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Wednesday, June 23, 2010

The Downtown Dream: Council Has One, But Nightmare To Others, Plus: The Pit Rule Debate; Picking Up Where We Left Off 

ABQ Mayor RJ Berry seems determined not to fall over the downtown development cliff even as he is being pushed by a stampeding city council.

Downtown, the sinkhole of political dreams for a long line of city mayors, including Rusk, Baca and Chavez, was again pushed to the fore this week when, on a vote of 7 to 1, the council urged the mayor to enter into an agreement with ABQ Public Schools to secure at least part of the First Baptist Church property for downtown redevelopment efforts. In others words, a $400 million project that would include a hyper-controversial downtown sports arena, now soothingly called an "events center."

But Berry is in charge of a city whose coffers are bare and who would undoubtedly have to raise taxes to finance such a venture, even as downtown continues to be a sinkhole. Developer Vince Garcia was recently indicted for fraud in connection with a major condominium project that now stands partially completed, a symbol of the epic Bull Market gone so sour.

The mayor has a task force to study the downtown project, but he is indicating they can take their time coming with a final report.

When the economy boomed, maybe there was a chance that a huge downtown complex like this may have had a chance of getting off the ground, but with the bear market still gripping the city and giving us a record-breaking jobless rate of over 9 percent, the councilors are barking at the moon. How about some ideas that might bring that jobless rate down?

FLYING SOLO

Who was the one city councilor to vote against the resolution prodding the mayor to form a downtown bandwagon? The West Side's Dan Lewis said he voted "no" because he disagreed with "the urgency" surrounding the resolution which does not carry the weight of a law.

Lewis's district is close to Rio Rancho. Maybe he was thinking about that city's financial disaster with the Santa Ana Star Center, another well-intentioned downtown development effort that tallied up millions in losses for City of Vision taxpayers

SHOOTING REACT

Mayor RJ Berry and the ABQ city council received an earful this week over one of the eight officer involved shootings we have had in the city this year. The family of one man who died during a dispute with police asserted the shooting was unnecessary. The police say otherwise. TV news covered the story.

This wasn't a poor Hispanic family from the valley as is often the case in these incidents, but a seemingly well-off Anglo family from the Northeast Heights where Berry's political support is deepest.

BERRY REBUKE

The honeymoon is over. The four Dem ABQ city councilors were able to upend Mayor Berry's plans for negotiating with city unions, and Berry started using the dreaded word "Democrat" instead of "Democratic," as in this:

It appears the four Democrat City Councilors led by Ken Sanchez were trying to politicize a very important function of City government during Monday’s meeting. What’s important is that we keep moving forward with these negotiations on behalf of our City employees and taxpayers...


That's a hard partisan kick from Berry who has mostly avoided using that boot. And how about that direct hit on council president Sanchez? Well, Sanchez has made it no secret that he will seek the mayor's job in 2013. Looks as though that campaign may be getting an extra early start.

THIRD CANDIDATE OR NOT?

Alan Woodruff hopes to be a candidate for the ABQ congressional seat held by Dem Martin Heinrich, but he is having his share of trouble. From his campaign:

Woodruff Tuesday filed the candidate petitions required to qualify as the Green Party candidate for U.S. Representative for congressional district 1 for the 2010 general election. The Secretary of State refused to accept those petitions, claiming that the Green Party is not a "qualified" party.

The "qualified" status of the Green Party of New Mexico was put in doubt following the 2008.

Woodruff says he plans a lawsuit to make the ballot. So far, it's Heinrich vs. Republican Jon Barela.

THE PIT DEBATE

With the oil spill catastrophe in the gulf, we wonder if public perception of New Mexico's "pit rule" which has come under so much fire from independent oil producers here is finding more favor with the average New Mexican.

We blogged May 12 asking pit rule critics for definitive proof that the rule--which sets environmental standards for disposing of drilling waste--cost the state jobs as opponents of the measure maintain. We received a lot of email, but no one could point to the name of a company and their employees who were laid off as a direct result of the pit rule, or moved out of the state as a result of the environmental regulation.

