New Mexico eases industry struggles with proposed HB28 bill

In an effort to keep existing companies and attract new Oil and Gas projects to the area, New Mexico has introduced HB28. This bill if passed would exclude the industry from some State subdivision regulations that can tie up companies for years. According to the article below in the Carlsbad Current Argus, the existing regulations are encouraging a move from the New Mexico Permian Basin to the other side of the state line into Texas. This proposed new bill is great news for the Industry and investors.

Oil and gas developments to be sped up by New Mexico House bill

Oil and gas became a primary driver of the State of New Mexico’s economy, providing billions of dollars in revenue since the boom began in 2017.

The growth in activity centered around the Permian Basin in southeast New Mexico and West Texas.

But many state and local officials, and industry leaders, worried that a potentially prohibitive and complex regulatory environment in the Land of Enchantment could lead oil and gas companies to move their businesses just over the Texas State Line, preventing New Mexico from gaining much-needed revenue.

That’s why New Mexico Rep. Cathrynn Brown (R-55) and Rep. Greg Nibert (R-59) sponsored House Bill 28, intended to exempt growing oil and gas developments from some state regulations.

The bill had not been printed as of Monday and was assigned to the House Rules and Order of Business Committee, awaiting approval by Gov. Michelle Lujan Grisham to be considered during the short, primarily financial 30-day session.

HB 28, if passed, would preclude oil and gas developments from having to work through the State’s subdivision regulations when adding land for added facilities such as compressor stations or injection wells.

Brown said she hoped the bill would help encourage more oil and gas companies to stay in New Mexico.

State House Rep. Cathrynn Brown (R-55)

State House Rep. Cathrynn Brown (R-55) (Photo: Courtesy)

“We’re losing some economic activity to Texas,” Brown said. “When oil and gas companies need more land for other facilities, they need to go through the Subdivision Act. It’s not really designed for that.”

HB 28 would add language to the New Mexico Subdivision Act defining that any lands continually used for oil and gas activity would not be considered a subdivision.

Under the Act, if a smaller parcel of land is pulled from a larger one to be sold, such as to build a compressor station or other facility near a well pad, landowners must go through a process of approval from a local government agency and must wait up to five years for subsequent divisions.

Eddy County Attorney Cas Tabor said the process can be lengthy and could discourage oil and gas companies from looking to do business in New Mexico.

“Because of all these subdivision regulations, some of these companies were running into a problem,” he said. “The intention was to make it a little easier. We wanted to add some exceptions, so they don’t have to jump through all these hoops.”

Brown said oil and gas developments along the Texas state line often face vastly different regulations depending on which side they’re on.

“This will speed up the process,” Brown said of the bill. In New Mexico, we’re a little more cumbersome, so a lot of companies just buy land in Texas. (The bill) would certainly help our tax base.”

Many operators, she said, would rather head east into Texas to drill, rather than face hurdles in New Mexico state law.

“There’s just so much drilling on the state line,” Brown said. “I would like to see more of those in New Mexico.”

Workers maintain Sendero's natural gas processing plant, May 7, 2018 in Loving.

Tour of Sendero natural gas plant in Loving

Tabor said the bill could also benefit local families and landowners looking to sell land to oil an gas companies. He said the bill would streamline the process of parceling out land to be sold.

“This has become an issue because of all the hoops a family has to go through if they give a piece of property to an oil company,” Tabor said. “(The bill) seems logical with what’s going on in the oilfield. They’re making new locations every day.”

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