Air pollution and the evolving world of enforcement for oil and gas operations in New Mexico

New Mexico is the second-largest oil producing state and shares borders with other oil- and gas-producing states, including Texas, the largest oil-producing state in the United States. In New Mexico alone, there are 1,613 permitted oil and gas facilities and 54,887 completed oil and gas wells. According to the U.S. Environmental Protection Agency (EPA), methane emissions from the upstream oil and gas sector represent a significant portion of the U.S. greenhouse gas (GHG) emissions profile. New Mexico’s own emissions inventory estimates that emissions from the sector make up 53 percent of the state’s GHG emissions and 64 percent of the total state-wide methane emissions. Upstream oil and gas activities also generate pollution that can form ground-level ozone. Controlling pollution from this sector, then, also protects local air quality.

New Mexico’s regulatory framework

In 1978, New Mexico’s Environmental Improvement Act created the New Mexico Environmental Improvement Board (EIB) to promulgate regulations to 1. attain and maintain national ambient air quality standards (NAAQS) and 2. prevent or abate air pollution. The New Mexico Environment Department (NMED) is delegated the power under the same act to enforce such regulations.

Most of New Mexico is in attainment with the ozone air quality standard, but seven counties now exceed 95 percent of the standard, meaning they are at risk of tipping into non-attainment.

The EIB recently adopted an Oil and Gas Sector Ozone Precursor Pollutants Rule, in part to address this worrying trend. This rule sets emission standards and imposes requirements on oil and gas owners or operators to install and/or replace certain types of technology and controls. The objective is the reduction in emissions of ozone precursor pollutants—volatile organic compounds (VOCs) and oxides of nitrogen (NOx)— from sources located at well sites, tank batteries, compressor stations, and natural gas processing plants. The same technology and controls at upstream oil and gas sources will capture fugitive methane emissions as a co-benefit. Owners or operators are required to report actions taken to comply with rule requirements and to report leak detection results and other data. NMED is authorized to enforce the rule through agency monitoring, including inspections, and by using credible information provided by a third party. This “credible evidence” provision plays into current efforts by NMED to explore the use of satellite-generated emissions data, discussed below.

NMED’s sister agency, the Oil Conservation Division (OCD) of the New Mexico Energy, Minerals and Natural Resources Department, is authorized under the state Oil and Gas Act to manage the conservation of oil and gas. OCD is authorized to regulate the exploration, development, production, or storage of oil and gas and to limit the waste of CH4 (methane) by venting and flaring.

The EPA has authorized NMED to accept delegation of authority to implement federal air quality programs specific to upstream oil and gas operations. The state’s Air Quality Bureau, within NMED, determines compliance or noncompliance with air quality regulations and permit conditions by evaluating areas of concern identified in facility inspection reports, compliance reporting submittals for state and federal air regulations, complaint findings, excess emission evaluations, and facility self-reporting.

The challenge of compliance

The EPA, in conjunction with NMED, has conducted helicopter flyovers of the Permian and San Juan Basins—New Mexico’s major producing basins—for the past several years, using forward-looking infrared (FLIR) technology to determine emissions trends in oil and gas operations. The video data collected during the flyovers document higher-than-expected leak rates from oil and gas equipment across both basins.

Leaks, which include methane, VOCs, and other air pollutants, were observed from a variety of oil and gas equipment, but particularly from storage tanks and flares. In 2020, the Permian Basin’s overall leak rate was 5 percent, an increase from a 2 percent leak rate observed during 2019 flyovers of the same area. In the San Juan Basin in northwest New Mexico, the leak rate was approximately 3 percent. The San Juan Basin was not included in 2019 flyover inspections. The emissions, which mostly result from equipment failures and unaddressed leaks, are significantly higher than those reported by industry and are in line with those identified by non-governmental organizations and academia. The findings were particularly disappointing in that they come after 18 months of intensive and ongoing stakeholder discussions with the oil and natural gas industry on reducing VOC and methane emissions.