State Senator Larry Scott spoke at a public hearing before the New Mexico Oil Conservation Commission on October 20, 2025, to address proposed changes in financial assurance bonding levels and new authority for the Oil Conservation Division (OCD) to reject private well acquisitions. The session was part of the WELC Rulemaking process.
Senator Scott began by introducing himself as a representative from District 42 and outlined his experience in the oil and gas industry. "I have some fairly significant personal experience with this subject matter. I spent the better part of 40 years as one of the very smallest independent oil and gas producers almost exclusively in southeast New Mexico, in Lee and Eddy counties," he said.
He described how his company once managed around 60 wells, including both producers and injectors. Scott expressed concern about the financial impact of the proposed rule: "All of these calculations that I’m listening to do not take into account having to a set-aside, if you will, $150,000 per marginal well, as effectively unproductive capital. That process would have driven me to bankruptcy in fairly short order."
Scott clarified that he is no longer an operator but still maintains interests as a non-owner in several properties. He stated that all his obligations to the state regarding plugging operations had been fulfilled.
He raised concerns about previous legislative actions related to bonding requirements: "I’ve been in the legislature long enough to have participated in the legislation that increased in blanket bonding requirements from $50,000 to 5x of that at $250,000 [in 2018]. I’m not aware that that’s had any significant impact, either plus or minus, on the obligations of the state or any plus or minus impact on small operators in the state."
Scott also addressed issues with how funds have been used: "Our oil and gas producers over the years have paid millions of dollars into that reclamation fund that have been misappropriated for use, in many cases, swept when New Mexico was short of funds and not utilized for the intended purpose of overcoming the very few operators that have failed to fulfill their plug-in abandonment operations."
He concluded by emphasizing his view on legislative oversight: "I think the increase in bonding requirements that was affected in 2018 was affected after robust debate and votes by both the House and the Senate. This proposal needs to be vetted through that process rather than as an administrative rulemaking."
Scott thanked those present for allowing him to comment and indicated he would follow further testimony.
