New Mexico could lose nearly three-quarters of $1 billion over the next few years if it sees even a modest reduction of oil and gas production due to the federal government’s actions to curb leasing on public lands, Gov. Michelle Lujan Grisham warned in a letter sent Monday to President Joe Biden.
The first-term Democratic governor said financial losses of that magnitude would have real effects on her administration’s ability to achieve goals like universal access to early childhood education. She has been pushing to expand social programs in an effort to turn the tide in a state that has been plagued for decades by high poverty rates and low educational outcomes.
Oil and gas revenues have been key to bankrolling many initiatives in the state as it struggles to diversify its economy. She acknowledged in the letter that New Mexico ranks third in the U.S. for onshore production and about one-third of the state’s general fund revenue is generated by the industry.
An analysis by state finance officials show New Mexico stands to lose $709 million between this fiscal year and 2025 if there’s a 10% decline in production.
With more than half of all oil and gas wells in New Mexico on federal land, Lujan Grisham noted that any changes to leasing and permitting by federal managers would disproportionally affect the state and push producers to Texas and other states where there are more opportunities on private land.
“Those shifts would not only cause economic harm to New Mexico, but would actually lead to increased emissions by shifting production to areas that have not adopted our strict environmental standards. This runs counter to our shared climate goals,” she wrote.
The governor asked Biden to grant New Mexico energy transition credit for actions the state already is taking to address pollution by the industry along with its landmark energy law that mandates carbon-free electricity generation by investor-owned utilities by 2045. She also pointed to her executive orders on climate change that call for statewide greenhouse gas reduction targets.
The Democratic-led Legislature also is considering a proposal that would establish a clean fuel standard to address New Mexico’s second largest source of greenhouse gas emissions - the transportation sector.
Oil and gas operators and business groups have had concerns about Biden’s moves to throttle new leases and drilling permits, saying stifling economic development - particularly in rural areas like southeastern New Mexico, which is home to one of the world’s most prolific oil patches - would have ripple effects beyond the industry.
Even U.S. Sens. Martin Heinrich and Ben Ray Lujan, both New Mexico Democrats, welcomed news Monday that the U.S. Interior Department would be returning to its standard permitting process for activities on public lands. They said earlier this month that any extension beyond 60 days would have significant consequences for New Mexico.
They also have urged the Biden administration to not make permanent its executive order that paused new leases on federal lands and have called on the administration to complete its review and “resume responsible leasing as soon as possible.”
But environmentalists have praised Biden’s directives as the kind of urgent action needed to slow climate change, which has been linked to drought, forest fires and heat waves.
Officials in Wyoming asked for a waiver from Biden’s directive in February, and the Western Governors Association in a letter sent earlier this month asked to be consulted as the administration conducts it review of leasing and permitting policies.
The New Mexico Oil and Gas Association, which represents producers around the state, had described the Biden administration’s moratorium as “a blockade around New Mexico’s economy,” saying the state could potentially be hit harder than any other.
In the heart of the Permian Basin, Carlsbad Mayor Dale Janway has been calling for New Mexico’s elected officials to stand up against policies that move in the direction of eliminating drilling on public lands. He argues that environmental efforts should be “fair and well-researched, not knee-jerk mandates that just hurt an already impoverished state.”
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