Regulations, lawsuits pose challenges to oil and gas industry

James Fenton
The Daily Times

In March, the coalition of environmental groups asked for an injunction to stop issuing permits oil and gas drilling near Chaco Culture National Historical Park.

Last month, the judge denied the injunction, citing economic harm faced by oil and gas companies if a halt to operations on leases in the Chaco area was made.

"The plaintiffs have put forth enough evidence to cast some doubt on the thoroughness of the (Bureau of Land Management's) decision making, but they have not made the necessary showing that the BLM failed to take a hard look at the environmental impacts of its actions, or that its decision making was arbitrary and capricious," the decision states.

Wally Drangmeister, communications director for the New Mexico Oil and Gas Association, said the federal judge's ruling was good news. "The ruling was welcome news," Drangmeister said. "The radical environmental agenda sounds reasonable until you look at the details about where energy comes from that enables our modern way of life."

Rebecca Sobel is a member of WildEarth Guardians in Santa Fe, one of the parties to the Chaco suit. Sobel said the coalition of groups who sought the halt to drilling permits around the Chaco region will likely appeal the ruling later this year.

Drangmeister said the industry presents many benefits to the state such as affordable energy, good-paying jobs and independence from foreign oil. The state also receives revenue from oil and gas profits that, on average, feed a third of the state's general fund each year, he said. Drangmeister said his organization will continue to promote what it believes are the benefits of the oil and gas industry.

"We are continuing our efforts to educate and interact with policy makers and the general public," Drangmeister said.

In May, NMOGA, which is funded primarily by the industry it represents, rolled out a 30-second commercial as part of its "Funding Education, Fueling Our Future" campaign. The TV spot will continue to air on markets throughout the state until February 2016, Drangmeister said.

Drangmeister said that the campaign just added 30-second ads on Pandora, the streaming digital radio outlet, with plans for additional online advertising coming later this fall.

Sobel said oil and gas companies are facing a cultural shift toward cleaner energy sources.

"The fracking industry thinks that they can buy people's opinions, just like the coal industry thought they could, and the uranium industry before that," Sobel said. "But people in the greater Chaco area are smarter than that, and they see the legacy of these industries in their neighborhoods. They know that poisoned communities and lost culture are too high a price for a few oil boom jobs. The future of the area is clean energy."

Drangmeister said comments like Sobel's are nothing more than rhetoric with an all-or-nothing approach that is damaging.

"The rhetoric from the environmental community has been such that it is just that, rhetoric," he said. The association aims to counter attacks from groups like WildEarth Guardians by touting the industry's "free market" solutions for environmental concerns that include installing its own advanced equipment to reduce emissions and increase safety for workers, he said.

Drangmeister said federal regulations take too much of a prescriptive approach, undercutting innovations and enhancements operators are already implementing like pneumatic controllers on drilling equipment that make proposed new rules requiring the use of FLIR - or thermal imaging infrared - cameras to spot emissions unnecessary.

"There are more cost-effective ways to solve issues than having people running around with FLIR cameras," he said. "Given the number of wells, that becomes extremely costly."

With added rules and regulations on top pending lawsuits, Drangmeister said oilfield production could be slowed.

"If these regulations continue to be piled on without any thought for the cost-benefit, there is the likelihood we're going to see less production in the basin," he said. "Requirements that aren't proven to be a benefit but are very costly can be damaging for operations and to the long-term economics of the basin."

James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621 and Follow him @fentondt on Twitter.