The crush of primary election news led us away from the issue, but we pick it back up today with a response to our skepticism from Karin Foster, the executive director of the Independent Petroleum Association of NM. She says the industry does not claim the pit rule specifically costs jobs, but:

Industry has never stated that the Pit Rule alone has killed oil and gas operations. We agree that the decline in the price of oil and gas has had a significant impact on the decision to drill, but the Pit Rule is the straw that broke the industry's back. The rule is not based on science, it was pushed for political reasons and the agency responsible for administering the rule is doing so in an unreasonable...manner.

...The 2009 Fraser Global Petroleum survey...looks at barriers to investment for oil and gas production...New Mexico has a composite ranking of 43rd in the world behind Louisiana, Namibia, Croatia, Ghana and even Egypt as having poor investment opportunity and high regulatory risk for oil and gas operations. The report explains why New Mexico received such a poor rating:

"Corrupt government. Furthermore, politicians want to stop development but they still want the income. The state should rely on one agency to police the oil and gas industry rather than every agency, county, and city, having a separate permitting procedure. State government is extremely 'anti-oil'; very hard to make a profit."

Did you know that the Pit Rule is being litigated in two separate cases? Why is the Independent Petroleum Association of New Mexico (IPANM), which represents well over three hundred companies in NM, a party to the suit? Because the Oil Conservation Commission failed to use a scientific basis for their one size fits all rule. They ignored the law--the OCD had the duty to look at the economics of the Pit Rule to determine the regulatory costs to small businesses.

The costs that operators need to absorb because of the Pit Rule are all over the board because of the complexity of the rule--it applies to both oil and gas production, in both the Permian Basin and the San Juan Basins...

As you would say in your blog, the bottom line is this: Independent operators don't like the Pit Rule but since there are still natural resources in the ground here, companies are staying and taking the risk.

So, Mr. Monahan, your assumptions in your blog may be correct,it's not just the Pit Rule that has killed oil and gas operations in New Mexico, it's the negative, regulatory environment, low commodity prices and better opportunity elsewhere that is causing industry to leave the state.

It's significant to us that Foster says the pit rule has not cost us specific jobs. That was our original contention when we wrote that May missive. Political candidates who claim otherwise are clearly off the mark.

As for Foster's argument that the overall NM energy industry is getting crushed by an out-of-control regulatory bureaucracy, here's a response to that....

THE GUV'S RESPONSE

The vigorous debate over this continues, with Big Bill coming withe this mid-May release that aims to knock down the industry argument:

Governor Richardson announced that New Mexico's drilling activity has more than doubled this year according to the Baker Hughes rig count with 63 operating rigs reported on May 14, 2010, compared to 31 operating rigs a year ago on May 15, 2009. The number of oil- and gas-producing wells in New Mexico remains constant with new environmental regulations balancing our energy needs while protecting New Mexico's precious ground water and our environment.

"New Mexico's pit rules have shown that protecting our health and water resources are good for industry and the environment," said Governor Richardson. "The BP oil leak in the Gulf of Mexico is a sobering reminder that preventing environmental contamination is always less expensive than cleaning it up."

Activity in southeastern New Mexico's Permian Basin is especially strong. Apache Corporation, an independent energy exploration and production company, recently announced it expects to drill in excess of 200 new wells during 2010 in the Permian Basin. Of the 200-plus wells, 100 will be drilled in New Mexico...

...Current prices in the $60-$70 range are driving healthy activity in New Mexico's southeastern oil fields. Unfortunately, natural gas prices have not increased to the same extent keeping activity at a lower level in the gas fields of the San Juan Basin.

The price of oil and gas fluctuates, but companies can find and produce oil and gas more safely, efficiently and with increased environmental protections using new technologies, such as directional drilling, reusing existing well pads for new wells and using closed loop systems to manage their waste.

We'll continue our coverage in the weeks ahead...

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