New Mexico’s economic and energy extraction quagmire

‘We’re on a death train, economically.’


This article was originally published on The River of Lost Souls and is reproduced here with permission. 

The meeting room was packed with people, many of them wearing the “I Stand With Oil And Gas” t-shirts that were being handed out in the lobby, and the collective heat from all those bodies was outdoing the otherwise chilly air-conditioning. I squeezed through the crowd in the doorway for a breather and, out in the hallway, fell into conversation with the owner of a small, local natural gas production company.

At a meeting put on by New Mexico’s environment department and oil and gas conservation division, the New Mexico Oil and Gas Association was on hand to give out free t-shirts and snacks.
“We’re on a death train, economically,” he said, as he rubbed his shorn head with his hand. “I don’t know the answer. I’ve been here 30 years and I don’t know the answer.” He wasn’t alone.

The July 29 meeting at San Juan College in Farmington, New Mexico, was put on by the state environment department and oil and gas conservation division in order to give information and get input on the state’s proposed regulations on methane and associated emissions from oil and natural gas operations. But it also served as a sort of economic anxiety therapy session for a fossil-fuel-driven community in decline.

THE FIRST COMMERCIAL WELL in the San Juan Basin — a hydrocarbon hot spot in northwestern New Mexico and southwestern Colorado — was drilled on the edge of Aztec in 1921, its methane used to heat the little town’s homes. When El Paso Natural Gas built a pipeline from the San Juan Basin to California thirty years later, Farmington drifted away from the agricultural prefix in its monicker, and the multitude of orchards spreading across the valleys of San Juan County were soon replaced by pumpjacks and trailer parks and compressor stations and the other detritus that the gaspatch seems to exude.

In the 1960s, as part of what law professor and scholar Charles Wilkinson calls “The Big Buildup,” the coal-fired Four Corners Power Plant and its associated mine were constructed on a sere mesa on the Navajo Nation west of Farmington. A decade later the San Juan Generating Station went up just eight miles away, firmly establishing Farmington and its neighbors as a fossil fuel powerhouse. The coal mines and plants provided the community with a solid and steady economic foundation, and the more volatile oil and gas industries pumped in prosperity on top.

The once-dusty little farming towns metastasized into sprawling, concrete-covered suburban-style communities, complete with big box stores, chain restaurants, payday loan joints, and liquor stores, centered around the gaspatch and coal plants. The county’s population soared. Farmington had a relatively strong middle class and employment opportunities in the gas patch, the mines, the power plants, and associated industries provided upward mobility of a sort that’s rapidly disappearing in the United States. The trifecta of fossil fuels allowed the community to retain some stability during booms, and helped it weather the busts. During the late-eighties oil crash, San Juan Basin drillers were kept on the job going after coalbed methane, and no matter what happened with oil and gas, the coal plants kept churning away, sending more and more juice to air conditioners in Phoenix, Tucson, Albuquerque, and Los Angeles. It seemed as if the good times would go on forever.

But in 2008, the shit hit the fan, economically, for the San Juan Basin, and it had very little to do with the global financial meltdown, the subprime mortgage disaster, or environmental regulations. It was — and still is — mostly due to cheap natural gas. The so-called shale revolution flooded the market with methane, driving prices down, wiping out profit margins and killing incentives to fork out millions to drill new wells. Since newly tapped basins were closer to the major markets, the San Juan Basin was at a further disadvantage. The drill rigs were packed up and sent to oil-rich basins in North Dakota and Texas, and Farmington faltered.

Still, the coal plants were going strong — until they weren’t. That low-priced natural gas made its way into the electrical grid, and suddenly coal was not the cheapest power source out there. In 2017 Public Service Company of New Mexico said it would shut down the San Juan plant in 2021. That “death train” that the gas-man mentioned to me — he said he’s about to plug a bunch of marginally producing wells — is now barreling down the tracks toward a yawning precipice, and a lot of folks in the area are wondering whether, and how, their towns will survive.

Farmington is one of the only metro areas in the West with a shrinking population, not to mention decreasing home values — yes, you read that right, Farmington is a buyer’s market. The unemployment rate is hovering around 5% (the national rate is 3.7%). A shrinking labor force has helped keep the rate lower than the 10% reached in 2010 and 2016. The jobs that do remain are, increasingly, lower-wage service jobs that simply cannot replace the ones lost in the gaspatch, or the ones that will disappear at the power plant and mine. “The people in our community are genuinely fearful of what the future holds,” said Jason Sandel, Executive Vice President of Aztec Well, one of the biggest employers in the area.

