SANTA FE, N.M. (AP) - Land managers in New Mexico are considering an emergency rule allowing oil and gas companies that lease state trust land to temporarily stop producing without penalty for at least 30 days, with a possible extension of up to 120 days.
State Land Commissioner Stephanie Garcia Richard on Friday pointed to the effects of the global coronavirus pandemic as well as the price war between Russia and Saudi Arabia that has threatened America’s yearslong fracking boom.
“Here in New Mexico, the ripples of this situation hits hard, not only when thinking about the state budget, but within communities where people rely on the boom for jobs to support their families,” Garcia Richard said.
She said it’s in the best interest of public schools, hospitals and other state trust land beneficiaries as well as employees in the industry if her agency allows developers to apply for temporary well shut-ins until “we can better predict the future of the Permian Basin.”
Ramped-up oil and gas production from Saudi Arabia and Russia and the economic slump from the coronavirus outbreak have created a global oil glut, dropping oil prices well below $30 a barrel. That has forced some U.S. companies to scale back production because pipelines and storage facilities are at holding capacity.
The State Land Office will be taking public comments on the proposed shut-in rule until April 17, when a tele-hearing is scheduled.
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