New Mexico halts some oil-field lease sales in standoff over royalty rates in Permian Basin
New Mexico’s State Land Office will withhold lease sales indefinitely on its most promising tracts for oil and gas development in the Permian Basin as it seeks approval by the state Legislature to increase top-tier royalty rates
SANTA FE, N.M. — 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 by 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 the Legislature and the State Land Office threatens to penalize petroleum producers and public beneficiaries as new 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
Read more on abcnews.go.com
