From the New Mexico Land Office:
SANTA FE – A study released today by O’Donnell Economics and Strategy of Corrales shows that a full-fledged oil and gas remediation industry in New Mexico, focused on plugging wells and other site clean-up, could generate $4 billion in wages, create 65,337 jobs, and boost state revenue by $541 million.
New Mexico Commissioner of Public Lands Stephanie Garcia Richard released the following statement on the results of the jobs study:
“With the recent oil and gas bonding study and this subsequent remediation jobs report, we are finally getting the full picture of what lies ahead of us. While we face a staggering $8.2 billion deficit in financial assurance for the industry, a remediation economy will eventually be needed and will play an important role in keeping hardworking New Mexicans employed, and pumping new revenue into the state.
“A key takeaway of the report focuses on the economic benefits to New Mexico if remediation work is industry funded, rather than funded by the state or federal government. I am proud to already be taking decisive action to ensure that companies live up to their financial responsibility to restore our public lands. Our Accountability and Enforcement Program is forcing companies to comply with the terms of their contracts, which includes well plugging and full site clean-up.
“We remain focused on doing the work necessary to right-size our bonding requirements. With the results of this new economic report, the State Land Office will continue pushing our Accountability and Enforcement Program so that industry isn’t allowed to shift remediation costs onto New Mexicans.
“Oil and gas wells in the Northwest and Southeast corners of our state are being abandoned every week, and with the potential for job creation and positive economic impact, getting our remediation industry online as fast as possible will only benefit us moving forward.”
According to a press release announcing the results of the study, other key takeaways include:
- Ensuring timely and proper clean-up of over 28,000 wells, 9,000 miles of pipelines and miscellaneous oil and gas infrastructure located on New Mexico State Trust and private lands, if funded by the major oil companies and/or other entities external to New Mexico, would inject roughly $8.2 billion into the state economy.
- Remediation and reclamation of oil and gas wells and infrastructure on New Mexico state and private lands would support 65,337 direct, indirect and induced jobs and $4.1 billion in wages and has the potential to re-employ large numbers of workers displaced by COVID-19, the energy transition, and routine swings in fossil fuel production.
- Eddy and Lea Counties alone could see more than 26,000 jobs from wellsite cleanup, decommissioning and surface reclamation.
- The economic benefits of remediation would accrue statewide but would be concentrated in Lea, Eddy, and San Juan counties where most of the remediation work would occur. Similarly, a wide variety of industries throughout the state would benefit from intensified remediation, but oil and gas field services and non-residential construction would receive the biggest boost.
- Reclamation funded by major oil companies would have significant positive impact on the state economy because the financing would derive primarily from out-of-state sources (e.g. shareholders).
- Conversely, reclamation funded by the state would have minimal impact on the New Mexico economy because the state is required to balance its budget and therefore revenue devoted to reclamation is revenue that will not be spent on other state services. Remediation costs would be left to the state in the case of a company walking away from its clean-up obligations entirely or having insufficient financial assurances to cover full clean-up; currently financial assurances exist for just over 2% of oil and gas wells on state and private lands.
- Federal funding for reclamation could also provide a net injection of capital to the state and thus produce a positive regional economic impact, but current proposals for federally funded remediation of “orphan” wells would not produce major economic benefits because orphan wells represent only about 1 percent of the existing oil and gas infrastructure in New Mexico.
- Gross receipts and personal income taxes levied on the value of reclamation services would generate $541 million in additional revenue for the State of New Mexico and the local jurisdictions, primarily counties, where the remediation work occurs.