New Mexico is holding onto more than $66 million intended for the cleanup of orphaned oil and gas wells, according to Rep. Mark Murphy (R-59, Roswell). In an opinion editorial published in the Santa Fe New Mexican, Murphy criticized state regulators for not using available funds to address the backlog of abandoned wells.
Murphy stated that when oil or gas wells reach the end of their productive life, producers are responsible for plugging them and restoring the land. He said that companies fulfill this obligation for about 99% of wells in New Mexico, with only a small number becoming “orphaned.” These are then supposed to be managed by the state using money from the Conservation Tax, which feeds into the Oil and Gas Reclamation Fund.
Murphy pointed out that as of November 2024, this fund had grown to over $66 million from tax revenues and federal grants. Despite having enough resources to deal with existing orphaned wells, he claimed that "OCD has allowed it to sit idle — trapped in red tape and mismanagement."
He also highlighted procurement rules as a barrier: “Procurement rules have limited the number of companies that can bid on reclamation projects, leaving only a few to handle the work. Other qualified contractors have been shut out for years. The result? Hundreds of orphaned wells sit untouched while the fund meant to fix the problem gathers dust.”
The Oil Conservation Division (OCD) has proposed raising financial assurance requirements—the bonds producers must post to guarantee well plugging—in response to ongoing issues. Murphy warned that increasing these requirements would disproportionately impact small producers: “Increasing those requirements would hit small producers the hardest, making it harder — and in some cases impossible — for them to stay in business. And when small producers go out of business, what happens? More orphaned wells.”
He referenced Colorado’s experience with higher bonding requirements leading to more abandoned wells after smaller operators exited due to increased costs.
Murphy also noted legislative efforts during recent sessions aimed at redirecting more Conservation Tax revenue toward well reclamation through House Bill 403. The bill was rejected twice by lawmakers.
“The oil and gas industry is already footing the bill through the Conservation Tax and is successfully plugging nearly every well in the state,” Murphy wrote. “The problem is the state refuses to use the money it already has.”
He concluded by urging regulators not to impose additional financial burdens on small producers but instead focus on utilizing existing funds for cleanup efforts.
Rep. Mark Murphy represents District 59 and works as an oil and gas producer based in Roswell.
