New Mexico Energy Transition Proposal Would Violate Ban on ‘Fossil Fuel Development’

After a long pause, New Mexico’s program to distribute grants under a landmark energy transition law is back on track, according to its lead convener. And an updated proposal from a New Mexico community college still seeks money for projects devoted to natural gas production, which run against the overarching goal of the law. One set of proposals clearly runs afoul of the guidelines for one of the three funds created by the law.

New Mexico passed the Energy Transition Act (ETA) in 2019 to support two transitions: those of workers needing new jobs following the closure of two coal-fired power plants and coal mines near Farmington, New Mexico; and that of the state as it moves away from fossil fuel energy production. The COVID-19 pandemic and a lawsuit unrelated to the grants themselves put the brakes on the process until now. Jason Sandel, lead convener of the Energy Transition Act Committee set up to vet grant proposals, says he hopes to reconvene his group soon after July 4 and recommence the recommendation process.
 

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Grant proposals can ask for funds from three state agencies, and the rules for grants from the Economic Development Department (EDD) specifically state the money should create economic development opportunities “unrelated to fossil fuel development or use.”

A proposal from San Juan College asks for money from all three ETA funds. In fact, the proposal seeks nearly all of the money being offered, spreading its request among many of the college’s training schools. And the school’s $6 million pitch for EDD money includes natural gas-based partner projects with Big Navajo Energy and Libertad Power, both of which aim to make hydrogen from natural gas. Another proposal for that fund would create a program in the college’s School of Energy to certify oil and gas wells on their environmental, social and governance (ESG) bona fides. That was conceived and written with the help of Western States and Tribal Nations (WSTN), a state, tribal and industry group set up to promote exporting natural gas from fields in Wyoming, Utah, Colorado and New Mexico to Asia. Letters of support for the proposal were provided by Sempra LNG (which has a natural gas export terminal on Mexico’s Pacific coast), the Navajo Nation Oil and Gas Company, Blackhawk Energy and Tallgrass Energy, all of which either produce or transport natural gas.

Sandel, a Democratic fundraiser and the operator of Aztec Well Servicing, which drills and maintains oil and gas wells, says he will recuse himself from any debate around the ESG program, because he is also the chairman of WSTN.

“It’s just the same old dirty fossil fuels scenario that they always attach themselves to,” says Mike Eisenfeld, energy program director with the San Juan Citizens Alliance. “It’s a community college that was created on oil and gas; I think it’s hard for them to deviate.”

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This isn’t the first time that San Juan College’s School of Energy has applied for ETA grant money. It submitted a similar request — also developed with WSTN — in 2020, before the process paused for years. That proposal also drew fire for its natural gas ambitions. Since then, some partner companies have changed, and the new proposal splits the School of Energy’s ESG program request between Economic Development Department and Indian Affairs Department funds. Meanwhile, the state, led by Gov. Michelle Lujan Grisham, has made a hard push for a billion-dollar, federally funded regional hydrogen hub based on natural gas, which has brought renewed interest in the region’s gas deposits.

Emails obtained by the Energy Policy Institute and shared with Capital & Main show School of Energy Dean Alicia Corbell working with Andrew Browning both on the original and on the updated plan. Browning is a partner at HBW Resources — a large public relations and lobbying firm with offices across the country — and president of WSTN. Previously, he was a registered federal lobbyist promoting the American Petroleum Institute in the halls of Congress and was a Clinton White House appointee to the Department of Energy, where he served as a special assistant in the Office of Fossil Energy. The application’s updated ESG proposal was fleshed out to say that the school will work with WSTN to make the School of Energy an ESG “Center of Excellence” and to “Position San Juan Natural Gas as the Gold Standard for LNG Exporters and other Natural Gas consumers.”

Pterosaur skeletons soar above the Sherman Dugan Museum of Geology located in the SJC School of Energy.

Under “Industry Partners,” the college’s proposal lists two more groups managed by Browning’s HBW Resources: the Consumer Energy Education Foundation, which claims to develop lesson plans to “create the energy workforce of the future,” and the Consumer Energy Alliance, which names every major oil and gas producer in the country as a member. When asked about the School of Energy’s ESG curriculum, Corbell responded, “No curriculum has been developed nor have any definitive plans been established.” She said the school collaborates “with WSTN and many other organizations” and that the ESG program, originally conceived three years ago, “may have been brought to us by a community member.”

“I think I brought it to them,” Browning said in a phone interview, because, he said, it was a natural fit for WSTN’s goals. “The San Juan School of Energy has a great program. They are well funded, they’ve got great equipment, they place students … all across the country.” In addition, he said that Asian markets are looking for certified “clean” natural gas.

In addition, Browning said, he has nothing to hide — and he’s tired of environmental watchdogs suggesting otherwise. “The Energy and Policy Institute pisses me off,” Browning said. Itai Vardi, a research and communications manager with the group, has been collecting information about HBW and its connected organizations and sharing that information with reporters since 2020. “He’s been peering through my bathroom window for three years,” Browning said.

He argues that all of his activities through HBW and WSTN are in full public view and have been developed in coordination with state officials at the highest levels — including hydrogen development projects that have been a state priority. “It’s what Gov. Lujan Grisham envisioned with her hydrogen hub proposal,” he said.

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WSTN lays bare the conundrum faced, and at times embraced, by New Mexico’s lawmakers.

