Less than a week after New Mexico’s top energy official reported a significant drop in emissions of methane from oil and gas operations, a study says the state may have failed to account for gas lost to the atmosphere through leaking equipment and other sources.
The new report, by the Environmental Defense Fund, says New Mexico’s losses, both in the volume of wasted methane and in lost royalties, are likely more than double state estimates — which would mean emissions of the potent greenhouse gas have remained level, not declined.
A total of about 570,000 tons of methane are released through New Mexico oil and gas production annually, according to the report, published Thursday.
“We have known for some time that New Mexico has a methane problem,” said Jon Goldstein, director of regulatory and legislative affairs for the Environmental Defense Fund, during a media call Thursday. He said the new report “tries to give a more accurate picture of what is happening out in the field.”
New Mexico Energy, Minerals and Natural Resources Secretary Ken McQueen told state lawmakers last week that methane emissions have dropped 50 percent in the state in the last year, despite an increase in production, with lost quantities accounting for roughly 1 percent of total natural gas production.
McQueen said the cost should be assessed at $2.69 per 1,000 cubic feet of natural gas, abbreviated as Mcf. About 25 million Mcf were lost through venting and flaring by operators in the last year, he said, which would account for $8 million to $11.5 million in lost royalties.
But the Environmental Defense Fund says the total amount of methane lost is more than double that amount, closer to 59 million Mcf, which would mean more than $175 million in profits if that gas were captured and $27 million in state royalties. The group calculated the lost royalties using an assumed price of $2.98 per Mcf, which is the current Henry Hub Natural Gas Spot Price, according to the Energy Information Administration.
State officials used a 19-cent lower figure for calculations, based on calendar year prices for 2016.
The bulk of production occurs on federal land in New Mexico — over 51 percent — followed by 23 percent on state and 21 percent on private land.
Goldstein said McQueen “offered an incomplete picture.”
The U.S. Environmental Protection Agency and the state, he said, are failing to account for emissions from leaking equipment, which can amount to as much as 50 percent of total emissions, and from smaller wells that are not required to report their emissions to the EPA.
“We shouldn’t be allowing this important natural resource to be wasted,” Goldstein added, “especially at a time when state funding for needs like education, health care and roads and bridges is so needed.”
The group called the lost methane the result of “wasteful practices,” such as failing to fix leaks and monitor equipment, as well as venting and flaring.
But Robert McEntyre, a spokesman for the New Mexico Oil and Gas Association, said the the state and EPA’s numbers paint the clearest picture of methane emissions in New Mexico, based on companies’ self-reported data.
While “it doesn’t include emissions from every source,” he said, “it is the best data we have and is better than the data [the Environmental Defense Fund] is using.” Environmental groups, he said, are “unwilling to acknowledge the progress we are making.”
The debate over emissions comes as efforts are underway by the Trump administration to revise, repeal and delay Obama-era federal regulations for methane capture and leak detection that came into effect this year.
McEntyre says the costs to comply with the regulations will lead to job losses: “The idea that we are going to see operators take on the cost of these new rules, especially with marginal wells, and continue to be able to produce is just not true.”
During the media call on the new report, U.S. Sen. Tom Udall, D-N.M., who has advocated to keep the methane regulations in place, said, “The arguments against the rules do not hold up to scrutiny that has been provided over and over.”
The industry has not been able to show job losses, he said, adding that methane capture regulations in Colorado have added jobs alongside increasing rig counts.
“We can and should do the same in New Mexico,” Udall said.
Contact Rebecca Moss at 505-986-3011 or firstname.lastname@example.org.