To Nathalie Eddy’s eye, Loco Hills has become “a graveyard” of oil and gas development.
Eddy is the Colorado and New Mexico field advocate at the environmental group Earthworks. Eddy works frequently in the Permian Basin, using special imaging cameras to capture methane leaks coming from oil and gas wells sites in the area.
Loco Hills, located north of Carlsbad on the Lovington Highway, is a legacy oilfield whose landscape is now dotted with inactive wells, and a few wells still producing, stretching as far as the eye can see. Most of those defunct wells are located on state or federal public lands and they aren’t going away anytime soon.
The area “offers a sobering glimpse of drilling’s irreversible damage that scars these public lands and makes the land unavailable for any future use for future generations,” Eddy told NM Political Report.
There is concern that other parts of the Permian Basin may suffer a similar fate. The U.S. Bureau of Land Management’s Carlsbad field office was considered the busiest in the country last year, thanks to record levels of oil and gas production in the Permian Basin. But as we enter the fourth month of an unprecedented global pandemic—during which a price war between oil producers Saudi Arabia and Russia drove the price of oil into negative territory—the future of oil and gas is less certain than a year ago.
Some predict a wave of bankruptcies will sweep through the industry if the price of oil doesn’t recover, and that could leave a glut of non-producing wells in its wave with no one to take responsibility over or pay to reclaim. When oil and gas operators cannot afford to pay the costs of plugging inactive or non-producing wells and the subsequent clean-up, the wells become “orphaned” and those costs fall on taxpayers.
“I think it’s a valid concern. It depends a lot on oil prices over the next year or two,” said Adam Peltz, senior attorney at the Environmental Defense Fund’s energy program. “If they remain really low, for a really long time, then yes, you will see a lot more orphans going on to state or federal rolls, which is a real problem. If prices recover—which they very well might—then that impact will be blunted.”
If the oil market struggles to rebound, up to 70 percent of the state’s 57,000 active wells are at risk of becoming uneconomic and either shut-in or orphaned, according to Oil Conservation Division Director Adrienne Sandoval. And in the meantime, state and federal regulators are struggling to keep pace with the current inventory of orphaned wells in New Mexico and elsewhere.
Trouble tracking orphan wells
BLM accounts for the lion’s share of oil and gas leasing that has occurred in the state over the last few years, but the agency doesn’t actually track the number of orphaned wells under its management. Instead, the agency requires its field offices to perform periodic reviews of inactive wells to determine whether those wells are capable of producing in the future, or if the companies that own them…