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A pump jack which produces oil from the Permian Basin in Artesia, New Mexico, is seen in this undated handout photo provided by Devon. REUTERS/Devon Energy/Handout via NewsCred

New Mexico oil, gas industries see record production, continued growth

Jason Gibbs | Carlsbad Current-Argus 

LAS CRUCES – Dotting the plains of southeastern New Mexico, pump jacks toil endlessly, drawing ever more crude from the earth and putting money in state coffers, driving a multimillion dollar industry that land management and energy officials don’t see slowing anytime soon.

New Mexico is currently undergoing an oil and gas boom — oil production is up nearly 70 percent from 2008 and is projected to increase by 20 percent in 2014. Most of the increase is attributable to new technology that allows producers to extract more oil and gas — specifically hydraulic fracturing, commonly called fracking, and horizontal drilling techniques which allow drillers to tap previously unreachable reserves.

“We’ve got tremendously positive (growth) in this area,” said Win Porter, who served as the assistant administrator for solid waste and emergency response at the Environmental Protection Agency under Presidents Ronald Reagan and George H.W. Bush. “Eight, 10 years ago we were running out of oil and natural gas. Now we (the United States) are the world’s largest producer of natural gas and will soon be the world’s largest on oil.”

For New Mexico, it’s not only an economic boon to businesses serving the oil-producing companies and their employees as the service and housing sectors try to keep pace with the oil development companies, but also a boon to the state in the form of increased oil and gas revenue. In turn, the leases on state lands for oil and gas drilling and exploration go back to the state’s educational system, benefiting children across the state, regardless of whether their district is near a well field.

Overall state earnings from such leases between July 2013 and June 2014 came in at $817 million, according to Sunalei Stewart, the state’s deputy land commissioner. Of that, 97 percent comes directly from oil and gas production on state lands, he said.

“We’re seeing increases in other divisions, agricultural leasing and other divisions including renewables,” Stewart said.

An $817 million infusion to state funds is “by the far the best year ever in the history of the Land Office,” he said. “Basically the last three years have been the highest in the history of the Land Office, and oil and gas is a major component of that success.”

Next year, the Land Office expect another record-setting year, with conservative projections calling for $800 million and up.

“Oil and gas production has been up 20 percent in the last two years, and we really don’t have any signs of slowing in the next five,” said State Land Commissioner Ray Powell, who is charged with administering public lands, including oil and gas leases. “So far it’s been primarily focused in the Permian Basin (in the southeastern part of the state), but it’s looking good for the Four Corners as well with the resources up there and the new technologies.”

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Some of those technologies include fracking, which has come under fire across oil-developing areas of the nation. Concerns about destabilizing underground formations and the potential for earthquakes are currently being studied. Another concern, echoed by Powell, is knowing what is in the mixture of water, sand and chemicals that are injected into wells to fracture underlying formations and free more oil and gas for pumping.

“There are concerns about fracking,” Powell said. “The primary concern is knowing what is being placed in the ground. I think industry has got that message and I’m told they are addressing that. I would encourage them to have as much sunshine as possible.

“Fracking is separated by considerable depths from groundwater,” he added. “If we contaminate groundwater in an area with drought, we have an irreparable problem.”

Yet oil and gas production in New Mexico is expected to continue to grow or hold steady for years to come.

“Oil and gas production is doing well in New Mexico,” Stewart said. “But these resources are finite resources. We don’t know how long we’ll have them. We do understand that, with oil, once you burn it, it’s gone.”

Still, estimates are for half a billion dollars in potential revenue from drilling in the next 35 years, according to the Land Office.

Solar and wind are also resources that are set to grow.

“We’re just on the cusp of a renewable energy revolution here in New Mexico,” Stewart said. “We want to have a strong oil and gas industry in New Mexico. We also want to be a leader in renewable energy resources.”

Porter agrees.

“New Mexico is pretty broad-based with the same amount of coal, natural gas and petroleum,” he said. “Anybody who makes progress on renewables, wind and solar, it should be New Mexico.”

Also, our state’s laboratory system lends the state to development of small-scale nuclear energy, he said.

Wind and solar are free raw materials which should be used. The current difficulty is in getting the electricity generated to larger, urban markets to be sold.

“I think we are running into some success,” Porter said. “We are now getting better at wind and solar, but you also lose energy in the grid. A lot of the things talked about in Washington nowadays is how do you get more efficient grid dynamics.”

But work is progressing to correct the transmission deficiencies to better allow development of renewable energy in the state.

“Now is the time to absolutely take advantage of the opportunities arising in renewable energy, solar, wind, and geothermal is not far on the horizon,” Powell said. “It’s looking very, very bright. What we need help with is the federal government putting in resources to address transmission needs.

“These are opportunities we really need to take advantage of and accelerate.”

 

(c)2014 the Carlsbad Current-Argus (Carlsbad, N.M.)

Visit the Carlsbad Current-Argus (Carlsbad, N.M.) at www.currentargus.com

Distributed by MCT Information Services

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