New Report Published: "CLOSING THE PLAYBOOK: HOW TO STOP OIL & GAS COMPANIES FROM EVADING THEIR OBLIGATIONS TO NEW MEXICANS BEFORE IT IS TOO LATE"

Ahead of tomorrow’s hearing on the State Land Office proposal to strengthen bonding requirements for oil and gas operators on state lands, New Energy Economy today released a major new report warning that New Mexico taxpayers will face billions of dollars in oil and gas cleanup liabilities unless state regulators act now to strengthen bonding and financial assurance requirements for oil and gas operators. This proposed rule is critical because abandoned oil and gas wells can leak volatile organic compounds,  benzene and other compounds that damage the human nervous, immune, and respiratory systems, and have the potential to pollute groundwater, affecting aquifers that New Mexicans depend on for drinking water.

The report, “Closing the Playbook: How to Stop Oil & Gas Companies from Evading Their Obligations to New Mexicans Before It’s Too Late,” examines the financial, environmental, and public health risks associated with orphaned and low-producing oil and gas wells in New Mexico and documents how oil and gas companies have systematically used a tried and true ‘playbook’ to shift cleanup liabilities onto taxpayers by transferring aging, low-producing wells to financially weak operators that ultimately declare bankruptcy, leaving wells unplugged and contaminated sites unreclaimed.  

As we report, New Mexico currently has more than 75,000 active oil and gas wells, including nearly 39,000 low-producing “stripper wells” and 3,275 inactive wells that may soon become orphaned liabilities.  

The state’s current financial assurance system is dangerously inadequate to address the looming crisis. Tomorrow’s hearing comes at a critical moment. As we write in our report: 

“On top of the already inactive and abandoned wells, tens of thousands of New Mexico’s wells that are technically productive at the moment are producing in such low quantities that they may soon operate at a loss, and are likely to be abandoned in the near future. A predicted decline in production across the Permian Basin will act as a catalyst in expediting this process.” (pg. 6) 

In 2025 the Legislative Finance Committee reported that oil and gas operators have posted only $117 million in bonds statewide, despite various independent estimates placing New Mexico’s total oil and gas cleanup liability between $8.1 billion and $22 billion. If oil and gas operators are allowed to continue their playbook, that could translate to more than $6000 per NM taxpayer. 

The proposed rule under discussion tomorrow is particularly urgent. Federal funding for orphaned well decommissioning has dried up under the Trump administration and production in the Permian production will not continue at the same pace forever. Numerous analysts have warned that production is at or near its peak. In fact a recent Oilprice.com article noted that production is nearing its geological limits, stating:

"The best drilling acreage—the so-called “Tier 1” sweet spots—has been heavily developed over the past decade. While technology continues to improve well productivity, operators are increasingly drilling outside the core, where wells tend to produce less oil and deplete faster."

In other words, the number of inactive, abandoned, and orphaned wells is almost certainly going to increase dramatically over the next decade.

New Energy Economy together with WildEarth Guardians' has also filed a brief in support of the State Land Office Proposed Amendment to Rule Relating to O&G Financial Assurances and our respectful but necessary proposal for further amendments.

Without stronger rules, New Mexico communities face escalating environmental and public health risks from leaking orphan wells, including methane emissions, groundwater contamination, benzene exposure, and declining property values.  

The proposed financial assurance rule is an important first step but does not go far enough. We call for comprehensive reforms, including: 

• Well-specific bonding requirements tied to actual cleanup costs; 

• Increased oversight of well transfers to financially unstable operators; 

• Joint and several liability for all companies involved in ownership chains; 

• Permanent remediation obligations and post-closure monitoring; 

• Enforcement mechanisms to ensure inactive wells are promptly plugged and reclaimed. 

New Mexico’s current regulatory structure incentivizes delay and underfunding of cleanup obligations while allowing companies to continue distributing profits to investors rather than reserving funds for reclamation. 

New Mexicans should not be forced to subsidize corporate pollution after companies have extracted billions in profits. Financial assurance reform is about basic accountability: if companies profit from drilling, they must also pay to clean up the damage.