New Mexico’s Proposed Methane Rules

Executive Order 2019-003

One month after she assumed office on January 1, 2019, New Mexico Governor Michelle Lujan Grisham issued Executive Order 2019-003.  The executive order finds that methane is a powerful greenhouse gas and that the oil and gas industry is the largest industrial source of methane emissions in New Mexico.  It establishes a Climate Change Task Force composed of the secretary or a designee of each state agency, co-chaired by secretaries or designees of the Energy, Minerals and Natural Resources Department (EMNRD) and the Environment Department (NMED).  The executive order directs the EMNRD and the NMED to develop a regulatory framework to reduce methane emissions from the oil and gas sector.

Climate Change Task Force

In November 2019, the New Mexico Interagency Climate Change Task Force issued its New Mexico Climate Strategy Initial Recommendations and Status Update.  The Update finds that the oil and gas sector was responsible for 24 percent of New Mexico’s greenhouse gas emissions in 2018.  It proposes that the EMNRD regulate methane emissions as part of its mission to prevent waste and that the NMED regulate emissions of volatile organic compounds (VOC) and oxides of nitrogen (NOx) in areas subject to its jurisdiction.  VOCs and NOx appear with methane, so reducing emission of those gasses also reduces methane emissions.

Methane Advisory Panel

The New Mexico Interagency Climate Change Task Force established its own task force, called the Methane Advisory Panel.  The Panel consists of 27 professionals from industry stakeholders.  The Panel issued its 300-page technical report in December 2019.  Among the report’s findings are:

a) Pneumatic valves and controllers accounted for 61% of methane emissions from the oil patch in 2017. Much of that equipment is operated by natural gas under pressure.  Once the equipment is actuated, the gas is often expelled into the atmosphere.

b) Nineteen percent of those methane emissions in 2017 were caused by equipment leaks. Leaks come from numerous components like connectors, covers, hatches, valves, etc. and result from changes in pressure, temperature, mechanical stresses, and worn or ill-fitting seals and gaskets.

c) Flaring releases methane because of inefficient flares and incomplete combustion. Flaring results mostly from inadequate infrastructure to carry natural gas to market.

The EMNRD and the NMED each proposed regulations based on the technical report.  The EMNRD issued draft regulations 19.15.27 NMAC and 19.15.28 NMAC, with conforming amendments to 19.15.7 NMAC, 19.15.18 NMAC, and 19.15.19 NMAC.  The new regulations deal with venting and flaring and gas capture.  The NMED issued draft regulation 20.2.50 NMAC.  That regulation deals with operation and maintenance of various components used in the development of oil and natural gas.

EMNRD Proposed Regulations

The EMNRD’s draft regulation at NMAC declares venting and flaring of natural gas to be waste and prohibits it with limited exceptions.  Those exceptions are different for each phase of operations: drilling, completion or recompletion, and production.  The draft regulation obligates operators to use components, including flare stacks, designed to reduce the escape of natural gas into the atmosphere and requires the operator to measure and report instances of venting or flaring.

The draft regulation at requires operators to capture 98 percent of produced gas by December 31, 2026.  Operators must first establish a baseline capture rate as of January 1, 2022. Each successive year, operators must show ratable progress toward the 98 percent goal.

The EMNRD proposes similar regulations for natural gas gathering systems at 19.15.28.

The Oil Conservation Commission has set a hearing on the proposed rules for January 4 through January 15, 2021.

NMED Proposed Regulations

On July 20, 2020, the NMED issued draft regulation 20.2.50 NMAC to regulate volatile organic compounds and nitrogen oxides in the oil patch.  The proposed regulation provides standards for various pieces of equipment used in the oil and gas industry, including engines and turbines, compressors, control devices including flares, dehydrators, heaters, and storage tanks.  The regulation requires monitoring, record keeping, and maintenance of the equipment.  It prohibits release of air contaminants in excess of that allowed by the regulation.  Stripper wells are exempt from some of the regulation’s requirements.

The NMED is currently revising the July 20 draft in light of public comments.  The NMED plans to file a petition for rulemaking with the New Mexico Environmental Improvement Board in the next few months.  A two-week hearing on that petition will likely occur in the spring or summer of 2021.

If you would like further updates on the progress of these proposed regulations, please contact Chris Killion.