HOUSE MEMORIAL 56

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Raymundo Lara

A MEMORIAL

REQUESTING THE OIL CONSERVATION DIVISION OF THE ENERGY, MINERALS AND NATURAL RESOURCES DEPARTMENT TO STUDY POTENTIAL OPTIONS FOR TRANSFERRING OWNERSHIP OF ORPHANED WELLS TO THIRD PARTIES INTERESTED IN DEVELOPMENT FOR ENERGY STORAGE AND HYDROCARBON RECOVERY PROJECTS.

     WHEREAS, an orphaned well is an oil or gas well that is no longer in active production and for which the owner or operator is unknown, insolvent or otherwise unable to pay for the proper plugging and abandonment; and

     WHEREAS, orphaned wells pose serious environmental and public health hazards due to leaking methane, toxins, volatile organic compounds and brine into the surrounding soil, air and water, which can degrade ecosystems, contribute to increased risks of cancer and contribute to worsening air quality conditions; and

     WHEREAS, there are estimated to be at least one thousand seven hundred orphaned wells in the state, with another three thousand four hundred inactive or very low-producing wells that could potentially become orphaned; and

     WHEREAS, the legislative finance committee has estimated the state's liability for properly cleaning up and plugging these wells at anywhere between seven hundred million dollars ($700,000,000) and one billion six hundred million dollars ($1,600,000,000); and

     WHEREAS, according to records from the oil conservation division of the energy, minerals and natural resources department, while the maximum amount of financial assurance has been raised in recent years, only one operator in the state currently has more per well financial assurance than the current average cost to plug a well, with a median of only seven thousand dollars ($7,000) per well coverage for an individual operator; and

     WHEREAS, the oil and gas reclamation fund, which receives a portion of taxes from oil and gas operators, saw its highest balance ever at the beginning of 2025 at sixty-six million dollars ($66,000,000) available for plugging activities due to the state receiving federal grants to conduct plugging activities, and the state is eligible for another one hundred eleven million dollars ($111,000,000) in federal grants; and

     WHEREAS, even taken all together, with the reclamation fund, federal grants and financial assurance from operators, the state remains hundreds of millions of dollars short on coverage for existing and expected liability resulting from orphaned wells within the state; and

     WHEREAS, in 2025, the legislature passed the Well Repurposing Act, which permits the energy, minerals and natural resources department to convert oil and gas wells for geothermal energy and carbon storage purposes, indicating a strong legislative interest in finding new and creative solutions to address the state's orphaned well problem; and

     WHEREAS, other states have found creative and lucrative solutions to help alleviate the financial burden imposed by orphaned well liability by partnering with third-party companies to adopt orphaned wells and install filtration technology and energy recovery units, neutralizing hydrogen sulfide, recovering valuable hydrocarbons and treating produced water in the process that can then be reused for other purposes; and

     WHEREAS, a market-friendly, environmentally conscious approach to solving the problem of orphaned wells within the state could turn a financial liability into a profitable venture that creates jobs and generates interest from private equity investors;

     NOW, THEREFORE, BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES OF THE STATE OF NEW MEXICO that the oil conservation division of the energy, minerals and natural resources department be requested to conduct a study, in consultation with third-party companies interested in adopting orphaned wells for energy storage and hydrocarbon recovery projects, to explore the potential for creative solutions to alleviate state financial liability resulting from the thousands of currently identified and potential future orphaned wells within the state; and

     BE IT FURTHER RESOLVED that the oil conservation division of the energy, minerals and natural resources department be requested to include in the study an estimate of initial investments needed to support third-party adoption of orphaned wells for various purposes and potential future profits from those ventures, compared to the amount that would be spent by the state on plugging operations over the next decade or more, as well as any statutory or regulatory barriers that would need to be addressed to allow for transfer of ownership of an orphaned well to a third party, including potential permitting and financial assurance requirement recommendations; and 

     BE IT FURTHER RESOLVED that the oil conservation division of the energy, minerals and natural resources department be requested to present the findings and recommendations from this study to the relevant interim legislative committees on or before November 1, 2026; and

     BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the secretary of energy, minerals and natural resources and the state petroleum engineer.

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