IPANM N.M. Legislative Report #3

NEW MEXICO
LEGISLATIVE STATUS REPORT

The following bills that may be of interest to our
members have been introduced in the Second Regular Session of New Mexico's
45th Legislature, which bills will be monitored during the Session, as I
continue to watch for any other developments that might specifically affect
our industry:

HB 165-Tribal Capital Improvements Tax Credit:
Introduced by Representative Ben Lujan, Dem., Dist. 46 (Santa Fe). Would
provide that one liable for the oil and gas severance tax, conservation tax
or emergency school tax on production from Indian tribal land will have a
credit each month equal to the lesser of the tax that is exclusively
dedicated to fund capital improvement projects on the tribal land (but not
commercial buildings) imposed on such production by the Indian tribe, or 2%
of the taxable value of such production. The burden of showing entitlement
to this credit would be on the taxpayer, who must furnish proof of payment
of the tribal tax. This bill received a "Do Pass" in the House Energy &
Natural Resources Committee and was sent to the House Taxation & Revenue
Committee, where it was temporarily tabled for amendment.

HB 230-"Indian Country" Defined: Introduced by
Representative Leo C. Watchman, Jr., Dem., Dist. 9 (McKinley & San Juan).
Would broadly define "Indian country" under the New Mexico statutes. This
bill was referred to the House Rules & Order of Business Committee, where it
remains.

HB 309-San Juan Oil and Gas Field Training Program:
Introduced by Representative Nick Tinnin, Rep., Dist. 1 (San Juan). Would
appropriate $300,000 to San Juan College for Fiscal Year 2003 and subsequent
years for an oil and gas field training program at the college that includes
certification and training for well, pipeline and drilling technicians and
field workers. This bill was received a "Do Pass" in the House Business &
Industry Committee and was sent to the House Appropriations & Finance
Committee.

CS/H 388-Tax Credit For Produced Water: Introduced
by Representative Robert W. Burpo, Rep., Dist. 23 (Bernalillo). A House
Business & Industry Committee substitute bill received a "Do Pass" and was
sent to the House Taxation & Revenue Committee. This substitute bill would
provide that a refinery, natural gas processor or person who operates an oil
or gas well who produces water from a depth of 3,000 feet or more below the
surface in the course of producing oil and gas may take an income tax credit
of $1,000 per acre-foot of produced water (not to exceed $400,000 per year)
if the party delivers the water to the Interstate Stream Commission at the
Pecos River in compliance with the New Mexico Water Quality Act, to
contribute to delivery obligations pursuant to the Pecos River Compact, and
subject to other conditions, and that the Interstate Stream Commission shall
indemnify the party from future liability.

HB 423-Additional Natural Gas Pipeline Systems
Study: Introduced by Representative Donald L Whitaker, Dem., Dist. 61 (Lea).
This bill is identical to SB 369, received a "Do Pass" in the House Energy &
Natural Resources Committee and was sent to the House Appropriations &
Finance Committee.

SB 16-Lea and Carlsbad Conservation District Study:
Introduced by Senator Carroll H. Leavell, Rep., Dist. 41 (Eddy & Lea). Would
appropriate $500,000 to New Mexico State University for Fiscal Year 2003 for
a study by the Lea and Carlsbad Soil and Water Conservation Districts of
issues related to the use of water produced by oil and gas exploration from
"deep underground." This bill was found germane by the Senate Committees'
Committee, received a "Do Pass" in the Senate Conservation Committee, and
was sent to the Senate Finance Committee, where it was temporarily tabled.

SB 283-Tribal Capital Improvements Tax Credit:
Introduced by Senator Leonard Tsosie, Dem., Dist 37 (Dona Ana, Otero &
Sierra). This bill is identical to HB 165, was found germane by the Senate
Committees' Committee, and was sent to the Senate Indian & Cultural Affairs,
where it was withdrawn and sent directly to the Senate Finance Committee.

SB 345-Well Workover Projects: Introduced by Senator
Leonard Lee Rawson, Rep., Dist. 37 (Dona Ana, Otero & Sierra). Would amend
the Natural Gas and Crude Oil Production Incentive Act to expand the
definition of "well workover project" to include the installation by the
operator of workover equipment that is intended to substantially increase
the life of the well and that has been approved and certified by the OCD,
which approval shall be granted if the OCD determines that the equipment
will substantially reduce operating costs, thereby increasing the life of
the well and its recoverable reserves. This bill was found germane by the
Senate Committees' Committee and sent to the Senate Conservation and Finance
Committees.

SB 369-Additional Natural Gas Pipeline Systems
Study: Also introduced by Senator Leavell. Would require the Legislative
Council to assign an Interim Committee to study the economic feasibility and
the costs and benefits of financing, constructing and operating a natural
gas pipeline to transport New Mexico natural gas to additional markets. This
bill was found germane by the Senate Committees' Committee and sent to the
Senate Conservation and Finance Committees.

HJM 17-Coordinated Oil & Gas Permitting Process:
Introduced by Representative Patricia A. Lundstrom, Dem., Dist. 5
(McKinley). Would request that the Department of Environment, the Oil
Conservation Division and the federal Bureau of Land Management cooperate in
the development of a coordinated permit process for oil and gas activities.
This memorial received a "Do Pass" in the House Energy & Natural Resources
and Business & Industry Committees, was passed by the House, and was sent to
the Senate.

SJM 83-Treat Produced Water For Recycling: Also
introduced by Senator Leavell. Would request that the State Engineer, the
OCD, representatives of the oil and gas industry and the Department of
Environment jointly study the issues raised by the potential for treating
produced water so that it may be put to beneficial use and report their
findings and recommendations to the appropriate legislative committee by
December 1, 2002. This memorial was referred to the Senate Rules and
Conservation Committees.

I will continue to keep you posted concerning any
changes or additional issues.

Tom Nance
February 10, 2002