Data Dump: Abandoned oil and gas wells in New Mexico
Also: Public lands continue to take a beating, despite one small victory
🛢️ Hydrocarbon Hoedown 📈 Data Dump 📊
A new report on New Mexico’s abandoned and orphaned oil and gas wells presents an alarming and expensive scenario for the state. It reveals that while the industry generates a lot of revenue for the state, cleaning up its mess is also poised to cost state and federal taxpayers hundreds of millions of dollars. No, this report was not put out by an environmental or progressive advocates, but by the state’s legislative finance committee.
New Mexico has been an oil and gas hotspot for more than a century, during which drillers have sunk at least 121,000 wells, mostly in the San Juan and Permian basins in the northwest and southeast portions of the state. Newly drilled wells typically kick out a large volume of oil and/or gas during the first months after drilling, generating a lot of cash for their operators and for state coffers, and helping to push production numbers for the state through the roof.
But the wells are soon afflicted with what’s known as the decline curve, meaning that the longer they pump, the less they pump. You know, it’s kind of like aging in people. Eventually, aging will render all oil and gas wells into low-producing stripper wells (I’m not sure how this analogy extends to the human realm, but hey …) that kick out less than 10 barrels of oil per day. Thousands of New Mexico wells are extreme strippers, producing one barrel or less daily. Yet they continue to spew methane, hydrogen sulfide, and volatile organic compounds at the same as or an even higher rate than their younger, more vital counterparts.
This is problematic for a number of reasons. For one, the operators of stripper wells are likely to be smaller, less financially secure companies, and it’s easier and cheaper for them to keep the wells in a nearly inactive state — during which the wells continue to ooze pollutants into the air and groundwater — than to decommission, plug, and reclaim them. It may make economic sense to abandon these wells, or for the companies to cease to exist and “orphan” the wells, leaving them to the state or federal taxpayers to clean up, since reclamation bonds are woefully inadequate. And, finally, these wells generate almost nothing in production taxes, meaning that they aren’t contributing much to the state’s conservation fund, a portion of which is used to clean up abandoned and orphaned wells.
The near constant drone of drilling for over a century has resulted in a near-constant addition of low- to non-producing wells to New Mexico’s rosters. While responsible and financially solvent companies plug and reclaim their own wells, many smaller operators simply walk away.
New Mexico’s Oil Conservation Division is currently responsible for plugging close to 1,000 abandoned and orphaned wells, including 700 on state or private land, and for remediation and reclamation of an additional 500 well sites and 18 infrastructure sites (such as leaky tank batteries).
At recent rates, plugging them will take close to a decade, not including remediation/reclamation. OCD is also responsible for remediation and reclamation of an additional 500 well sites and 18 infrastructure sties. In total, plugging, remediation, and reclamation of all currently orphaned wells and infrastructure on state and private land is estimated to cost a minimum of $208 million, and likely more. And that’s just for now.
The report goes on to say: “… in addition to wells the state already has legal authority to plug, thousands of inactive and low-producing wells are at risk of being orphaned, potentially increasing the state’s liability by many orders of magnitude.” There are about 1,400 inactive at high risk of being orphaned on state and private land, according to the OCD. And there are thousands more that are extremely low-producing wells — putting out less than one barrel of oil equivalent per day — for which the “expected cost of cleanup far exceeds predicted future revenues, increasing their risk of being orphaned.”
And the kicker: “Altogether, the state’s current and near-future liability for well plugging and site remediation is estimated to be between $700 million and $1.6 billion.”
More data from the report:
38,817 Number of stripper wells, meaning they produce less than 10 barrels of oil-equivalent daily, in New Mexico, making up about 64% of the state’s active wells. This number will continue to increase.
$100,000 Average cost to plug single oil and gas well.
450% Percent the average state-contracted cost to plug an oil and gas well in New Mexico has increased since 2019.
$250,000 Maximum amount of financial assurance an operator in New Mexico must post to cover the costs of plugging and reclaiming its wells. This cap applies whether the operator has five wells or 500 wells, meaning it actually provides almost no financial assurance whatsoever.
$46.4 million Amount spent by the New Mexico Oil Conservation Division to plug and reclaim 360 wells and associated infrastructure between 2019 and 2024.
9% Percent by which the cost of plugging a gas well exceeds that of an oil well. Most of the wells in the San Juan Basin are gas wells.
$208 million Estimated cost to New Mexico to plug, remediate, and reclaim all existing orphaned and abandoned wells and infrastructure on state and private land.
$5.6 million Amount in financial assurance associated with orphaned wells or their operators, meaning most of the costs will be shouldered by the taxpayers — either via the state reclamation fund or federal grants.
$66.7 million April 2025 balance of New Mexico’s oil and gas reclamation fund (which is funded by a portion of conservation tax revenues).
$6 million Tax revenue New Mexico’s 3,024 wells producing less than 1BOE/day would generate with the West Texas Intermediate oil price at $70/barrel (it’s currently lower than that). Plugging and reclaiming those same wells would cost an estimated $531 million to $885 million. “The vast majority of the wells—87%—are owned by private companies whose financial health is difficult for regulators to assess.”
