- Oil and gas interests in the Permian Basin have aligned with environmentalists to oppose Holtec’s plan
- Holtec says the project will provide hundreds of good paying jobs in New Mexico
- Communities across the nation that are stuck with spent nuclear fuel are anxious to send the waste out west so they can begin redeveloping sites that housed nuclear power plants.
It’s easy to tell when boom time has arrived on the wind-swept streets of Carlsbad.
When New Mexico’s Permian Basin is humming, churning out barrel upon barrel of crude to fuel the nation’s cars and trucks, the RV parks along San Jose Boulevard and Hidalgo Road teem with workers looking to cash in on work in the oilfields that dot the city.
The prices of hotel rooms climb to the rates of four-star resorts – as much as $300-a-night — while companies buy out entire floors to house their fleet of workers.
In 2017, oil and gas production in the Permian Basin surged, led by technological advancements such as hydraulic fracturing and horizontal drilling, which make it possible to target harder-to-reach shale deposits thousands of feet beneath the surface.
By 2019, New Mexico, which relies on oil and gas for nearly a third of its budget, had a surplus of more than $2 billion, money that would have gone to repair the state’s struggling education system and other public services.
Then came the bust.
When the pandemic hit last year, travel restrictions kept cars off the road, causing slumps in demand for fuel that led to all-time lows in New Mexico’s per barrel price for oil.
In April 2020, the price of West Texas Intermediate, a grade of crude oil used as a domestic pricing benchmark, collapsed to less than $0 per barrel – bottoming out at about negative $40 – for the first time in history.
Drilling rigs disappeared from vast swaths of the once-prolific basin. Thousands of workers were laid off.
And those who kept their jobs were forced to live on slimmer margins. Many had to do without the per diem they used to rely on for food and gas while they sent their paychecks back home to places in Texas and Colorado.
“Now companies aren’t paying that,” said Raul Ortega, 55, a pipeline worker from Carlsbad. “A lot of guys were living off their per diem and sending their checks home. Now, it’s outrageous.”
Carlsbad’s hotel rooms, RV parks and man camps emptied out, sobering reminders of a fragile economy exposed by the pandemic.
State revenue dried up.
By the end of 2020, that multi-billion-dollar surplus became a nearly $400 million deficit. Lawmakers needed an emergency session to balance the budget.
Talk in the state capitol in Santa Fe turned once again to the need to diversity the state’s economy. And in southeastern New Mexico, near the Texas border, county leaders had a plan.
They would turn over nearly 1,000 acres of desert to Holtec International, a New Jersey company that wants to build an interim underground repository for the 83,000 metric tons of nuclear waste stored at power plants across the U.S.
The site, and a manufacturing plant nearby, would create hundreds of good-paying jobs and diversify the local economy.
Eddy and Lea county leaders say the project would help the region weather the slow times.
Last year’s massive drop in oil prices not only hurt workers but local restaurants and tax rolls for counties, states and municipalities, said Jonathan Sena, in his second term on the all-Republican Lea County Board of Commissioners.
“We love oil and gas—it is the backbone of our economy,” Sena said. “But there is also a boom and bust cycle with oil and gas, which would be softened with more jobs from the Holtec project.”
But the project is opposed by New Mexico’s Democratic governor, Michelle Lujan Grisham, who says the project poses a threat to the state’s leading industries – agriculture and oil and gas.
And Grisham says Holtec has ignored the impact the project will have on the state’s tribal, minority and low-income populations and suggests the state has tired of being a nuclear dumping ground.
“Such populations have already suffered disproportionately high adverse human health and environmental effects from nuclear energy and weapons programs of the United States,” Lujan Grisham wrote in September.
“Holtec International’s proposal would join the ranks of uranium mining, nuclear energy and defense-related programs that have long created risks to public health and the environment in the state of New Mexico that are disproportionately greater than such risks to the general population of the United States.”
The fight in the New Mexico desert will have far-reaching implications, not just for New Mexico, but for communities across the U.S. that are home to shuttered nuclear power plants like Indian Point in New York and Oyster Creek in New Jersey.
Without a place to send fuel, they will remain de facto storage sites for nuclear waste. More than 80,000 metric tons of spent fuel is being stored at nuclear power plants across the U.S., the detritus of decades of electricity-generating nuclear power.
It’s a battle with echoes in the decades-long fight to designate Yucca Mountain north of Las Vegas as the permanent repository for the nation’s nuclear waste. Despite $12 billion spent in research and planning, the Yucca Mountain project was scuttled amid opposition from Nevada.
More on the oil bust in New Mexico:
Story continues below.
1,000 ACRES IN THE DESERT
During the Bush Administration, the counties of Eddy and Lea snapped up 963 acres of desert in the hopes of one day developing it for use by the nuclear industry. That never happened.
