Alliance of Energy Producers
  • Adrienne Sandoval, New Mexico Oil Conservation District Director
  • Jim Townsend (R), New Mexico’s House of Representatives Minority Leader
  • Claire Chase, director of government affairs at Mack Energy

A Tale of Two States

No two states are created equal, and in the case of federal lands leasing, New Mexico and Texas could not be further apart. For starters, the impact of the ban will have an outsized impact on New Mexico. During the panel, New Mexico Oil Conservation District Director Adrianne Sandoval said that more than half of New Mexico’s production is on public lands:

“So actually New Mexico production last year was, 62 percent of it was on federal land for oil and 64 percent of it was for gas, while 55 percent of our wells are on federal land. So, we even have more than 50 percent of our production and wells on federal land.”

On the other hand, while Texas’ onshore production will not be as affected by the leasing ban due to 95 percent of land in the state being privately owned, communities around the state will feel the effects of what happens right off the coast in the Gulf of Mexico. President Biden’s executive order includes offshore leases, putting at risk thousands of jobs in cities such as Houston and Corpus Christi, key ports for our nation’s offshore industry. Jason Modlin, president of the Texas Alliance of Energy Producers, put it frankly:

“But the real story is in offshore, offshore employs 120,000 jobs, according to the American Petroleum Institute, just benefiting Texas. These jobs are in jeopardy if those moratoriums stay in place for long periods of time.”

The effects of the ban are expected to be long-lasting due to the delay from permitting to production. Claire Chase of Mack Energy provided the panel with the direct impact to businesses. Mack Energy expects an 80 percent decline in production in five years, saying that most companies have about two years of permits accounted for in New Mexico, but beyond that they are “going to have to look elsewhere.”

As Commissioner Craddick explained:

“I think that the biggest challenge for us really is to have regulatory certainty.”

Regulatory certainty is a major factor in where companies choose to invest, a point echoed by Rep. Townsend who described how “lack of consistency in the regulatory platforms” has already influenced people leaving the state.

Calling for Collaboration

Every participant on the panel knew the solution: collaboration. Speaking on New Mexico’s long-standing relationship with the federal government, Sandoval said:

“Here in New Mexico we have what we think is a very good relationship with the field offices and the state offices with the Bureau of Land Management, we believe we had really good information, and sort of, lessons learned to share with the federal government.”

She also explained:

“You know, in in New Mexico, we are proud to be an all-of-the-above energy state…We have spoken with the Biden administration and we hope to be invited to the table in order to discuss these options of as they analyze the Permits and the permitting process and leasing process. We believe we have a lot of really valuable information that we gathered over the last couple years as we moved on this path to combat climate change again in a very heavy oil and gas state.”

Collaboration has worked before, and will work in the future, but in order for the relationship to continue, both sides must be willing to come to the table. As Commissioner Craddick put it:

 “Talk to us in Texas, New Mexico. States that have oil and gas production really do have good common sense, and we can work with them.”

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