The Reclamation Fund

Oil and natural gas production in New Mexico supports thousands of jobs and billions of dollars in state revenue. But when wells reach the end of their productive life, they must be properly plugged and the land restored. To ensure this work gets done, New Mexico created the Oil and Gas Reclamation Fund — a program designed to pay for plugging wells and reclaiming sites when an operator is no longer able to do so.

The fund is an important part of the state’s regulatory system and reflects a core principle of New Mexico energy policy: the industry that develops resources should also fund the cleanup and restoration of wells. It is a responsibility operators fund themselves, and it is one of the most concrete demonstrations of what long-term stewardship actually looks like.

What Is the Reclamation Fund?

The Reclamation Fund helps pay for the plugging of orphaned and abandoned wells and the restoration of well sites across the state.

Plugging a well involves sealing it with cement and removing equipment so that oil, gas, or water cannot migrate to the surface or underground. Once the well is plugged, the surface location can be reclaimed and returned to its natural condition.

The fund is administered by the New Mexico Oil Conservation Division, which is part of the New Mexico Energy, Minerals and Natural Resources Department. These agencies oversee well plugging, site restoration, and other environmental protections related to oil and gas development in the state.

Funded Entirely by the Oil and Gas Industry

The fund is supported through fees paid by oil and gas operators across New Mexico. These industry-paid fees ensure that financial resources are available to plug wells and restore sites when necessary.

This is the industry funding its own accountability, not waiting for mandates and not passing costs to the public. It is what responsible development looks like across the full lifecycle of a well.

Why Well Plugging Matters

Plugging wells is a critical part of responsible energy development. When wells are no longer producing, they must be safely sealed to prevent leaks and protect groundwater resources. Proper plugging also allows land to be reclaimed and returned to productive uses.

The Reclamation Fund helps ensure that wells can still be plugged even in situations where an operator is no longer active or financially able to complete the work.

State Regulators and Federal Support

State regulators play a key role in making sure the Reclamation Fund is used effectively. The New Mexico Oil Conservation Division identifies wells that need to be plugged and oversees the contracting process for plugging and reclamation work. The goal is to ensure that wells are plugged efficiently and that funds contributed by the industry are used to restore sites across the state. By prioritizing well plugging and site cleanup, regulators can help reduce the number of inactive wells while improving environmental stewardship.

In addition to the state reclamation program, New Mexico is receiving federal funding to accelerate well plugging efforts. The Infrastructure Investment and Jobs Act (2021) created a national program to help states address orphaned oil and gas wells — wells that have no responsible operator remaining.

Through this program, New Mexico has received hundreds of millions of dollars in federal funding to identify, plug, and reclaim orphan wells across the state. These federal resources complement the state’s Reclamation Fund and allow regulators to plug more wells more quickly. The federal program is administered through the U.S. Department of the Interior and implemented in New Mexico in coordination with state regulators.

Reclamation by the Numbers

Why These Numbers Matter

Well plugging and site reclamation are essential parts of responsible energy development. The funding mechanisms in place ensure that:

• Land can be restored after wells stop producing
• Groundwater and environmental resources are protected
• The oil and gas industry contributes directly to cleanup efforts
• Federal resources help accelerate the pace of plugging

The Reclamation Fund ensures that the land is restored when production ends. Combined with federal funding, it demonstrates that the industry’s commitment to New Mexico does not end when the last barrel is produced. This is what it looks like to acknowledge environmental responsibility and act on it — supporting the proper use of the fund and treating it as an obligation the industry takes seriously.

Together, industry-funded programs and federal investments are helping New Mexico plug wells, reclaim land, and ensure responsible energy development continues across the state for generations to come.