New Mexico’s financial assurance requirements for oil and gas wells, pipelines and related infrastructure fall far short of what would be needed to offset closure and cleanup costs, according to the findings of an independent study released Thursday, the Associated Press reported. The research was commissioned by the state after concerns were raised last year about taxpayers being left on the hook if companies go bankrupt or abandon their operations without plugging wells, decommissioning pipelines or cleaning up. While bonding requirements can vary widely depending on the location and the type of well, the study estimated the bonding gap for companies operating on state trust lands and private land at more than $8 billion. For pipelines on trust land, the study estimated average financial assurance is about $51 per mile, while the average decommissioning and surface reclamation cost is likely to top $211,000 per mile. Land Commissioner Stephanie Garcia Richard called the gaps in financial assurance staggering. She said the state needs to ensure that companies are adequately bonded so the costs of plugging wells, remediating spills and contamination, and reseeding disturbed areas will be covered. “No one can afford these obligations if they have gone bankrupt. That is why we need companies to be adequately bonded on the front end,” she said. The New Mexico Legislature in 2018 increased the amount of certain financial assurances. Industry officials said not enough time has passed to determine if the new rules are working as intended.
