Has the energy transition finally come to Farmington?
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Has the energy transition finally come to Farmington?
On a sunny October day, dozens of officials gathered in the high desert of northwestern New Mexico to celebrate the groundbreaking of the San Juan solar-plus-storage project, a utility-scale photovoltaic array.
The first phase of the solar plant, expected to go online next year, will have a generating capacity of 200 megawatts along with a 100-megawatt battery installation. Future phases will double the capacity, enabling the facility to provide electricity to tens of thousands of homes. Them’s no small power potatoes, and represent a big step toward replacing the generation lost when the coal-fired San Juan Generating Station — its smokestacks looming in the background of the ceremony — shut down last year.
But just as importantly, this project is a sign that the energy transition is taking place, if hesitantly, in a place that I once thought was so steeped in fossil fuels that it could never break free. After all, geology often is destiny. And geology both blessed and cursed the San Juan Basin with an abundance of readily extractable coal, oil, and methane — a.k.a. natural gas. That has spawned over a century of booms and busts that have shaped the landscapes, economies, cultures, and very identities of the communities of the 10,000-square-mile dinner plate-shaped geologic feature that straddles the state line.
If you’ve spent much time in San Juan County, New Mexico, you know what I’m talking about. Scattered among the juniper and piñon forests and cottonwood studded river-bottoms are tens of thousands of oil and gas wells sucking up the remains of fossilized organisms that once plied the shallow inland sea that spread out across the region some 75 million years ago. On the ancient sea’s shores, the draglines scrape away the earth to get at a thick bed of low sulfur coal, the carboniferous leftovers of fecund and sultry shoreline swamps, which is then burned in the massive power plants’ boilers, sending the carbon back to the atmosphere and the sulfur dioxide, mercury, arsenic, and other pollutants into the lungs of nearby residents.
The San Juan Basin is one of the only places on the planet where a 26-kiloton nuclear device (double that of Little Boy, which obliterated Hiroshima) was detonated underground to free up natural gas from the rock — a nuke-frack job, if you will. It’s a place where landscape and infrastructure have become indistinguishable. A place where billions of dollars worth of hydrocarbons are sucked from the earth, the money — like the oil and gas — mostly flowing outward into corporate coffers and shareholders’ pockets. Yet enough of the cash sticks around to pay decent wages for the arduous and dangerous work in the oil fields and coal mines, to fund schools and public employees’ salaries, to give rise to a virtual city of chain restaurants and big box stores, car dealerships and Super Walmarts.
This huge infusion of cash into local and state governments effectively puts the government — and therefore the community as a whole — into the fossil fuel business. It also further embeds the industry into the economy and even identity of the community, where more than a degree or two of separation from the energy industry is quite rare. The upside is that those communities get to share in the profits. The downside is that everyone, from the toolpusher to the symphony-goer, is dependent on a volatile global market and polluting industries that can hurt other sectors of the economy, such as tourism and “quality of life.” And any efforts to rein in or regulate industry, or even try to add to the three-legged economic stool, are readily interpreted as attacks on schools, local governments and, really, the people who live here.
Nevertheless, since the 1980s folks have been trying to diversify the economy by supplementing fossil fuels with tourism, agriculture, small industry, and the hard-to-define amenities economy — something to ease the economic and societal whiplash that is inherent to riding the volatile commodities waves. Mostly they’ve failed. But over the last several years, the efforts took on new urgency. The natural gas industry — once the region’s cash cow — has been in a slump since 2009.
Then, in 2017, Public Service Company of New Mexico announced it would close the San Juan plant in 2022, spreading panic throughout the community. The facilities together employed more than 400 people, and paid $3.5 million annually in property taxes to the 3,000-square-mile Central Consolidated School District that reaches deep into the Navajo Nation, according to a 2019 study by O’Donnell Economics and Strategy, and nearly $2 million to the community college. The mine spent millions more each year at local businesses, from shoe-stores to porta-potty rental shops to catering establishments.
Soon after the announcement, local environmentalists and state lawmakers went to work on legislation that would both ease the financial pain and fund efforts to diversify the economy. The result was the Energy Transition Act of 2019, which allowed PNM to take out securitization bonds to pay for decommissioning the facility and mine, to support and train the displaced workers, and to fund projects that would help transition the local economy. The law also required PNM to replace some of the lost generation with projects in the region and the school district.
The legislation wasn’t perfect: PNM ratepayers would end up paying for the bonds, not the corporate shareholders who had profited off of the power plants and the pollution for years. Still, it was a win-win situation for the environment and the community. At the same time, the city of Farmington was embarking on a parallel economic diversification effort, branding it as the “Jolt Your Journey” campaign. They expanded biking and hiking trails, added rafting put-ins at the river, and even did a “Complete Streets” makeover downtown, making it more amenable to human beings rather than focused just on cars. It seemed, for a moment, as if Methane-town was actually going to kick the fossil fuel habit and move into the future.
