On March 25, 2021, the New Mexico Oil Conservation Commission (OCC) unanimously approved rules requiring oil operators to capture 98% of natural gas emissions by the end of 2026 and prohibiting venting (the process of releasing unburned methane, carbon dioxide, volatile organic compounds, and gas impurities into the atmosphere) or flaring (the process where the gas is burned in the open air releasing several gases, including carbon dioxide, carbon monoxide, and sulfur dioxide) except in the case of emergencies or equipment failure. According to data from the Energy Information Administration, New Mexico vented or flared about .1 billion cubic feet (Bcf) of natural gas per day in 2019, the third most after Texas (.7 Bcf/d) and North Dakota (.6 Bcf/d) (see EIA: Natural Gas Gross Withdrawals and Production (Vented and Flared)).

The rules, originally proposed by the New Mexico Oil Conservation Division of the Energy, Minerals and Natural Resources Department (EMNRD), state that as of April 1, 2022, New Mexico oil companies are required to calculate and report data on their methane venting at every stage of the process. Operators are then required to capture more gas each year, based on the following formula: (baseline loss rate minus two percent) divided by five.

An operator's percentage of captured natural gas may only be less than 75% during 2022. The target is to capture 98% of all natural gas waste by the end of 2026. If operators do not meet New Mexico's targets, regulators may deny drilling permits.

The rules also prohibit venting or flaring of natural gas during drilling, completion, or production operations that constitute waste, except in the case of emergencies or malfunctions. Operators must report such venting or flaring in relation to emergencies or malfunctions.

The rules come after a 2019 executive order by New Mexico Governor Michelle Lujan Grisham, which supports the goals of the Paris Climate Agreement by joining the US Climate Alliance, a coalition formed to reduce greenhouse gases (GHG), and establishing an interagency Climate Change Task Force (see Legal Update, New Mexico Signs Executive Order Complying with Paris Climate Agreement).

The rules go into effect after publication in the New Mexico Register.