Jim Winchester Executive Director | Independent Petrolium Association of New Mexico
The New Mexico Oil Conservation Commission began a rulemaking process on October 20 to consider proposals from environmental groups that would increase financial assurance bonding requirements for oil and gas wells in the state. The Independent Petroleum Association of New Mexico (IPANM) has raised concerns that these changes could impose significant new costs on independent producers, potentially forcing many to shut down operations.
According to IPANM, the proposed rules would require immediate increases in bonding for marginal wells, which are typically operated by small, local companies. "With an immediate bond increase assessment per well, there will not be enough of the still-available, but yet-to-be extracted, oil & gas remaining in the underground to financially breakeven," IPANM stated. The group argues that this could lead to premature well closures and lost revenues for both operators and the state.
The proposed regulations also include provisions that would allow state regulators to deny sales of existing marginal wells if they determine a buyer is not financially solvent. IPANM claims this could block most operators from selling or acquiring new wells. "This is autocracy over an entire industry on the regulatory level, and will certainly block most operators from selling or acquiring new wells altogether," according to their statement.
IPANM noted that since 2017, the number of oil and gas reporting entities in New Mexico has decreased by 20%, with more than 100 mostly independent producers leaving the state or going out of business due to regulatory changes. The association emphasized that these companies are often multi-generational businesses rooted in local communities.
Industry representatives plan to present evidence at the hearing showing that operators already plug over 95% of their own non-producing wells each year. They argue that current state projections of unfunded liability do not reflect this fact and claim that existing reclamation funds—financed by industry—are underutilized by regulators.
"The Independent Petroleum Association of New Mexico (IPANM) will fight for the responsible, New Mexico-based independent producers at this hearing. These companies already plug their own wells, pay into the state’s reclamation fund to plug other wells, and protect the ground where they work upon. Sadly, they will face unnecessary shut-ins and complete shutdowns if this rule is passed," IPANM said.
The association called on the Oil Conservation Commission to consider testimony from independent producers and urged citizens who benefit from oil and gas production to participate in public comments during the hearing.