Gov. Lujan Grisham was sworn into office in January 2019, and her third order, “Executive Order on Addressing Climate Change and Energy Waste Prevention,” commenced a climate-based legislative push that resulted in some of the strongest oil and gas regulations in the country (though they have been weakly enforced), clean vehicle standards and a goal to reduce the state’s greenhouse gas emissions by 45% by 2030 compared to 2005 levels. That climate focus also nudged the language in the Energy Transition Act in that year’s legislative session to focus on clean energy and technologies.

By the time Gov. Lujan Grisham signed the ETA into law, the state was nearly two decades deep into a climate change-fueled drought that still hasn’t let up, and just a few years away from two of the state’s biggest wildfires in recorded history, in 2022. The U.S. Forest Service started those fires, but they blew out of control in timber desiccated by the epic drought. Forest Service Chief Randy Moore said that climate change has rendered the agency’s firefighting plans obsolete, contributing to the catastrophe.

New Mexico is the No. 2 oil producing state in the nation, and the oil and gas industry is the state’s leading climate warming driver. It creates more than half of all of New Mexico’s greenhouse gas emissions, a fact tallied each year in annual reports begun as part of Lujan Grisham’s climate push. But taxes levied on that industry also fund nearly half of the state budget, leaving lawmakers wary of upsetting the economic applecart in a poor state that has a hard time paying for social services while ranking at the bottom by most child welfare, education and health care measures.

In late 2019, without much fanfare, Gov. Lujan Grisham signed a memorandum of understanding through which New Mexico joined WSTN, with hopes of creating a new Asian market for the state’s natural gas. A key argument made by WSTN for the exports is that natural gas-fired power plants pollute less and have lower greenhouse gas emissions than the coal-fired plants that power much of Asia now.

That’s where San Juan College’s ESG program fits in. Corbell, the dean at the School of Energy, says that a curriculum hasn’t been discussed yet, but companies already working in the nascent ESG field — potential employers of the school’s graduates — certify and grade gas based on the measured emissions and historical water use at individual wells, as well as the production company’s dedication to sustainability and governance goals. The hope is that power companies will pay a premium for this certified fuel to cover the cost of grading, while making themselves look good and keeping the production industry rolling along as the globe as a whole tries to wind down fossil fuel use. This is despite the fact that grid-scale solar has been cheaper to install than natural gas power plants for the past couple of years.

The ESG concept has another friend in yet another multistate initiative: Gov. Lujan Grisham’s proposed Western Interstate Hydrogen Hub, which also happens to cover the same four states involved in WSTN. This newer proposal aims to secure up to $1.25 billion from last year’s federal Inflation Reduction Act to create an interwoven interstate business nexus that makes and uses hydrogen stripped from natural gas. That gas needs to be certified “clean” for the proposal to qualify under the IRA. Good ESG ratings could do that.

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Nearly 20% of the four-acre parking lot at the San Juan College School of Energy is given over to a collection of uncommonly clean and tidy oilfield equipment used for training. In front of the school there’s a sign, with a familiar yellow and green starburst logo, announcing the BP Center for Energy Education. A tiny pumpjack commemorating the first oil well on state lands in 1924 stands to the side. Neither is included in the photo of the front of the school in the 2022 proposal. Just inside the school’s front doors, hanging in the two-story atrium, is a massive mobile of logos for oil and gas companies and affiliated industry firms — the major funders who kickstarted the school. In the hallways, black-and-white photos of gushing wells from the start of the last century hang near color photos of drilling rigs with massive flares from the century’s end. There are classrooms sponsored by BP and Encana. Flyers by the information desk advertise degrees in advanced petroleum production and natural gas compression.

A mobile of donor logos hangs in the entryway atrium of the SJC School of Energy.

Corbell stoutly defends the school’s offerings and says, “All of our degree programs teach broadly based skills that are applicable to a wide variety of applications. We work diligently not to pigeonhole any of our students.

“We teach skills commonly associated with renewable energy,” she said. “We teach the basics of repairing and maintaining turbines, including wind turbines and hydro turbines, in our Industrial Maintenance Mechanic program.” The school’s brochure for the program says the courses prepare students for entry-level positions in “power generation, mining, natural gas, oil and gas refining, water treatment, semiconductor, food and beverage, petrochemical and pharmaceutical.” She also said that EV and Alternative Fuel Vehicle Technician Training and Lithium-Ion Battery Technician Training are conducted in the School of Trades and Technology, around the corner and down the road from the School of Energy. Even so, none of the energy sources on display or classes promoted in the School of Energy use the words “wind,” “solar” or “renewable.”

The School of Energy’s path through the ETA grant process may be bumpy. Corbell acknowledges that at an ETA Committee meeting last November, someone from the Economic Development Department (“I do not remember the gentleman’s name”) told her that the ESG plan may not be eligible for funding. “I do not recall if he specifically said that funds from the Economic Development Department could not be used or if he said any ETA funds,” she said. Even so, “I am not aware of any plans to rewrite this proposal,” she said.

In the back of her school is another sunlit, two-story atrium, this one filled with glass cases — a jewel box museum displaying hundreds of exquisite mineral and fossil samples from around the globe, a personal collection donated by a local oilman. Over it all hang two full-size skeletons of toothy flying pterosaurs, their fossil bones circling the air.

Copyright 2023 Capital & Main.

All photos by Jerry Redfern.