New Mexico Energy Secretary Focuses on Innovative Progress

Special Focus: New Mexico

By Heather Seftel-Kirk

Dave MartinNew Mexico is developing key strategies and innovative collaborations to maintain its position as a top energy producing state at a time when changing energy sources and lagging infrastructure are creating new challenges.

At the request of Governor Susana Martinez, one of the biggest steps will be the first formal energy plan the state has seen since 1990. Driven by Secretary F. David Martin of the New Mexico Dept. of Energy, Minerals and Natural Resources, the plan is expected to be delivered in early 2015.

“We’re calling it an energy policy and action plan because we want it to be more than a paper record,” says Martin.

The department just completed a half dozen listening sessions in different communities around New Mexico. The sessions focused on energy issues in specific geographic areas and have revealed several common challenges: infrastructure, workforce training, and water.

One of the biggest challenges impacting development of mining, oil, and gas is infrastructure. Martin says infrastructure typically lags behind production. “We get to a certain production level and then realize the infrastructure gap. It takes time to then acquire the services to meet the needs, and sometimes there are staffing issues and a lack of people to approve permits, which creates delays in construction that impacts the whole cycle.”

Natural gas historically has been extracted from formations in the San Juan Basin in the Four Corners Region. With a drop in gas prices, there is a renewed interest in pulling oil from the San Juan Basin. However, a lack of rail infrastructure and a need for road improvements presents future challenges for getting oil out of the Four Corners.

Most of the current oil production occurs in the Permian Basin in the southeast part of the state. The boom in oil development has led to an immediate need for major road improvements. Wear and tear from hundreds of tanker trucks and other vehicles in the Permian Basin has taken its toll. Work is underway to improve roadways, but the challenge is to keep up with the increasing traffic. Likewise, the flood of oilfield workers into the region has maxed out hotels and restaurants. Overnight weekday rates for hotels in Carlsbad (population 27,000) range between $350 – $450 per night.

Staffing issues and workforce training have also created some unique partnerships as the state seeks solutions.

“There is a lot of land in the western states that is either Native American land, where the Federal Indian Minerals Office negotiates and manages oil and gas leases, or land that falls under the Bureau of Land Management,” says Martin. “There is a shortage of staff to process the leases meaning land isn’t being used and lease holders aren’t receiving bonuses and royalties; and money isn’t going back into the economy.”

To help alleviate the backlog, Governor Martinez authorized funds for a new partnership between the state, the federal government, and San Juan College School of Energy. Students are assigned task orders to help move the land leases through the permitting process. Not only does the work get done, but students receive valuable work experience. The state hopes these experiences will encourage student graduates to pursue full-time public service jobs in state government.

“The public sector doesn’t pay what the private sector does. We also have staffing issues in the Permian Basin area in southeast New Mexico because of the oil boom there. We’re looking at the possibility of a consortium involving additional universities and have another professional service agreement with a local college. These programs benefit students but also provide us with skilled, affordable workers.”

Martin says the state is also looking at new courses at post-secondary schools to meet the workforce training demands, including regulatory engineering and other curricula intended to get people into the field. “San Juan College already has a training program for oilfield workers. We’re looking at a certification program that would be a rigorous course to develop experience both through classroom and field work.” The program, which he says could be offered to workers from other states, would be designed to supply industry with workers who are fully certified and capable, eliminating the issue that often comes with boom cycles and the resulting influx of inexperienced workers.

“Water is a big issue in New Mexico that was discussed at most of the listening sessions as well,” he said. “Fresh water is frequently used in both oil and gas production. There is a desire to move to reuse and recycle oilfield produced water instead.” Rather than reinvent the wheel, the state is examining programs currently in existence out of state. “We’re looking at the Texas Water Recycling Association closely to see what they are doing and how we might adapt some of their technology,” Martin said.

Rather than waiting until the final policy document has been issued, areas identified as a concern are getting immediate attention. At the beginning of her administration, Governor Martinez created a state drought task force. Secretary Martin heads sub-committees from that task force that are examining potential in areas including brackish water, water aquifers, and produced water reuse. The goal of the collaborative groups is to examine water issues from a science and technology angle.

New technology continues to evolve in the oil and gas industry. “With our last listening session in Albuquerque, we focused specifically on advanced technology,” Martin said. “New developments and technical breakthroughs will drive the oil boom, which will help overall economic growth and development in the state. These advances are a major point of consideration in our upcoming state energy plan.”

Martin added that public outreach and education will also be a formal component of the new energy policy. This commitment is already evident, as the public listening sessions have identified concerns and opportunities for early action. The public outreach has also identified immediate economic development potential for New Mexico. The state is also looking at strategic alliances between counties and municipalities to help educate local decision makers.

While New Mexico is blessed with access to oil and gas, wind and solar potential is becoming more attractive. New Mexico also has potential for geothermal energy expansion. The state’s renewable portfolio standard (RPS), signed into law in 2004, requires that by 2020 investor-owned utilities will be required to generate 20 percent of their electricity from renewable energy resources, and rural electric cooperatives will be required to meet a 10 percent target.

“Diversity a key component of developing energy sources,” Martin said. “We’ll certainly see some increase in solar and there is interest in wind as well. Additional transmission capability out of New Mexico and energy storage would help facilitate wind and solar development.”

Martin says with a relatively low population and large land area (the state ranks 36 in population with just over 2 million people but fifth in size with more than 121,000 sq. miles of land area) the market within the state is not huge but the ability to transmit to the west (California and Arizona) or to the east (Texas and Oklahoma) would open additional potential. He said private sector efforts are seeking funding to increase out-of-state transmission capabilities.

Coal, which once provided 40 percent of the state’s energy and most recently dropped to 31 percent, will be reduced even further with the anticipated approval to close two of the four coal-fired units at the San Juan Generating Station. Replacing that lost generation will come from a combination of sources, including natural gas.

In June, the EPA proposed a Clean Action Plan which included a plan to cut carbon pollution from existing power plants. Under section 111 (d), the EPA will establish guidelines which the state must then adapt programs to meet. Martin says the impact of the section is not yet known but could impact the coal industry further. “We’re investigating the feasibility of alternative low-emissions sources to baseload power, like small modular nuclear reactors,” Martin said.

In summary, New Mexico ranks high on both energy production and energy potential. As Cabinet Secretary, Martin’s style is to address challenges head-on and seek innovative ways to meet changing demands. With an upcoming energy policy and action plan, the future holds great possibilities for New Mexico.

 


Resources Quarterly - Fall 2014

This article originally appears in the Fall 2014 edition of Resources Quarterly.

Click here or on the cover to view the entire issue.