New Mexico Oil Producers Brace for Tighter Regulation as Output Jumps

Crude oil output has more than doubled in New Mexico over the last 4 years, making it the No. 3 producer among US states, but a January change in state leadership to Democratic control has industry executives fearing tougher regulations are coming.

Incoming New Mexico governor Michelle Lujan Grisham and state land commissioner Stephanie Garcia Richard plan to limit new leasing on state lands where drillers planned to tap freshwater aquifers. The incoming administration also has pledged to crack down on methane, a potent greenhouse gas that is often flared during oil production or can leak into the atmosphere from faulty equipment.

“They could make it much harder for operators to make a good profit in New Mexico,” said Phil Buch, a Texas oil executive with personal energy holdings in New Mexico. “There’s definitely an added risk there.”

Advancements in drilling technology over the last decade or so have boosted US oil production dramatically. The country’s crude output surged to a record 11.5 million B/D as of September.

However, opposition to drilling has also grown as activists around the world have pressured governments to limit emissions of carbon dioxide and other greenhouse gases blamed for global warming. In North America, there have been growing protests against pipeline construction and measures to curb fossil fuels have made their way to the ballot box in many western states.

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