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Oil and gas takes new tack

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By Sherry Robinson

Two heavy hitters passed from the oil and gas industry in recent weeks.

Pete Hanagan headed the New Mexico Oil and Gas Association for 15 years until 1985. He died at age 81 in Ireland.

The association’s other Irishman, Bob Gallagher, got his walking papers a week after Hanagan’s death. Both men hailed from Roswell, and both practiced law, but the similarities end there. In the differences between the two is a tale for our times in New Mexico.

The ever cheerful Hanagan entered a room with a 100-watt smile and a hand extended. He was quick with a joke, didn’t take himself too seriously and got a lot done behind the scenes. He knew everyone. Even his adversaries liked him.

Things weren’t particularly easy then either – pipeline capacity was an issue, and the environmental movement had dawned, bringing with it a new era of regulation. But Hanagan observed the line between advocacy and engagement; he never became personally embroiled in an issue.

Enter Gallagher in 1999. I’ve found him to be bright, articulate and gracious – I like the man, as I did Hanagan. But in temperament, he’s Hanagan’s polar opposite – outspoken, intense and passionate about his cause. The industry folks who wanted their man to go toe to toe with government regulators got their money’s worth, but it seems Gallagher’s stridence got him in trouble.

In the last few months, Gallagher had spoken wherever he could find an audience, often to business groups. He was frank:

 “We ought to be concerned about the loss of production in New Mexico. There’s a systemic problem with development in New Mexico,” he said.

The proposal for state greenhouse emissions was “an attack on business in New Mexico. Every business that has an emission, they’re coming to see you.”

 “We think in the state of New Mexico we have an overzealous regulatory climate. It needs to be consistent, coordinated and stable.”

And the capper, about the governor: “He promised us heartache and he has delivered.”

After one of his talks, I went up to ask Gallagher a question. He was a picture of nervous energy, mopping his crimson face with a napkin, and I found myself hoping he had a strong ticker because he looked like the guy your doctor warns you about.

We’ve read the dueling op-eds between Gallagher and the state Energy and Minerals Department over pit rules, intended to protect groundwater from toxic spills and leaks. This back-and-forth spiraled into a standoff between Gallagher and Oil Conservation Division Director Mark Fesmire and his boss, then Secretary Joanna Prukop.

Prukop has argued that the pit rule isn’t singlehandedly responsible for the industry’s decline, which is true, but there is still the drip-drip erosion of marginal costs. When commodity prices declined, the additional cost of the pit rule sent them south a little faster.

John Byrom, a member of the association’s regulatory practices committee, told the Albuquerque Journal that the new goal is “a more collaborative approach to the issues rather than having such a knock-down, drag-out, adversarial relationship.” He and others want to see more innovative, science-based solutions.

Hear, hear.

In months past, I opined that the pit rule seemed unreasonable and unnecessarily costly, only to hear from knowledgeable people about problems on the ground. Many producers operate responsibly, but not all. We have to protect water in New Mexico. How do you make what one regulator calls “fly-by-night operators” toe the line without unfairly penalizing those who are trying to do the right thing?

I suggested before that this discussion isn’t over. Maybe with some new players in the game, the state and industry can begin anew and learn to work together. It’s refreshing to see at least one party holster its rhetoric.

Don’t count Gallagher out. I expect he’ll reappear, wearing a new hat.  

© New Mexico News Services 2010