But there was a big hitch. Farmington’s elected officials are, more likely than not, prone to be infected by a certain petro-ideology that overcomes pragmatism. The result is that these folks tend to see the energy transition as a war, as a battle between the good working folk of Farmington against outsider, Tesla-driving liberal environmentalists, and to see true economic diversification as a weapon wielded by the left.
In fact the transition is driven by a combination of factors, environmental regulations only one of them, and the push to diversify the economy is a response to the decline of the fossil fuel industries more than a cause. Republican politicians from the Farmington area tried to kill the Energy Transition Act, even though it was a response to the coal plant closure, not the impetus. Nate Duckett, the Farmington mayor, also falsely blamed the Act for nixing the effort to keep the coal plant running.
These petro-ideologues then threw up obstacles in the way of energy transition progress. The Farmington municipal utility, for example, spent nearly four years and more than $2 million in support of an upstart energy company’s failed bid to keep San Juan Generating Station running by installing technically and economically dubious equipment to capture the carbon and market it to oil fields to stimulate aging wells, thereby distracting from efforts to plan for the future. The same utility discouraged residents’ adoption of rooftop solar by tacking extra fees onto solar panels.
Thing is, the wheels of progress were set in motion a long time ago and they’re gaining momentum, despite efforts to slow it down. The state has distributed hundreds of checks to displaced workers. The Indian Affairs Department disbursed $1.8 million in Energy Transition Act funds to local projects, including the Shiprock Traditional Farmers Co-op, Native Renewables, a Diné food sovereignty project, and a sustainable farming initiative. And just this week, the energy transition committee selected four projects, including a couple involving hydrogen fuel-production along with a pumped hydropower energy storage facility and coal-ash recycling, to receive $6 million.
More significantly, perhaps, the power plant has been shuttered for over a year, and the economy has not collapsed, as many predicted it would. In fact, it seems to be chugging along just fine. Just take a look at this data from the New Mexico Economic Development Department. It shows San Juan County’s taxable gross receipts staying about level year-over-year during the last quarter of fiscal 2023. Nothing remarkable there, except that the mining and oil and gas extraction sector saw a 54% decline during that same period. It was offset by huge jumps in construction, educational services, manufacturing, and even utilities.
The drop for mining and drilling was so big that it demoted the sector from the county’s second largest, receipt-wise, to number seven.
The job numbers are looking up across the board, too, with a 5.2% year-over-year (for Q3) jump in average employment and a 9.6% increase for weekly wages. In this case, mining and drilling posted a 10.8% increase in job numbers, despite the coal mine shutdown. That’s probably because natural gas prices have been high, sparking more drilling — and therefore more jobs on the rigs — in the methane-rich San Juan Basin.
The jobs chart does reveal one of the obstacles a true and comprehensive energy transition must overcome: mining and drilling pay better than just about anything else in the region. The extractive sector’s average weekly wage is $2,037, or $106,000/year. Compare that to educational services ($916/week), health care ($1,106/week), or arts, entertainment, and recreation ($673/week). It’s no wonder some folks are resisting the outdoor recreation push. “Energy is the key,” Farmington Mayer Nate Duckett said on his Mayor’s Table video podcast late last year. “When we’re talking about retraining a workforce: What are you going to retrain them to do that allows them to make the kind of money they’re making right now in the coal mine? It doesn’t exist.”
Well, those jobs do exist, just maybe not in Farmington — at least not yet. It’s another challenge of the larger clean energy transition: The new clean energy jobs created by Inflation Reduction Act and Infrastructure & Jobs Act incentives and grants are often located far away from where the fossil fuel jobs are vanishing.
Maybe Farmington will buck that trend. The construction phase of the San Juan Solar plant will create dozens of well-paying jobs and two other large-scale installations are in the permitting phase. At least one local oil and gas drilling company has largely switched over to plugging and reclaiming old wells, and a half-dozen methane emission mitigation firms have sprouted in the Farmington area — proof that the energy extraction infrastructure can also be used to give back to and heal the land, while building a new economy.
Has the energy transition finally come to Farmington?
Excellent news about the Farmington energy transition, excellently written. Thank you, Jonathan!
In addition to The Land Desk, I also subscribe to the Wall Street Journal. There have been more and more stories on the majors like Shell, Exxon-Mobil, BP and Chevron investing in renewables. A recent WSJ story on the Exxon-Mobil CEO made the point that we will still be dependent on petroleum based products for the next 100 years. How many of you out there invested in jujoba beans as a substitute for plastic? Henry Ford with all of his resources couldn't make soy beans work to replace bakealite plastic knobs. The sooner environmentalists acknowledge the fact that oil will be part of our life in the long term future, the sooner we will see co-operation on projects that benefit everyone. Full disclosure, I paid for my Land Desk sub with Exxon-Mobil dividends!