Budget deficit to impact NM oil and gas inspections, drilling permits and reclamation work

NM oil and gas agency warns of fewer inspections

ALBUQUERQUE, N.M. — The state agency responsible for preventing contamination from oil and natural gas operations and reclaiming past environmental damage will have to drastically reduce its routine field inspections as New Mexico searches for ways to plug a $650 million budget shortfall.

The Oil Conservation Division is just one agency within the state Energy, Minerals and Natural Resources Department that is unable to fill key vacancies because of the budget crunch.

Division director Mark Fesmire said Tuesday his agency is down seven inspectors. That means fewer people are in the field to make sure groundwater resources are protected.

“The big thing is without money, we’re going to have to leave slots vacant,” Fesmire said. “It all adds up to a pretty significant reduction in the number of inspections we can have.”

State and federal employees performed more than 40,000 well inspections during the 2009 fiscal year as part of a cooperative agreement with the Bureau of Land Management. But Fesmire said the agreement has expired and the lack of state inspectors in southeastern New Mexico’s Permian Basin means the division is expecting a 66 percent reduction in inspections next year.

State officials warned legislators during a meeting Monday that fewer inspections could place the environment and groundwater resources at risk and that the division’s vacancy rate of more than 16 percent could cause delays in the processing of any new applications to drill for oil and gas.

New Mexico Oil and Gas Association President Bob Gallagher said the Oil Conservation Division has been balancing its responsibilities with a high vacancy rate for the past 18 months, so he doesn’t expect the unfilled positions or additional budget cuts to affect the industry in the state.

But he added that better staffing would mean faster processing of applications for new development — and more taxes and royalties from oil and gas production flowing to the state coffers.

Despite the vacancies, Fesmire said the division will process drilling applications while making sure all state rules are followed.

“That’s going to be one of our priorities, making sure environmental regulations are complied with and getting these applications processed so we can produce our way out of this fiscal problem,” he said.

Oscar Simpson of the sportsmen’s group New Mexico Wildlife Federation predicted that fewer inspections could have “huge implications” for water resources, wildlife and habitat.

“It’s one thing to go out there and approve where a well will be drilled,” he said. “But the other part of it is environmental inspections and remediation and investigations. And if they don’t have the staff, it just stacks up.”

The Oil Conservation Division said another challenge it faces is an increase in enforcement costs due to a recent New Mexico Supreme Court decision regarding administrative penalties for certain violations.

Now, the agency must have funding to cover costs such as attorney and witness per diems, document reproduction and payments to expert witnesses if it takes a case to district court.