But around 2012, when the idea of building an interim underground repository for nuclear waste popped up in an Obama Administration blue ribbon report, local economic development officials pounced.
They found a partner in Holtec, which was scouting places to build an underground repository for the thousands of canisters of spent nuclear fuel accumulating at power plants across the U.S.
Holtec gained a toehold in the nuclear industry manufacturing the cement and steel canisters used to store spent fuel and has spent the past few years buying up nuclear power plants slated for closure.
Indian Point, on the shores of the Hudson River in Buchanan, N.Y., was among them. The plant’s owners, Louisiana-based Entergy, announced in 2017 that it was finding it harder to compete in a wholesale energy market flooded with abundant natural gas from fracking.
Holtec has a pending deal to buy Indian Point, which shut down the last of its three reactors on April 30. And it’s already bought Oyster Creek and Pilgrim in Massachusetts.
At Indian Point, Holtec said it will take 12 to 15 years at a cost of $2.3 billion – money in decommissioning trusts funded by ratepayers — to tear down buildings and rid the site of radiological waste. But dozens of massive cement canisters loaded with spent fuel will remain at the site after the demolition.
And that poses a problem for local towns like Buchanan who have come to rely on Indian Point for millions of dollars in property taxes every year. The village is anxious to move the spent fuel off the 240-acre site so it can be redeveloped.
And that’s where Holtec’s New Mexico plan comes in.
The underground repository would hold some 8,680 metric tons of uranium, roughly 500 canisters of spent nuclear fuel. Over 20 years, it could hold 10,000 storage canisters.
The underground repository and a Holtec manufacturing site for building the steel and cement cask would bring 300 to 400 jobs to the region. Average salaries at the repository would be about $75,000, meaning the project could bring up to $30 million in total salary to New Mexicans.
Holtec says the project will not have an impact on the oil and gas industry. It will still be possible to frack beneath the canisters of spent fuel, which will be housed some 25 feet beneath the surface.
HEATON MAKES CASE FOR HOLTEC
The company’s biggest backer in New Mexico has been John Heaton, a former state lawmaker who oversees economic development for the Eddy-Lea Energy Alliance – a consortium of Eddy and Lea counties and the cities of Carlsbad and Hobbs which sited the project and recruited Holtec.
He accuses “out-of-town protestors” of aligning against the nuclear industry.
“It doesn’t make sense to me that the public isn’t more sensitive to the benefits of these new industries and diversifying our economy,” Heaton said. “We’ve found this niche. It’s safe and reliable. We’ll continue to look for nuclear projects to bring to our part of the state.”
In March, in an escalation of a simmering battle, New Mexico’s attorney general, Hector Balderas, sued the Nuclear Regulatory Commission, the federal regulatory agency that has already signaled its intention to approve the project.
Balderas questions the NRC’s claim that the site will only be temporary since there’s currently no permanent repository for the nation’s nuclear waste. And he says it’s unfair to force New Mexico to take in waste from other states.
“In light of its aggressive promotion of the use of nuclear power (which in turn generates new high-level waste requiring long-term storage and/or disposal), NRC has begun to promote the idea of long-term consolidated interim storage of high-level radioactive waste in New Mexico, without its consent or consideration, when the state itself has no operating nuclear power plant,” the lawsuit says.
WORK IN THE OIL FIELDS
Each day, Ortega drives two hours up and down U.S. Highway 285 from his home in Carlsbad, to Orla, Texas, where for the past 12 years he’s worked in the West Texas oilfields.
Ortega supervises pipeline installation for a natural gas company. Before that he mined potash, a mineral used in fertilizer abundant in the New Mexico desert.
Work in the natural gas industry didn’t slow down, even during the pandemic, he says.
“People don’t realize around here that all the gas from this area, in the wintertime it’s going to the east,” Ortega said. “It fuels the power plants. That gives them electricity. In the winter it goes east, and in the summer, it goes west where it gets hotter.”
His sons have followed him into the business. The oldest, who works as a welder, was out of work for three months during the pandemic.
“A lot of companies had to shut in wells because it wasn’t feasible for them to be producing wells,” he said. “They weren’t making any money.”
Ortega has deep ties to the community. On weekends, he plays drums in a popular local band called Stranded. Their song “285” was inspired by deaths of oilfield workers along the highway they use to get to work every day. It’s the story of a worker who kisses his wife and children goodbye wondering if he’s going to make it home.
Ortega knows the strains of the boom and bust. He said the Holtec project could provide steady work for people like his son and others in Carlsbad.
“…They’ve got to do a lot of welding and stuff like that,” he said. “There’d be a lot of jobs there.”
In the meantime, he’s guessing the boom times will return soon enough.
