Ad spotlights gas waste by oil and gas industry

Spokesman for New Mexico Oil and Gas Association says ad is based on inaccurate information

James Fenton
Rio Arriba County rancher Don Schreiber is featured in a new TV ad campaign that calls attention to royalties lost every year because of venting, flaring and leaking of natural gas during extraction operations on public lands.

FARMINGTON — A nonprofit conservation group based in Montana and Colorado has launched a new television ad campaign to call attention to royalties lost each year because of venting, flaring and leaking of natural gas by the oil and gas industry on public lands. 

On Monday, the Western Values Project rolled out the TV spot, which features Rio Arriba County rancher Don Schreiber, a critic of the industry. The ad will air throughout New Mexico for four weeks, according to the group.

In a press release, Western Values Project Director Chris Saeger said budget-strained New Mexico could use the royalty revenue to fund key areas, such as education and infrastructure.

"The industry is literally burning money just at the time when New Mexico can least afford it," Saeger said. "Wasted natural gas means less money to fund education and new roads and bridges.”

This still from a television ad campaign launched by the Western Values Project calls attention to royalties lost annually because of venting, flaring and leaking of natural gas on public lands. Representatives of the oil and gas industry say the ads are based on inaccurate data.

In New Mexico, oil and gas revenue makes up about one-third of the state's general fund budget each year.

About half of New Mexico’s mineral estate is federally owned. In 2013, royalties from the extraction of federally owned minerals contributed more than $400 million to New Mexico’s general fund, according to a 2014 WVP report called "Up in Flames."

If tighter rules are finalized by the U.S. Bureau of Land Management, New Mexico could receive an estimated $6.7 million to $8.1 million in revenue each year, the report states. New Mexico has lost nearly $50 million in royalty revenue since 2010, according to the group.

“This is a no-brainer. It means more money in the state budget, more product to market and New Mexicans overwhelmingly support action to reduce wasteful gas venting and flaring,” Saeger said.

But Wally Drangmeister of the New Mexico Oil and Gas Association said on Monday that the industry has made progress in reducing lost natural gas from venting, flaring and leaking. Besides, he said, operators are in the business of selling natural gas, not letting profits go up in the air. He said the data the Western Values Project used to determine lost revenue numbers are flawed.

Drangmeister pointed to the natural gas pricing projections in the report, which lists natural gas prices at $4.24 an Mcf, or thousand cubic feet, in 2016.

"I would be doing cartwheels if that price was accurate," he said. "In the San Juan Basin, we are consistently seeing 36 cents below the market price. (Operators) see the spot price, which was $1.96 yesterday, minus 36 cents to get that gas to market. That's what we're actually getting."

An update to a 30-year-old rule proposed by the BLM that aims to reduce natural gas venting and flaring on federal lands is currently in a public comment period. That comment period has been extended to April 22.

To submit comments on the  proposed rule, go to regulations.gov.

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