A few years ago, before the coal plant announcement but during a time when oil prices were declining, I discussed the situation with Sandel. He said that when the oil market crashed in 1986 due to global market forces, locals lashed out due to feelings of impotence and helplessness. He recalls “a rise of conservative attitudes and nationalism as a result of feeling out of control.”

The current quagmire is breeding the same sort of resentment. Prior to the methane meeting one longtime local and a supporter of strong methane rules warned me that I might see some folks touting firearms, due to the “guns to gas crossover that ties the Second Amendment sanctuary/white power movement to resistance against oil and gas/mining regulations.” I didn’t see any guns, but that sort of tension — the economic anxiety that so often manifests itself as racism, bitterness, and anti-government sentiment — was palpable. When a photograph of New Mexico Governor Michelle Lujan Grisham, a Democrat, appeared in the state’s presentation, a raucous boo rang out from the crowd. I saw one older guy tell another in a these-colors-don’t-run American flag t-shirt that the methane rules were “just like Obamacare.” The two snickered when one of the state officials mentioned climate change. Burly state troopers, their heads shorn, roamed through the crowd, trying to keep the peace.

A pumpjack in Eddy County, New Mexico.

METHANE IS THE MAIN COMPONENT of natural gas and is also a potent greenhouse gas, with 86 times the warming potential of carbon dioxide over the short term. When drillers are chasing oil rather than natural gas, they vent and flare massive quantities of methane — and the associated volatile organic compounds, which can harm human health — into the air. Meanwhile, the vast web of natural gas extraction, processing, and delivery infrastructure oozes it as well. Several years ago NASA satellites spotted a concentrated plume of methane over the San Juan Basin, which became known as the Four Corners Methane Hotspot. The Obama administration formulated methane emission rules, but the Trump administration eviscerated them before they took effect. That’s left the states to take up the slack.

Pretty much everyone who spoke out against the new rules, or in favor of keeping them as lenient as possible, did so from the assumption that they would increase costs, and thus kill jobs. An engineer with a local oil and gas producer said, “We agree with the concept of a balanced, sensible rule, but we don’t agree with government overreach that will kill industry … Why kill the golden goose?” It is precisely the same language used by mining companies a hundred miles upstream from Farmington in the early 1900s, when downstreamers demanded that the mines contain their toxic, water-sullying tailings. 

Delora Hesuse, wearing a t-shirt that said, “Navajo Allottees Stand for Oil and Gas: Hear our voices, our land, our choice,” stood up and demanded that allottees — the heirs to land and mineral rights “allotted” to tribal members in the late 1800s and early 1900s — be heard and their wishes be heeded. Hesuse has long advocated for allottees and the oil and gas industry. In theory, the methane rule should be good for allottees because any additional methane that industry captures and sells rather than vents or leaks will result in higher royalty payments to the allottees. As La Plata County Commissioner Gwen Lachelt put it: “Methane that doesn’t leak is money in the bank.”

It is, however, complicated: If the huge oil operations in the Permian Basin are required to ship the natural gas to market, then it will increase supply, which will further decrease prices and therefore royalties.

And yet one thing remains clear: The “golden goose” and the communities that not only rely on it but have also fashioned their very identities around it are ailing regardless of regulations or the lack thereof. Even the Trump administration’s regulatory rollbacks and industry handouts have done nothing to slow the downward slide.

Others were somewhat less rational. One woman questioned whether methane emissions were actually harmful before bringing up chemtrails: “How can they tell us to clean up methane when the government is dumping all this stuff on us.” And a state senator said that targeting the oil and gas industry because it emitted the largest share of methane in the state would only cause the share from other industries to increase, thus offsetting the gains. It seemed as if heads would explode trying to work that one out.

But even Farmington and surrounding San Juan County are not monolithic, and several locals also spoke out in favor of strong rules. Aztec Mayor Victor Snover said, “It sounds to me like we’re just trying to fix some leaks. We have the ability and technology to do it. And shame on us if we don’t.” One woman, whose name I couldn’t hear, said: “It isn’t simply jobs. It isn’t simply the loss of revenue to business. It is the survival of our species. We have to move now.” Snorts of derision murmured through the audience. 

Finally, near the end of the session, Duane “Chili” Yazzie took the microphone. Yazzie is a longtime activist and is the Shiprock Chapter President. But at the meeting he spoke as a “grandpa, private citizen, and earth defender.” He asked a simple but weighty question: “What is our priority as parents and grandparents? Is it our children’s and grandchildren’s futures? Or is it the bottom line?”

Jonathan Thompson is a contributing editor at High Country News. He is the author of River of Lost Souls: The Science, Politics and Greed Behind the Gold King Mine Disaster. Email him at [email protected] or submit a letter to the editor

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