Oil and gas land auction cut by more than 3,000 acres in New Mexico amid concerns

Federal officials cut a proposed public land auction for the oil and gas industry by 3,000 acres, responding to concerns operations would increase pollution in southeast New Mexico.

The Bureau of Land Management said it proposed leasing four parcels of land in Eddy, five parcels in Lea and two in Chaves counties in the southeast Permian Basin region, combining the New Mexico sale with eight parcels of land in Kansas.

The sale offered 760 acres in Eddy County, 480 in Lea County and 359 acres in Chaves County. The BLM initially proposed to lease 18 parcels in New Mexico but removed seven after further analysis, cutting the sale by 3,152 acres.

More: Oil and gas leases blocked on Permian Basin state land most likely to produce fossil fuel

That decision was made in response to an instructional memorandum (IM) issued by the BLM’s parent agency the Department of the Interior in November 2022 which stipulated new guidelines for evaluating lands nominated by the oil and gas companies for lease.

Criteria included the lands’ proximity to existing oil and gas operations, giving preference to those that expanded ongoing operations. The Agency also sought preference for lands that would not impact fish and wildlife habitats, cultural resources or outdoor recreation.

The reduction was also in response to several public comments the BLM received on the nominated parcels, calling for leases to be deferred if they did not appear likely to produce oil and gas, could impact wildlife and cultural resources or contribute to greenhouse gas pollution, read an environmental analysis.

More: Over half of oil and gas rigs in Eddy County were not paying taxes. An assessment has changed all that.

“Based on the analysis and IM 2023-007 Evaluating Competitive Oil and Gas Lease Sale Parcels for Future Lease Sales, the BLM has decided to remove seven parcels from consideration,” read a BLM statement.

How to protest the BLM’s oil and gas land sale

A protest period on the final sale was set for March 11 to April 10 when those opposed can submit comments to the BLM.

Protests for specific parcels must be submitted electronically or physically by the end of day on the last day of the protest period.

More: Oil and gas leases blocked on Permian Basin state land most likely to produce fossil fuel

They can be sent via email to BLM_NM_Q2_2024Protest@blm.gov with the subject line: “June 2024 Protest, or by mail to The BLM’s New Mexico Office, Attention: State Director, 301 Dinosaur Trail, Santa Fe, New Mexico 87508.

Hand delivered protests can be submitted by appointment only to the BLM by calling 505-954-2149.

Oil and gas leasing under fire on state land

Continual leasing of federal public land in New Mexico’s Permian Basin region came as restrictions were in place for such sales on State Trust land. Those lands are managed by the New Mexico State Land Office which last week imposed a halt on premium tracts as the office lobbies to increase royalty rates.

More: Gov. Lujan Grisham vetoes tax exemption for small oil and gas wells in New Mexico

The rates are paid by operators based on the value of the oil or gas extracted, and New Mexico State Land Commissioner Stephanie Garcia Richard sought since 2019 to increase the cap on the rate from 20 percent to 25 percent. Raising the rate would increase income to the Land Office, she said, which is used to fund public schools, hospitals and other institutions in New Mexico.

Garcia Richard argued the increase would allow New Mexico taxpayers to get a fair return for development on public land.

“I am no longer willing to let these tracts subsidized by school kids,” she said. “When we get the right value for them, they will be leased.”

Stephanie Garcia Richard
Stephanie Garcia Richard

More: 2023 a growth year for companies throughout the Permian Basin

She was most recently denied such policy as lawmakers failed to pass bills during the most recent legislative session and enacted the halt on leases of the lands – mostly in the oil-rich Permian Basin in southern Eddy and Lea counties.

The halt drew instant backlash from leaders in New Mexico’s oil and gas industry and its supporters.

On Tuesday, a group of House Republicans from oil and gas areas penned a letter to Garcia Richard demanding she reverse the decision and reopen the lands to oil and gas development. Reps. Jim Townsend of Artesia, Larry Scott of Hobbs, Jared Hembree of Roswell and Rod Montoya of Farmington signed onto the letter that called the action a “dereliction” of the Land Office’s duties.

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“Such a lease moratorium, in our opinion, is unacceptable as it is clear you are placing your personal public policy goals over and above the proper decisions made by the Legislature in deciding whether the state royalty rate should be increased or not,” read the letter.

New Mexico Rep. Jim Townsend (R-54)
New Mexico Rep. Jim Townsend (R-54)

They argued the halt could lead to regulatory uncertainty for the industry, causing companies to shift operations to Texas, costing New Mexico jobs and revenue from declining production. The lawmakers also said it was unlikely the legislature would vote to raise the rate in the future, meaning the Land Office’s moratorium would likely last longer than was expected when it was enacted.

The GOP estimated the halt would cost New Mexico $10 million in revenue by Fiscal Year 2026 and $30 million by FY 2028, read the letter.

“We urge you to reverse this ill-advised decision so that no oil and natural gas development area is punished because of your failure to convince the Legislature that increasing the state royalty rate is appropriate,” the letter read.

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on the social media platform X.

This article originally appeared on Carlsbad Current-Argus: Oil and gas land auction cut by more than 3,000 acres in New Mexico