The New Mexico Oil Conservation Commission has finalized new rules that dramatically increase financial assurance requirements for certain oil and gas wells.
The new rules require $150,000 in financial assurance for wells the state considers high risk, including aging, low-producing, or inactive wells. The previous minimum was $10,000.
That is a 1,400% increase.
Supporters say the rule is intended to ensure wells are properly plugged and cleaned up. The concern is that this new mandate creates a high fixed cost that will fall hardest on small and independent producers.
For smaller companies, a jump from $10,000 to $150,000 per well can tie up capital, limit investment, make transfers more difficult, and force the premature plugging of wells that may still have productive life left.