It could cost more to drill for oil if legislation to raise royalty payments oil and gas companies pay to operate on State Trust land continues its momentum in the final days of New Mexico’s 2024 Legislative Session.
House Bill 48 would increase the royalty payments from 20 percent to 25 percent on the value of oil and gas extracted from State Trust land.
HB 48 passed on the House Floor Feb. 10, on a 39-28 vote, and was scheduled for further debate and possible action on Tuesday before the Senate Finance Committee.
The higher rate would apply to oil and gas leases issued by the State Land Office after July 1, 2024 and was expected to generate $50 million to $75 million to the Land Grant Permanent Fund by 2027 as production usually starts three years after a lease is issued, read an analysis from the Legislative Finance Committee.
During the debate on the House Floor, Republicans opposed the bill as they feared it would drive companies out of New Mexico to Texas which shares the booming Permian Basin.