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Oil and gas leasing, permitting moratoriums could hurt many businesses

e-frac, New Mexico, moratorium, oil

By: Hannah Grover – The Farmington Daily Times – The San Juan Basin has gone through booms and busts before, but Jamie Church, the president and CEO of the Farmington Chamber of Commerce, said a federal moratorium on new oil and gas leases and on permitting would be different than any bust the region has seen in the past.

Church sent a letter to Gov. Michelle Lujan Grisham on behalf of the chamber asking the governor to speak up against a moratorium on new oil and gas leases on federal lands that was instituted by President Joe Biden.

Church said there were some operations planned for the basin that needed to go through permitting, but a 60-day moratorium on permitting led them to pursue options in Texas instead. Texas has significantly less federal land, which is the kind impacted by the moratoriums.

Church said past busts haven’t been accompanied by the same political movement away from fossil fuels. As an example, she highlighted the Energy Transition Act that was passed in 2019 to increase renewable portfolio standards and provide a mechanism to refinance past investments into coal-fired power plants as utilities exit their ownership in those plants.

“The whole outlook on the national level is changing,” Church said.

Proponents of these actions highlight the changing climate, which is leading to increased drought and wildfires as well as extreme weather. They say these actions are necessary to reduce emissions and reduce some of the impacts of climate change. The moratoriums will also give the federal government an opportunity to review existing leasing and permitting processes.

Church said the actions could destroy Farmington’s economy by taking away one of the major economic sectors when there is nothing that can really replace it.

The Farmington Chamber of Commerce is part of the efforts to diversify the economy, including promoting tourism and outdoor recreation and trying to attract retirees to move to the area.

“These things take time and basically 2020 was a complete pause on all of those efforts,” she said.

These efforts were gaining momentum in 2019. She highlighted the opening of Bisti Bay Water Park and the types of shows that were being put on at the Farmington Civic Center. Then, in March 2020, the coronavirus reached New Mexico and everything came to a halt.

“It’s going to take time now to build that momentum again,” Church said.

She said she isn’t saying that any one of those efforts is going to replace the oil and gas industry in the San Juan Basin.

“We still need oil and gas. We know that that is a very important piece of the economy,” she said. “We need the outdoor recreation industry. We need film. We need retirement. All those things will help us to diversify our economy, but to pull one large piece of that away before all these other things have had a chance to really build just doesn’t help our chamber members, our businesses, our local economy, our community.”

In the letter, she highlights that San Juan County has seen a 10% reduction in population in the last decade and that this ban on new leases as well as a 60-day moratorium on permitting comes as the region is preparing for the economic impacts that will occur if the San Juan Generating Station closes in 2022. At the same time, San Juan County has been hit hard by the COVID-19 pandemic and businesses are still trying to recover from the business restrictions implemented to reduce the spread of the virus.

Church said not issuing new leases on federal lands and the moratorium on permitting will have ripple effects in the local economy, impacting restaurants, hotels, retail, and other sectors.

“We know that our businesses depend on oil and gas operations,” she said.

Additionally, Church highlighted that a large portion of New Mexico’s revenues come from oil and gas. She said the chamber would like to hear from the governor about how the state could make up for a shortfall resulting from the moratorium.

Church expressed support for the solar projects that are in the works for San Juan County and said Photosol US is one of the chamber members. Photosol has three solar projects at different stages of development in San Juan County. However, she said the solar arrays will not generate many long-term jobs.

Church said the chamber board approved the letter and she sent the letter to the governor so that the chamber can have a voice in decisions that are being made.

“Farmington Chamber of Commerce is doing its best to advocate for the businesses in our community every single day,” she said.

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