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Resumed Oil And Gas Leases Bring Cautious Relief To New Mexico

New Mexico

The Biden administration was forced to allow auctions on new oil and gas leases last month after a June federal court decision overturned the White House suspension signed in January.

The scheduled resumption of leases, set for spring next year, is a sigh of relief not only for producers in New Mexico who require new drilling prospects always on the horizon, but for residents who rely on industry revenues for more than a third of the state budget. New Mexico schools, ranked among the lowest in the country, rely on the money most.

Larry Behrens, the New Mexico-based communications director for the energy non-profit Power the Future, celebrated compliance with the court decision as a win for the oil-rich state. One-third of New Mexico’s land is managed by the federal government, requiring White House permission for citizens to harvest their own resources.

“It’s a sad day when it takes a federal judge’s ruling to get the Biden administration to do the right thing,” Behrens told The Federalist. “Hopefully the Biden administration has now learned our energy industry is too critical to continue to use it for political games.”

Behrens went on to fault the White House for pleading with foreign adversaries to ramp up oil production last month while producers remained stalled at home.

“The fact the Interior Department was creating every possible obstacle against production while the president begged OPEC for more oil only makes sense when you realize Joe Biden puts the green agenda ahead of our working families,” Behrens said.

Home to nearly half the Permian Basin under its southeast soil, extracting the nation’s most lucrative oil and gas reserve is the backbone of the New Mexican economy, pumping billions into state coffers each year. Of the $2.8 billion sent to progressives ruling Santa Fe in the fiscal year 2020, more than $1 billion went to K-12 classrooms and another $300 million went to institutions of higher education. A 2018 report from the U.S. Geological Survey concluded more than 46 billion barrels of oil and 281 trillion cubic feet of natural gas remained in the basin.

The federal pause on new leases prepared to wreak havoc on the state’s economy, crippling southeastern boomtowns while sending an ax through the state budget. Producers require long-term planning and assurance operations will remain in place before they pledge new capital to drill in a particular area. That makes the availability of new leases essential.

State Rep. Larry Scott, who sits on the House Energy, Environment, and Natural Resources Committee and has worked in oil and gas for decades, told The Federalist in May that producers began to jump the border into Texas after facing headwinds from radical leftists in both Santa Fe and Washington.

“I think that the major oil companies have read the tea leaves,” Scott said. The federal government owns less than 2 percent of the land in oil-friendly Texas.

While the resumption of leases is a boon for an anxious New Mexico, Kathleen Sgamma, the president of the Denver-based industry trade organization Western Energy Alliance, told The Federalist to still expect White House animosity.

“They have a lot of opportunity to make mischief, there’s no question about that,” Sgamma said. “The first thing they’re doing is foot-dragging.”

While Sgamma gave the Interior Department credit for using previously scheduled lease sales as the launch point for auctions next year, Sgamma cited the agency’s decision to discredit pre-existing environmental reviews completed under the National Environmental Policy Act (NEPA) as an excuse to delay.

“What they should do is put a lease sale on the calendar 45 days from now and move forward with those lease sales,” Sgamma told The Federalist. But the Interior Department instead, is redoing analyses already conducted on lands prepared for auction. “It’s like telling your professor you’re working on the term paper for the fall semester but you’re turning it in for the spring semester.”

The Western Energy Alliance has filed another lawsuit challenging the administration’s decisions on oil and gas leases in the U.S. District Court for the District of Wyoming that would accelerate the timeline of auctions to be held this year.