HM 56

                                1  HOUSE MEMORIAL 56
                                2      57TH LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2026
                                3  INTRODUCED BY
                                4  Raymundo Lara
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                                10  A MEMORIAL
                                11   REQUESTING THE OIL CONSERVATION DIVISION OF THE ENERGY,
                                12   MINERALS AND NATURAL RESOURCES DEPARTMENT TO STUDY POTENTIAL
                                13   OPTIONS FOR TRANSFERRING OWNERSHIP OF ORPHANED WELLS TO THIRD
                                14   PARTIES INTERESTED IN DEVELOPMENT FOR ENERGY STORAGE AND
                                15   HYDROCARBON RECOVERY PROJECTS.
                                16
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                                17        WHEREAS, an orphaned well is an oil or gas well that is no
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                                18   longer in active production and for which the owner or operator
                                19   is unknown, insolvent or otherwise unable to pay for the proper
                                20   plugging and abandonment; and
                                21        WHEREAS, orphaned wells pose serious environmental and
                                22   public health hazards due to leaking methane, toxins, volatile
                                23   organic compounds and brine into the surrounding soil, air and
                                24   water, which can degrade ecosystems, contribute to increased
                                25   risks of cancer and contribute to worsening air quality
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                                1    conditions; and
                                2  WHEREAS, there are estimated to be at least one thousand
                                3    seven hundred orphaned wells in the state, with another three
                                4    thousand four hundred inactive or very low-producing wells that
                                5    could potentially become orphaned; and
                                6  WHEREAS, the legislative finance committee has estimated
                                7    the state's liability for properly cleaning up and plugging
                                8    these wells at anywhere between seven hundred million dollars
                                9    ($700,000,000) and one billion six hundred million dollars
                                10   ($1,600,000,000); and
                                11        WHEREAS, according to records from the oil conservation
                                12   division of the energy, minerals and natural resources
                                13   department, while the maximum amount of financial assurance has
                                14   been raised in recent years, only one operator in the state
                                15   currently has more per well financial assurance than the
                                16   current average cost to plug a well, with a median of only
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                                17   seven thousand dollars ($7,000) per well coverage for an
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                                18   individual operator; and
                                19        WHEREAS, the oil and gas reclamation fund, which receives
                                20   a portion of taxes from oil and gas operators, saw its highest
                                21   balance ever at the beginning of 2025 at sixty-six million
                                22   dollars ($66,000,000) available for plugging activities due to
                                23   the state receiving federal grants to conduct plugging
                                24   activities, and the state is eligible for another one hundred
                                25   eleven million dollars ($111,000,000) in federal grants; and
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                                1  WHEREAS, even taken all together, with the reclamation
                                2    fund, federal grants and financial assurance from operators,
                                3    the state remains hundreds of millions of dollars short on
                                4    coverage for existing and expected liability resulting from
                                5    orphaned wells within the state; and
                                6  WHEREAS, in 2025, the legislature passed the Well
                                7    Repurposing Act, which permits the energy, minerals and natural
                                8    resources department to convert oil and gas wells for
                                9    geothermal energy and carbon storage purposes, indicating a
                                10   strong legislative interest in finding new and creative
                                11   solutions to address the state's orphaned well problem; and
                                12        WHEREAS, other states have found creative and lucrative
                                13   solutions to help alleviate the financial burden imposed by
                                14   orphaned well liability by partnering with third-party
                                15   companies to adopt orphaned wells and install filtration
                                16   technology and energy recovery units, neutralizing hydrogen
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                                17   sulfide, recovering valuable hydrocarbons and treating produced
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                                18   water in the process that can then be reused for other
                                19   purposes; and
                                20        WHEREAS, a market-friendly, environmentally conscious
                                21   approach to solving the problem of orphaned wells within the
                                22   state could turn a financial liability into a profitable
                                23   venture that creates jobs and generates interest from private
                                24   equity investors;
                                25        NOW, THEREFORE, BE IT RESOLVED BY THE HOUSE OF
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                                1    REPRESENTATIVES OF THE STATE OF NEW MEXICO that the oil
                                2    conservation division of the energy, minerals and natural
                                3    resources department be requested to conduct a study, in
                                4    consultation with third-party companies interested in adopting
                                5    orphaned wells for energy storage and hydrocarbon recovery
                                6    projects, to explore the potential for creative solutions to
                                7    alleviate state financial liability resulting from the
                                8    thousands of currently identified and potential future orphaned
                                9    wells within the state; and
                                10        BE IT FURTHER RESOLVED that the oil conservation division
                                11   of the energy, minerals and natural resources department be
                                12   requested to include in the study an estimate of initial
                                13   investments needed to support third-party adoption of orphaned
                                14   wells for various purposes and potential future profits from
                                15   those ventures, compared to the amount that would be spent by
                                16   the state on plugging operations over the next decade or more,
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                                17   as well as any statutory or regulatory barriers that would need
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                                18   to be addressed to allow for transfer of ownership of an
                                19   orphaned well to a third party, including potential permitting
                                20   and financial assurance requirement recommendations; and
                                21        BE IT FURTHER RESOLVED that the oil conservation division
                                22   of the energy, minerals and natural resources department be
                                23   requested to present the findings and recommendations from this
                                24   study to the relevant interim legislative committees on or
                                25   before November 1, 2026; and
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                                1  BE IT FURTHER RESOLVED that copies of this memorial be
                                2    transmitted to the secretary of energy, minerals and natural
                                3    resources and the state petroleum engineer.
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