New Mexico upstream and midstream operators have until 2026 to reduce routine natural gas flaring and venting by 98% under rules enacted Thursday.

Permian flaring

The Oil Conservation Commission (OCC) completed the two-year rulemaking process to update gas capture regulations. The undertaking followed months of testimony and virtual public hearings, with the oil and gas industry pledging its support.

The state is one of the leading oil producers in the country, fueled mostly by the Permian Basin, with considerable production from the San Juan Basin. In 2019, state operators vented and flared an estimated 36 Bcf of gas, according to the Oil Conservation Division (OCD).

OCD director Adrienne Sandoval said the updated rules signal “a huge day for New Mexico.” 

The rulemaking process, according to commissioners, “was among the most collaborative that they had experienced.” Testimony came from a broad array of stakeholders, including from the New Mexico Oil and Gas Association (NMOGA), Environmental Defense Fund (EDF) and the State Land Office.

‘Bold Action’

Finalizing the rules “proves that taking bold action on climate change is not at odds with industry and job creation,” Gov. Michelle Lujan Grisham, who had championed the changes as part of a sweeping climate change vision. Reducing gas waste and eliminating leaks have been a priority since she was elected. 

In 2019, the Democrat issued an executive order to address climate change and prevent waste, such as gas flaring. At that time, she called on regulators to craft rules to limit venting and flaring, as well as to increase reporting requirements.

Under the rules, performance standards would allow operators “to engage their creative and innovative technical experts to solve the complex problems involved in reducing the waste of natural gas,” OCC noted. The rules “also contain strong compliance provisions,” which allow regulators to use “discretion and judgment to fairly and efficiently achieve the commission’s objectives.”

In 1969 and in 1972, the OCC adopted orders and rules to prohibit venting and flaring. “Unfortunately, these orders and rules were not tight enough,” the OCC noted. Some operators “obtained permission to vent and flare for years, candidly acknowledging that they lacked takeaway capacity.

“Other operators simply did not report their venting or flaring, acquired wells and then stopped reporting on them, or year after year, filed reports with inaccurate data.”

The updated rules “address these problems and achieve the commission’s original intent by tightening the requirements and imposing meaningful penalties for noncompliance.” 

Under the initial phase of implementation, the OCC has mandated data collection and reporting by operators to identify natural gas losses at each stage. When the information has been compiled, regulators then plan to require operators to capture more gas every year. If operators fail to comply, drilling permits could be denied.

The gas capture rule is “a goal that we share and support,” said the NMOGA. “This will enable our state to continue to lead in the safe, responsible production of oil and natural gas. As always, we will strive for full compliance with the final rule, and we commend this commission for undertaking a collaborative approach throughout this two-year process.”

State regulator Sarah Cottrell Propst, who heads the Energy Minerals and Natural Resources Department, said the 98% capture rate was ambitious and would “secure significant methane waste reductions that will directly benefit New Mexico’s environment.

“Oil and gas operations make up the biggest portion of greenhouse gas emissions in New Mexico and the rules established…will lead to reductions across the board beginning in 2022.”

Still pending are draft rules that would target oilfield equipment that emits methane, volatile organic compounds and nitrogen oxides. The proposed rules could come before regulators in May, with public hearings later this year.

EDF’s Jon Goldstein, director of regulatory and legislative affairs, said the Lujan Grisham administration “deserves praise for enacting strong rules to end routing venting and flaring in New Mexico. This is a first and critical step” to address an estimated 1.1 million metric tons/year of methane emissions from the state’s energy industry.

To “fully protect New Mexico communities from needless waste and pollution,” Goldstein said, regulators must “finalize complementary air pollution rules that address the equipment leaks and malfunctions that constitute the lion’s share of the industry’s methane problem.”