Wikimedia Commons/Yoshi Canopus
Wikimedia Commons/Yoshi Canopus
New Mexico increased the level of bond money for oil and gas companies that is required before they can start drilling four decades ago in the 1970s, but now, as development is growing, State Land Commissioner Stephanie Garcia Richard believes it is time to consider raising the bond amount for the oil and gas companies.
Garcia Richard told the Albuquerque Journal that “taxpayers and our state trust land beneficiaries on the hook for potentially millions of dollars.”
According to a report fro the U.S. Government Accountability Office (GAO), oil and gas bond amounts have gone unchanged for at least 40 years and are no longer making fiscal sense.
A study has been commissioned by the state to look into the issue thoroughly, that will look at several problems including unplugged and abandoned wells. An area like the Permian Basin, located on the Texas-New Mexico border is a growing area that has been affected by the problem.
The State Land Office following the completion of the study and discussions at public meetings will then decide whether or not to propose the bond increase, although Garcia Richard would like to move forward with a proposed increase before then.
According to the State Land Office, dealing with the abandoned well issue is costly as plugging a well can reach a figure of more than $28,000 and the cost to remediate contamination associated with a single lease is also costly.
Estimated data provided by the New Mexico Oil Conservation Division reveals that abandoned number 711 around the state, and approximately 6% of those are in the books as plugged.
The state's study will look at 10,000 miles of oil and gas-related pipelines around the state.
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