A fresh lawsuit filed Monday by a coalition of conservation groups is accusing the state of New Mexico of failing to hold oil and gas operators financially responsible for thousands of abandoned fossil fuel wells across the state.
The Center for Biological Diversity, San Juan Citizens Alliance and Tó Nizhóní Ání allege that the state is now footing the cost – spending tens of millions of dollars to slowly plug wells.
“This lawsuit is putting pressure on the state to take those mandatory enforcement actions to prevent more of these orphaned wells,” said Zachary Pavlik, an attorney with the Center for Biological Diversity in an interview with KUNM.
These so-called “orphan wells” tend to emit harmful methane gas and leak other toxic chemicals into nearby soil and groundwater without being properly sealed off.
Estimates vary, but there are thousands of known orphaned wells in New Mexico.
Pavlik, who is on the team suing the state, said that New Mexico is failing to enforce its own laws meant to keep oil and gas producers accountable.
“It's not the responsibility of the state to clean up after oil and gas companies, and it's not the responsibility of New Mexicans to pay for that cleanup,” Pavlik said. “New Mexicans should not be harmed by the effects of this failure to clean up.”
The Oil and Gas Act explicitly states that operators are to clean up after themselves – including plugging wells and performing any needed land remediation – as a requirement to do business within the state of New Mexico.
And, when that’s not possible, it’s expected that operators pay into a bonding system that, in theory, is supposed to ensure companies can pay for cleanup.
State law caps bonding at $250,000 per operator for active wells, regardless of how many wells an operator may have. While cleanup costs vary, the average cost for state-contracted plugging has risen to $163,000 in recent years per well.
Alternatively, a 2021 analysis of around 20,000 abandoned and decommissioned wells across the United States by the independent, nonprofit research institution Resources from the Future estimated that median well decommissioning costs are about $20,000 for plugging one well.
That figure rises to $76,000 when accounting for surface reclamation.
In other cases, the research group found cleanups could cost upwards of $1 million depending on the geography, age, and depth of a singular well. Their recommendation was to adjust bonding requirements to match these unique characteristics.
Despite the costs, Pavlik said that, instead of going after operators for shirking their responsibilities, the state has been using money from a last-resort reclamation fund to plug up wells – potentially passing the buck to the taxpayer.
“We're seeing the state dip into that [reclamation fund] before it has, for example, forfeited and taken the financial assurance of operators,” Pavlik said.
A levied operator tax and forfeited financial assurances from out-of-compliance operators are the main revenue streams of this fund. Sometimes the state will sue operators to recover costs – but, that has become increasingly rare due to a lack of state personnel resources.
The Oil Conservation Division, an arm of the New Mexico Energy, Minerals, and Natural Resources Department (EMNRD), is widely responsible for managing this fund and collecting bonds.
New Mexico is home to 60,000 wells that will eventually need to be cleaned up – and according to a 2025 Legislative Finance Committee report, decommissioning 1,400 of them could cost the state anywhere from $700 million to $1.6 billion.
As it stands, the state has about $1,000 per well for cleanup and remediation.
The report also outlines that 29% of all private owners are out of compliance with the Oil and Gas Act from “inactive” wells that continue to release methane into the atmosphere.
In response to the suit, EMNRD spokesperson Sidney Hill emailed KUNM the following statement:
“While EMNRD generally does not comment on specific pending litigation, EMNRD can emphasize that the Oil Conservation Division (OCD) takes its duties and responsibilities under the Oil and Gas Act seriously and the OCD team works extraordinarily diligently every day to uphold both the letter and the spirit of the Oil and Gas Act, including pursuing violations of the Oil and Gas Act and forfeiture of financial assurance.”
Since fiscal year 2019, New Mexico has spent more than $50 million to plug abandoned wells.
