Venting & Flaring Rules Talking Points

Talking points for use in crafting your comments at the upcoming February 16th BLM forum on “venting and flaring rules.” :

What is at stake?

  • Very conservative estimates indicate that 5% of the wells operating in New Mexico could immediately become permanently uneconomic and have to be plugged under the rules being proposed.
  • These wells that would be prematurely and needlessly plugged would in the short term cost New Mexico the loss of nearly 3,200 additional jobs in the short-term (1,200 jobs in northwest New Mexico and 2,000 jobs in southeast New Mexico).
  • Fewer wells mean fewer jobs, higher unemployment, less local tax revenues, less state revenue and economic misery for hard working New Mexicans.
  • Because oil and gas jobs are at the base of our local economies in northwest and southeast New Mexico, loss of these jobs spreads far and wide into our local communities damaging local businesses, public schools, city and county governments, and the state as a whole.
  • If low commodity prices continue for an extended period of time the number of wells at risk of being plugs is substantial, and higher operating costs caused by redundant and cumbersome regulations will further exacerbate the problem and accelerate the plugging of existing wells.

San Juan Basin

  • There are 20,922 operating oil and gas wells in San Juan, Rio Arriba, McKinley and Sandoval Counties
  • The oil and gas industry employs approximately 25,000 people in the San Juan Basin (approximately 1.2 employees per operating well).
  • The average salary is $71,500 compared to the overall state average salary of $39,660
  • The industry produced over 9 million barrels of oil and 690 billion cubic feet of natural gas in 2015
  • In fiscal year 2014 the industry in San Juan County provided $600 million of the state of New Mexico’s $6 billion general fund revenues (10%)
  • A survey of operators in the San Juan Basin indicates that at gas prices of $2.0 per MCF that 25% of gas wells are cash flow negative under current regulatory requirements. The financial impact of adding just $5,000 per year in operating costs to a typical well would cause an additional 5% of wells in the San Juan Basin to become cash flow negative. Clearly, regulations that add significant costs to gas wells operating in the San Juan Basin will have profound negative impacts.

Statewide

  • There are 54,457 operating oil and gas wells in New Mexico
  • The oil and gas industry employs 69,000 people in New Mexico (approximately 1.2 employees per operating well).
  • The average salary is $71,500 compared to the overall state average salary of $39,660
  • The industry produced over 140 million barrels of oil and 1.2 trillion cubic feet of natural gas in 2015
  • 56% of the oil and 63% of the natural gas is produced from Federal (BLM leases)
  • In fiscal year 2014 the industry provided $2.1 billion of the state of New Mexico’s $6 billion general fund revenues (35%)

Methane Emissions

  • Methane is both a product and by-product of oil and natural gas production. Onshore oil and natural gas operators are becoming more efficient at capturing methane emissions, and at reducing methane emissions from production activities. The national trend of methane reduction is supported by GHG reporting data, and it holds true despite a historic increase in oil and gas production over the past several years.
  • Without regulations overall greenhouse gas emission in the San Juan Basin have decreased from 10.7 million metric tons in 2007 to 7.3 million metric tons in 2014.
  • Vented methane emission in the San Juan are down due to cost effective and efficient practices including:
    • Better operating practices that are decreasing the number and duration of venting events.
    • Reduced pneumatic device emissions by reclassifying, removing, replacing and retrofitting high-bleed pneumatic devices.

Good Regulations vs. Bad Regulations

  • Good regulation practices
    • Single and appropriate entity responsible for regulation
    • Effective in meeting public policy goals: environmental, health and safety
    • Based on science
    • Cost effective: the overall benefit of regulation is greater than the cost
  • Why the proposed venting and flaring rule is bad regulation
    • Redundant and contradictory with other federal regulations and state regulations
    • Requires extensive capital and operating expenses with little or no additional benefits
    • Not based on science and in fact, locks in operating and technology solutions that have been shown to be inferior
    • Cost prohibitive especially in era of low community prices will force existing wells to be plugged with the loss of future production, jobs, taxes and other revenues
  • What are weaknesses in the BLM’s approach?
    • The BLM has attempted to understand economic impacts of these rules in isolation and has overestimated the benefits and underestimated the costs.
    • We believe the cumulative economic impacts of the proposed changes should be considered in total across all their proposed rules.
    • As proposed, these changes are significant and will have major impact to investments in new and existing projects on federal and Indian lands, with the potential for job losses, premature well closures and significantly lower federal and tribal revenues.
    • The BLM should conduct a more thorough economic impact analysis for the changes that they propose for wells in New Mexico and take into account the tremendous progress that has been made in a cost effective manner by the industry.
  • What it means to me?
    • I am ___________________
    • My [spouse, children, etc. and I live in _____________________
    • I am very concerned with the proposed BLM rule because as currently drafted it will lead to wells being prematurely plugged, devastating loss of jobs and will further damage my community and [my job, my company, my organization]
    • Details of what this will mean to you.
    • Ask them to fully and broadly consider the impacts to you
    • The environment can be protected without further damaging the industry and needlessly destroying jobs.