By Paige Knight
June 1, 2023
Most of us were taught at a fairly young age the importance of cleaning up the messes we make. But unfortunately, many American industries are not held to the same standards we set for our children. Chief among these is the oil and gas industry. Too often, companies are let off the hook for cleaning up the oil wells they abandon, even when these wells threaten the health of our communities.
Instead of oil and gas companies cleaning up the mess, the high cost to plug, restore, and clean up orphaned well sites is left to the state and its taxpayers, even though our tax dollars are desperately needed elsewhere – like for our classrooms, hospitals, and roadways. In December, 2021, the Interstate Oil and Gas Compact Commission (IOGCC) reported that there were at least 3,375 orphaned wells in New Mexico – meaning the company that built them went out of business before the wells were plugged. With an average clean up cost of $35,000, and as high as $145,000 per well, the total cost to clean up these wells could be as much as $450 million.
Orphaned wells not only hurt our bottom line, but they hurt our health too. Abandoned well sites often have decaying infrastructure that can pollute our drinking water and the air we breathe.
So how are oil and gas companies able to get away with not cleaning up their messes? Well, before they begin drilling, companies are supposed to set aside funds – called bonds – to cover clean-up costs in case of bankruptcy. But federal bonding rates are too low. Federal bonding rates have not been updated since the 1950s and ’60s.
And just last week BLM auctioned off thousands of acres of our public lands in New Mexico. More leasing in the state without federal bonding reform in place will all but ensure that the orphaned well crisis will get worse and that our communities will continue to be on the hook to pay to clean up the oil and gas industry’s mess.
The Department of Interior needs to act now to protect our communities and taxpayers and move forward with a promised rulemaking to update their inadequate and severely outdated bonding rates. Improving these rules will shift the financial responsibility from the taxpayers back to the industry, where it belongs.
By telling our lawmakers we support these changes, New Mexicans can help ensure that our communities are healthier and that our tax dollars are spent in our children’s classrooms, not cleaning up the oil and gas industry’s mess.
Paige Knight, MPP, is a Senior Research and Policy Analyst with NM Voices for Children.