Organization Press Release – From New Energy Economy

SANTA FE, NM – Ahead of tomorrow’s public hearing on a proposed rule to update bonding requirements for oil and gas development on state trust land at the New Mexico State Land Office, New Energy Economy today released a major new report warning that New Mexico taxpayers will face billions of dollars in oil and gas cleanup liabilities unless state regulators act now to strengthen bonding and financial assurance requirements for oil and gas operators. 

Information Regarding Attending the New Mexico State Land Office Public Hearing on Wednesday and Thursday May 27, and 28, 2026 – For Either Attendance In Person or Online Information Can Be Found At the End of This Press Release.

The report, “Closing the Playbook: How to Stop Oil & Gas Companies from Evading Their Obligations to New Mexicans Before It’s Too Late,” examines the financial, environmental, and public health risks associated with orphaned and low-producing oil and gas wells in New Mexico and documents how oil and gas companies have systematically used a tried and true ‘playbook’ to shift cleanup liabilities onto taxpayers by transferring aging, low-producing wells to financially weak operators that ultimately declare bankruptcy, leaving wells unplugged and contaminated sites unreclaimed.  

As we report, New Mexico currently has more than 75,000 active oil and gas wells, including nearly 39,000 low-producing “stripper wells” and 3,275 inactive wells that may soon become orphaned liabilities.  

The state’s current financial assurance system is dangerously inadequate to address the looming crisis. Tomorrow’s hearing comes at a critical moment. As we write in our report: 

“On top of the already inactive and abandoned wells, tens of thousands of New Mexico’s wells that are technically productive at the moment are producing in such low quantities that they may soon operate at a loss, and are likely to be abandoned in the near future. A predicted decline in production across the Permian Basin will act as a catalyst in expediting this process.” (pg. 6) 

In 2025 the Legislative Finance Committee reported that oil and gas operators have posted only $117 million in bonds statewide, despite various independent estimates placing New Mexico’s total oil and gas cleanup liability between $8.1 billion and $22 billion. If oil and gas operators are allowed to continue their playbook, that could translate to more than $6000 per NM taxpayer. 

Under current state rules, companies can pay as little as $10,000 for a single well and secure blanket bonds covering unlimited numbers of wells for as little as $250,000. These requirements lag behind federal standards and fail to reflect the actual cost of plugging and remediation, especially for horizontal fracked wells that are significantly more complicated to decommission. 

The release comes as the New Mexico State Land Office prepares to consider updates to financial assurance rules intended to ensure operators can pay for well plugging, remediation, and long-term environmental obligations. The proposed rule is particularly urgent as federal orphan well funding distributed under prior federal infrastructure legislation has effectively stalled, increasing pressure on states to address cleanup liabilities directly. 

Without stronger rules, New Mexico communities face escalating environmental and public health risks from leaking orphan wells, including methane emissions, groundwater contamination, benzene exposure, and declining property values.  

Mariel Nanasi, Executive Director of New Energy Economy, stated, “New Mexicans should not be forced to subsidize corporate pollution after companies have extracted billions in profits. Financial assurance reform is about basic accountability: if companies profit from drilling, they must also pay to clean up the damage.”

The proposed financial assurance rule is an important first step but does not go far enough. We call for comprehensive reforms, including: 

• Well-specific bonding requirements tied to actual cleanup costs; 
• Increased oversight of well transfers to financially unstable operators; 
• Joint and several liability for all companies involved in ownership chains; 
• Permanent remediation obligations and post-closure monitoring; 
• Enforcement mechanisms to ensure inactive wells are promptly plugged and reclaimed. 
  
  

New Mexico’s current regulatory structure incentivizes delay and underfunding of cleanup obligations while allowing companies to continue distributing profits to investors rather than reserving funds for reclamation. 

New Mexico State Land Office Public Hearing Wednesday and Thursday May 27, and 28, 2026 – Attendance In Person and Online Information:

Draft Oil and Gas Bonding Rule

Background: The New Mexico State Land Office (NMSLO) has begun formal rulemaking on a proposed rule to update bonding requirements for oil and gas development on state trust lands. The draft rule intends to provide more adequate financial assurances to mitigate the risk of abandoned oil and gas wells and any damage to state trust lands that may occur during oil and gas operations.

On October 23, 2025, the NMSLO released a pre-publication discussion draft to informally receive public input regarding its oil and gas bonding rule. The NMSLO held stakeholder meetings in Santa Fe on November 6 and 12, 2025, in Hobbs on November 14, 2025, and in Farmington on November 17, 2025. In developing the proposed rule, the NMSLO considered the comments received on the pre-publication discussion draft during the stakeholder group meetings.

The NMSLO has now started the formal rulemaking process to hear from the public on the draft rule. The draft rule is available for download below and was posted to the New Mexico Sunshine Portal and published in the New Mexico Register on April 7, 2026, in accordance with state law.

Public Hearing

The NMSLO will host a public hearing on the proposed bonding rule:

May 27-28, 2026 at 9:00 a.m. (and continuing thereafter as necessary)
New Mexico State Land Office, Morgan Hall, Room 101
310 Old Santa Fe Trail, Santa Fe, NM 87501

Virtual Option

May 27: Register to attend via Zoom

May 28: Register to attend via Zoom

Individuals with disabilities who require this information in an alternative format or need any form of auxiliary aid (such as a sign language interpreter) to attend or participate in any aspect of the proposed rulemaking process or the public rule hearing are asked to contact Selena Romero at least 10 days prior to the hearing by phone at (505) 827-5790 or by email at sromero@nmslo.gov.

Public Comments

Written public comments may be emailed to info@nmslo.gov by 11:59 p.m. MT on May 26, 2026.