New Mexico halts some oil-field lease sales in standoff over royalty rates in Permian Basin

Mar 7, 2024, 7:04 PM

SANTA FE, N.M. (AP) — New Mexico’s State Land Office will withhold lease sales indefinitely on its most promising tracts for oil and natural gas development in the Permian Basin as it seeks approval for the state Legislature to increase top-tier royalty rates, Land Commissioner Stephanie Garcia Richard said Thursday.

Bills have repeatedly stalled in the Democratic-led Legislature, including this year, that would raise New Mexico’s top royalty rate for oil and gas development from 20% to 25%. Proponents of the change say neighboring Texas already charges up to 25% on state trust land amid intense competition to drill in the Permian Basin that overlaps southeastern New Mexico and parts of western Texas.

In New Mexico, royalty payments from oil and gas development are deposited in a multibillion-dollar investment trust that benefits public schools, universities and hospitals.

“I am a fiduciary on behalf of the school kids,” Garcia Richard said. “It’s my job to make them the most money possible, and leasing these tracts below market rate means that school kids are subsidizing the oil and gas activity.”

New Mexico Oil and Gas Association CEO Missi Currier said the disagreement between Legislature and State Land Office threatens to penalize petroleum producers and public beneficiaries as leases are sidelined.

She said in a statement that current combined royalties and other taxes in New Mexico are comparable to surrounding states, though the association hasn’t taken a formal position on proposed rate increases in recent years.

Garcia Richard estimates the state would miss out on billions of dollars in income and investment returns over the lifetime of future leases if royalties stay capped at 20%.

The accountability and budget office of the Legislature says a 25% royalty rate cap would increase annual revenues by between $50 million to $75 million.

Up to six leases will be left out of monthly lease bidding in March, a small portion of overall sales. The Legislature’s next regular session convenes in January 2025.

Garcia Richard, a Democrat elected to a second term in 2020. acknowledged that the state will miss out on smaller, one-time bonus payments while some lease sales are suspended.

She compared the decision to delay some lease sales to a homeowner delaying sale during a downturn in the market for real estate.

“The larger amount in the long term, to me, is worth it,” she said.

United States News

Associated Press

Hawaii says it’s safe to surf and swim in Lahaina’s coastal waters after wildfire

HONOLULU (AP) — Hawaii authorities say coastal waters off the wildfire-stricken town of Lahaina pose no significant risk to human health and it’s safe to surf and swim there. The state Department of Health announced the decision Thursday after reviewing water sampling test results collected by groups including University of Hawaii researchers, the Surfrider Foundation […]

1 hour ago

Associated Press

A state trooper pleaded guilty to assaulting teens over a doorbell prank. He could face prison time

DOVER, Del. (AP) — A suspended Delaware state trooper is facing prison time after pleading guilty to criminal charges involving a brutal assault on a teenager who targeted the trooper’s house in a prank. Dempsey Walters, 30, pleaded guilty Friday to second-degree assault and deprivation of civil rights, both felonies, authorities said. He also pleaded […]

2 hours ago

Associated Press

Sawfish rescued in Florida as biologists try to determine why the ancient fish are dying

ST. PETERSBURG, Fla. (AP) — A large sawfish that showed signs of distress was rescued by wildlife officials in the Florida Keys, where more than three dozen of the ancient and endangered fish have died for unexplained reasons in recent months. The 11-foot (3.3-meter) smalltooth sawfish was seen swimming in circles near Cudjoe Key and […]

2 hours ago

Associated Press

‘HELP’ sign on beach points rescuers to men stuck nine days on remote Pacific atoll

Three men stranded on an uninhabited Pacific island survived for more than a week and used palm fronds to spell out HELP on the beach – leading to rescue by Navy and Coast Guard aviators who spotted the sign from several thousand feet in the air. They had embarked March 31 in a 20-foot boat […]

4 hours ago

Associated Press

1 dead and 13 injured after semitrailer intentionally crashed into Texas public safety office

BRENHAM, Texas (AP) — A Texas semitrailer driver rammed a stolen 18-wheeler though the front a public safety building where his renewal for a commercial driver’s license had been rejected, killing one person and injuring 13 others, authorities said Friday. The intentional crash into the single-story brick building off a highway in Brenham, a rural […]

5 hours ago

Associated Press

Prosecutors: South Carolina prison supervisor took $219,000 in bribes; got 173 cellphones to inmates

COLUMBIA, S.C. (AP) — A supervisor who managed security at a South Carolina prison accepted more than $219,000 in bribes over three years and got 173 contraband cellphones for inmates, according to federal prosecutors. Christine Mary Livingston, 46, was indicted earlier this month on 15 charges including bribery, conspiracy, wire fraud and money laundering. Livingston […]

5 hours ago

Sponsored Articles



Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.


DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.


Day & Night Air Conditioning, Heating and Plumbing

Valley residents should be mindful of plumbing ahead of holidays

With Halloween in the rear-view and more holidays coming up, Day & Night recommends that Valley residents prepare accordingly.

New Mexico halts some oil-field lease sales in standoff over royalty rates in Permian Basin