Oil and gas group fires president

ALBUQUERQUE (AP) - Bob Gallagher doesn't work for the state of New Mexico. He isn't on any of Gov. Bill Richardson's task forces. And his days as a university regent have been over for more than a year.

Still, the outspoken president of the New Mexico Oil and Gas Association got crossways with the Richardson administration for standing up for the state's oil and natural gas producers and now he's out of a job.

Gallagher confirmed Friday that the trade group's board informed him this week that the association wanted to "move in a different direction" and that meant he would be relieved of his duties.

"It came out of the clear blue sky," Gallagher told The Associated Press. He declined to talk about what led to the board's decision.

Leland Gould, the board chairman, and others who work with the association remained tightlipped about Gallagher's situation. Gould refused to confirm whether Gallagher was being asked to leave, saying it was a personnel matter.

Gallagher said his attorney and the board were working on the terms of his departure from the trade group, where he has worked for about a decade. An agreement is expected next week.

Gallagher has been a vocal supporter of the oil and gas industry, New Mexico's largest industry, and a significant contributor to the state's coffers. His criticisms of tougher regulations have often pitted him against the Richardson administration and its efforts to push New Mexico's economy toward renewable energy.

Earlier this month, Gallagher said Richardson's environmental policies have delivered "heartache" to the oil and gas industry. It has become extremely difficult for producers to operate in the state and make any long-term plans because the regulatory arena has been inconsistent and punitive, he said.

Richardson spokesman Gilbert Gallegos dismissed claims that the administration had anything to do with Gallagher leaving the association.

"Governor Richardson has more important things to do than get involved in an outside organization's personnel decisions," Gallegos said.

Richardson has acknowledged the importance of oil and gas to New Mexico's economy but said in his State of the State speech that New Mexico's road to solvency can't depend on the whims of the oil and gas market.

Gallagher has been most vocal about changes to the state's pit rules. The state Oil Conservation Commission approved tougher rules to restrict the use of pits for onsite waste disposal at drilling operations. The rules also regulate below-grade tanks and the use of closed loop systems during oil and gas operations.

Oil and gas producers have pointed to the new rules in addition to dropping commodity prices as a reason the industry has faltered. They argue that the rules make drilling too costly.

Gallagher said the effect can be seen in drilling permit numbers, which dropped from 1,200 in 2008 to 500-550 in 2009.

State officials argued that permits don't reflect actual drilling activity. The state Energy, Minerals and Natural Resources Department says the number of rigs drilling in New Mexico has increased to 53, up from 30 last April.

Kathleen Sgamma, director of government affairs for Independent Petroleum Association of Mountain States, said drilling activity has been down throughout the region. One of the things a company does when deciding where to develop is look at the cost of doing business in that state, she said.

"Additional regulations like the ones we've seen in New Mexico and Colorado mean additional costs, and if the regulatory burden gets too onerous, companies may be compelled to take their investment elsewhere," Sgamma said.

Punitive legislation and regulations can have direct impacts on jobs, economic growth and state revenues, she said. The oil and gas industry has an estimated annual economic impact of about $67 billion in the region, Sgamma said.

It's not clear who will be the new voice for the New Mexico Oil and Gas Association, but House GOP Leader Tom Taylor of Farmington said the timing couldn't be worse. State lawmakers are in the middle of a 30-day session that is focused on plugging a budget deficit, finding revenues and developing ways to reinvigorate the economy.

Gould, the board chairman, believes the industry will be able to work with state officials "in a positive direction." With regulatory agreements, he said, he's confident the oil and gas industry can rebound and companies will be encouraged to invest new capital in the state.