$1.6 million Amount New Mexico paid in 2024 to plug six of Ridgeway Arizona’s wells under a 2023 settlement agreement with the company. Under the agreement, the state pays to plug 299 of the company’s wells, and the company reimburses the state $2 for each barrel of oil it sells, with a minimum payment of $30k per month. But at current rates, the total cost to plug the remaining wells could be $60 million or more, meaning it would take the company as long as 170 years to pay it off.
🌵 Public Lands 🌲
By now you’ve probably heard that Sen. Mike Lee pulled his public land sell-off provision from the budget reconciliation bill that the Senate just passed following intense backlash. And perhaps you’re planning on celebrating the salvation of America’s public lands on July 4.
Well, I hate to be Mr. Buzzkill, but while this victory may be sweet, it does little to offset the bitterness brought by continuing attacks on public lands, along with democracy, morality, decency, and, well, America, itself, this Independence Day week.
The “Big, Beautiful Bill” perpetuates and amplifies the massive transfer of wealth from low- and middle-income and working-class Americans to the richest 10%. It will slash Medicaid and other vital programs Americans have paid into and rely upon, while also dismantling tribal sovereignty. And yet, it will also drive up the deficit by trillions of dollars due to additional spending on the military industrial complex, which is reaching its tentacles further into immigration enforcement, wildlife blocking border walls, deportations, and $450-million-per-year concentration camps. With Trump threatening to revoke citizenship from U.S.-born citizens whom he considers threats (e.g. Zohran Mamdani and Elon Musk), those camps may end up housing his political opponents. I really hate to make this comparison, but that is some severe Nazi-esque nastiness.
The Senate’s bill gives more handouts to the oil and gas and coal industries, while revoking tax credits for wind and solar power, which could kill those industries when they are needed most.
And yes, some of you may cheer a weaker renewable-energy industry, since it will mean fewer utility-scale installations blanketing the desert. I get that. But it will also hurt rooftop solar and larger installations on big box stores, over parking lots, or in fallow agricultural land, brownfields or other appropriate sites. A western Colorado farmer’s plan to install solar panels to generate electricity and shade his crops, for example, is imperiled by the GOP’s plans.
This at a time when strain on the power grid is exponentially increasing due to the outsized demand of more and more AI-powering, hyperscale data centers. That power will come from somewhere, and if it’s not solar or wind or batteries, then it’s likely to be from pollution-intensive coal and natural gas (mined and drilled from public lands), fish-killing hydropower, or new nuclear reactors (that will require uranium mined from public lands).
And keep in mind, oil and gas leasing and mining claims represent a sort of quasi-privatization of public lands. Sure, the government retains title to the land, but the corporations get access to the minerals within, can rip the land apart to get to them, and can cut off public access with the necessary permits. With its accelerated 14-day “energy emergency” permitting process, the Trump administration is making it a heck of a lot easier for corporations to mine, drill, and otherwise develop public lands, sans public input. The latest beneficiaries include:
NorthWestern Energy, which was given the Bureau of Land Management green light to build a 74-mile natural gas pipeline between Helena and Three Forks, Montana.
Ormat got the BLM go-ahead to move forward on three separate geothermal projects in Nevada:
• Exploration work at the Diamond Flat project near Fallon;
• Upgrades at the McGinness Hills project in Lander County;
• Exploration drilling at the Pinto Geothermal Project near Denio.
I’m not suggesting that these are horrible projects that shouldn’t have been approved. Geothermal holds a lot of potential as a relatively clean, round-the-clock baseline power source, and these are merely upgrades and exploration, not full on developments. Still, geothermal development and even exploration have impacts and can affect groundwater aquifers, springs, and wetlands. Land agencies should have as much time as it takes to adequately analyze potential effects, and tribal nations should be consulted and have time to do their own analysis. And if it’s happening on public lands, then the public deserves to know about it and have an opportunity to weigh in. None of that is possible under this 14-day permitting process.
So, yeah, happy Fourth of July, y’all and welcome to the Divided States of Project 2025. And on that note, the Land Desk will be taking the rest of the week off.
📸 Parting Shot 🎞️
Just getting into the ol’ July Fourth spirit with this picture of Raymond "Squeek” Hunt’s signs near his mutton meat slaughterhouse and shop in Waterflow, New Mexico. I mean, it does have an American flag in it, after all.
Always like to see the details of a few more $$$$ that us citizens will need to pony up to clean up fossil fuel messes. I live in Gasfield county CO, so there are probably thousands of "stripper wells" just west a tad. (Instead of a pole dance do we get a well dance? The lap dance sounds messy.)
It just seems like "we" should have a handle on this in 2025. Seems like the plugging could be a long term career for quite a few good sized crews. But I guess "green jobs" have lost their luster. And somehow "long term" doesn't seem like a thing for governmental, environmental projects and policies right now.
Agree in whole.