“It hurt a lot of them. But now, they’re picking back up again,” he said. “Within a couple months, it’s going to be picking up again. It’s going to be hitting hard again.”
OIL AND GAS V. NUCLEAR
The oil and gas industry agrees and is opposing Holtec’s plans.
The most vocal has been Fasken Land and Minerals. Fasken drilled in the Permian Basin for decades and owns 2,000 acres of land two miles west of the Holtec site.
Fasken challenged the project on several fronts – the potential impact on groundwater, seismic activity in the area and the danger of fracking beneath the repository.
So far, the NRC has been unpersuaded. In March 2020, the NRC staff recommended the commission approve the Holtec project. And in April, the NRC rejected Fasken’s latest appeal.
A safety evaluation and a final environmental impact study are due in the coming months.
“It’s turned into a political war and I just don’t see how we got there,” said Monica Perales, Fasken’s attorney. “Dealing with the NRC is outside of anything I’ve ever seen. When they’re on a mission, their purpose is to get to yes. That’s hard for me.”
The location along the border of Eddy and Lea counties is close to the towns of Carlsbad, Eunice and Hobbs, areas that are ecologically diverse and environmentally sensitive.
The Pecos River runs through Eddy County and Carlsbad. It’s been racked by a generations-long drought, which has led to scarce water supplies.
Species that rely on the river and its surrounding habitats were already in a precarious position before oil rigs appeared. And animals like the Texas hornshell mussel, lesser prairie chicken and dunes sagebrush lizard saw their habitats shrinking as the river dried up and more and more land was being taken over for private development.
Nearby, the world-famous Carlsbad Caverns exist within a complex network of karstic landforms made of eroded limestone that serves as a natural filter for precious groundwater but can be easily contaminated by surface operations.
Environmentalists voiced such concerns as they joined forces with anti-nuclear advocates like Beyond Nuclear and the Southwest Research and Information Center in Albuquerque.
Both groups have made the claim that federal law prevents the federal government from taking ownership of spent nuclear waste without first developing a permanent repository. And until one opens, an interim site shouldn’t be allowed, said Don Hancock of the Southwest center.
“The law says the government doesn’t take title until repository is operational,” Hancock said. “Everyone knows the repository isn’t happening.”
In Sante Fe, State Sen. Jeff Steinborn, a Democrat from Las Cruces, introduced a bill that would allow the state to increase oversight of nuclear projects to in include privately-owned facilities. The bill stalled on the New Mexico House floor, but could be brought up again in subsequent sessions held at the start of each year.
“The welcome mat is already here,” Steinborn said. “The industry is trying to create a facility. We’re trying to do our due diligence and make sure New Mexicans are protected.”
Steinborn says there hasn’t been enough discussion about transporting spent fuel to New Mexico across roads and rail lines.
“For the long-term risks, as someone who lives just where the waste will pass through, what’s the benefit to Las Cruces?,” Steinborn said. “What’s the benefit to Albuquerque or our tribes up north? It’s just not the economic development that I would like to see.”
Similar arguments were made by Nevada lawmakers in 2002 when the Bush Administration designated Yucca Mountain as a permanent repository for nuclear waste. At the time, Las Vegas Mayor Oscar Goodman said transporting waste to Nevada would expose “millions of Americans in 43 states to potential nuclear holocaust.”
Las Cruces, Albuquerque, Sante Fe County and other cities have signed resolutions opposing the project.
If it was allowed to open, Holtec’s site would join a number of other facilities in what’s become known as the region’s “nuclear corridor.”
Nearby is the Waste Isolation Pilot Plant – a deep geological repository for low-level waste operated by the U.S. Department of Energy – and a nuclear enrichment facility owned by URENCO USA in nearby Lea County.
Heaton says the remote, desert locale proposed for the site is geologically stable, far from large bodies of water or densely populated areas like most nuclear generator sites and unlikely to impact oil drilling or any other industry.
“It’s extremely safe and secure,” he said. “People that oppose these things are simply fear mongers. They go into these what ifs. The science defines it. There aren’t any of these what ifs. People are talking about things that have a one in trillion chance of happening. It’s a ridiculous argument.”
Perales understands such concerns. The oil and gas industry is typically on the defensive during such debates, assuaging community fears about gas pipelines and the like.
But she has trouble seeing why the region would risk bringing nuclear waste into a region that’s home to oil wells.
“I wish the city managers or whoever’s in charge had shopped around a little bit to invite other industries to make a pitch,” Perales said. “I understand diversification but I don’t understand this.”
“Be like Austin,” she quipped. “Bring tech to oil country.”
Adrian Hedden can be reached at 575-618-7631, [email protected] or @AdrianHedden on Twitter.