Report: BLM methane rule a 'net positive'

James Fenton
A drilling rig is seen in January near Lybrook.

FARMINGTON – A study released by a Boise, Idaho-based nonprofit organization argues that if proposed federal rules over methane waste are implemented, the oil and gas industry — and the local and state governments that rely on revenues from fossil fuels production — stand to benefit.

On Thursday, the Conservation Economics Institute, a conservation-based nonprofit organization that conducts economic research, released a 27-page study that claims that if proposed U.S. Bureau of Land Management rules over methane waste are implemented, the oil and gas industry in the San Juan Basin will enjoy increased production and generate more royalties paid to New Mexico's coffers. The study was commissioned by the Environmental Defense Fund and The Wilderness Society.

Pete Morton, lead author of the report and CEI senior economist, said in a press release on Thursday that the study shows the pending rule would have a "net positive impact" on the industry and state programs that rely on revenue from oil and gas operations.

“This study finds that by applying the BLM leak detection and repair provisions in the San Juan Basin alone, the state can expect an increase in royalty revenue of between $1 million to $6 million per year, depending on future price scenarios,” Morton said.

Jon Goldstein, EDS senior energy policy manager based in Boulder, Colo., said the study spotlights the economics over the pending federal rules.

"What they found is, counter to the concerns expressed by the oil and gas industry, (the implementation of the rules) actually delivers a net positive both in terms of more gas into the gas line and increased revenues to the state of New Mexico," Goldstein said.

While he conceded that a majority of elected officials from San Juan County have been outspoken in their opposition to the rules, he said other public officials throughout the state are in favor of their approval.

Goldstein said the report's findings on compliance costs — especially those concerning leak detection, which represent less than 3 percent of a company's annual operating costs — ought to be welcome news to operators.

But Wally Drangmeister, New Mexico Oil and Gas Association spokesman, said the study is flawed.

"The numbers are wrong," Drangmeister said. "You put bad numbers into a reasonable model, and you're going to have a bad outcome."

He said the oil and gas industry has made great strides toward reducing leaking natural gas on its own without the pending federal rules.

"Not only can we, we did," Drangmeister said.

Also on Thursday, a letter sent to President Barack Obama expressed support for the U.S. Environmental Protection Agency's proposed rules over methane.

Christine Berg — mayor of Lafayette, Colo. — and 67 other mayors and other elected officials across the U.S. threw their collective support toward the rules and urged the EPA to "swiftly move forward with (the rules) to rein in emissions from existing sources of oil and gas methane pollution," according to the letter.

The letter included the signatures of seven New Mexican officials — Santa Fe Mayor Javier M. GonzalesRio Arriba County Commissioner Alex M. NaranjoSanta Fe County Commissioner Kathleen HolianSanta Fe County Commissioner Miguel M. ChavezBernalillo County Commissioner Debbie O'Malley and Doña Ana County Commissioner Billy G. Garrett.

But there was only one from San Juan County — Aztec Commissioner Katee McClure,

McClure said the industry's habit of not capturing more methane is akin to "putting gas in your truck and you have a quarter of it spill out as you drive down the road.

"With all this leakage, this is like money thrown up in the air, and it's hurting our air," she said.

McClure, who grew up in Los Angeles, known for its smoggy skies, said polluted air contributes to respiratory problems like asthma, which especially impacts kids and the elderly.

She sad the local outcry over the EPA and BLM proposed rules overlooks the many real issues that adversely impact the community.

"I'm so tired of this 'The sky is falling' complaining and blaming everything on the (federal government's) rules over the industry," McClure said. "Is the health of our people important? Yes. Is the quality of our air important? Yes. Is the oil and gas industry here important? Of course. But like I have said before, if I started burning tires in my front lawn, I'd be arrested. I'm not jumping on the bandwagon. Without rules and government stepping in sometimes, we'd still have child labor. Oil and gas isn't solely to blame. But come on — (sources of atmospheric methane are) not all landfill and cow farts."

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