Due to an executive order signed by New Mexico Gov. Michelle Lujan Grisham back in January of 2019, a conglomerate of the New Mexico Energy, Mineral, and Natural Resources Department (EMNRD), the New Mexico Environment Department (NMED), climate activists, industry leaders, and academics have come together as the Methane Advisory Panel (MAP) to discuss how to reduce and regulate methane emissions by developing new state rules and regulations.
As the rules seem to be on the way to be completed by the end of 2020, various approaches have been suggested, including increased leak detection and monitoring and the development of more pipeline and infrastructure to decrease the need for natural gas venting and flaring.
In the most recent July 20, 2020 MAP draft technical report, several rules have been introduced to public comment and review, including a rule setting requirements on the amount of natural gas being captured and sent to flare.
This proposed rule states that starting on January 1, 2022, operators would be required to begin reducing their volumes of vented and flared gas to be able to capture 98% of the gas produced from their wells by December 31, 2026. Along with that, each calendar year between the January 2022 and December 2026 dates, the operator would have to incrementally increase the percentage of natural gas captured based on a formula that takes a 2021 baseline capture rate and divides it by five. The following table from the draft rule shows examples of the formula with several baseline capture rates.
In terms of keeping track of how operators are complying, operators have 45 days after January 1, 2022 to submit a report showing compliance of the gas capture requirements. For new drills, after May 31, 2021, operators would also have to file a natural gas management plan along with each of their Application for Permits to Drill (APD’s).
As the NMED releases updated proposals or rule updates, we will come back with updates and send a white paper out to our clients.