Officials ask lawmakers to support oil and gas

James Fenton
A natural gas site is pictured in 2014, in Lybrook south of Farmington.

FARMINGTON — City, county and economic development officials hope to get the support of the state's congressional delegation in modifying proposed oil and gas rules they say threaten the economic health of the area.

Last week, a stakeholders group — which included Farmington Mayor Tommy Roberts, San Juan County executive officer Kim Carpenter and Four Corners Economic Development CEO Ray Hagerman — drafted a letter to U.S. Senators Tom Udall and Martin Heinrich and U.S. Rep. Ben Ray Luján, urging them to put the brakes on proposed oil and gas regulations they say will seriously harm the region's economic health.

Hagerman said the letter grew out of concerns that proposed updates of rules for oil and gas production on federal land — the U.S. Bureau of Land Management's Onshore Oil and Gas Orders and its methane waste rule — will result in the permanent closure of a significant portion of the natural gas wells in the San Juan Basin.

In the wake of collapsing crude oil and natural gas prices, 25 percent of those gas wells are already "cash-flow negative" and an additional 12.5 percent also are at risk of being shut in if those rules are implemented, the letter states.

The closure of thousands of wells in the basin translates to the loss of thousands of area jobs and revenue at the city and county level. The area already has lost thousands of jobs due to the low commodity market prices of oil and gas.

"The potential loss of up to 7,500 wells represents a revenue loss of 13 percent in county oil and gas taxes on top of the 47.6 percent decline already experienced since 2009," the letter states.

The loss of revenue threatens vital services such as law enforcement, fire and emergency response and help provided to vulnerable populations, including indigent health care services and senior care center operations, according to the letter.

The letter, which will be finalized with contributions from schools, chambers of commerce and nonprofit agencies, was posted online at RealPeopleRealJobsNM.com on Monday.

Hagerman said in a phone interview that he hopes to have all the officials' contributions finalized and the letter distributed around the county.

"Thereafter we're going to go ahead and get thousands of signatures on the letter," Hagerman said. "Above all of that we would like the general public to (read the letter and sign it). They are going to be affected by this, leading to fewer ... teachers (and) to decreased services at the city and county. We are all going to be affected by it."

Hagerman said his organization's Real People, Real Jobs campaign will help drive the effort.

Farmington's February 2016 Gross Receipts Tax revenue was 21 percent less than the same month last year and that trend is likely to continue if more wells are closed from pressure from proposed BLM rules, according to the letter.

Roberts would like the federal delegation to support freezing implementation of the BLM rule changes and conducting a cost-benefit study.

"We have to continue to challenge regulations that don't have a solid cost-benefit foundation, and I haven't seen a cost-benefit analysis that justifies (the BLM's) regulations," Roberts said in a phone interview. "In fact, we're told that the cost analysis that the BLM performed assigned a 'no value' to the cost (associated) with implementation of the regulations and clearly there are great costs there."

Roberts said the proposed rules will lead to a "downward spiral" of lost jobs, both direct and indirect.

Public comment for the BLM rules closes April 8.

James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.