FARMINGTON — San Juan County led the state in natural gas production at 480 billion cubic feet in 2011, according to a new report from the state Energy, Minerals and Natural Resources Department.

The county's two coal mines also produced a majority of the coal mined in New Mexico.

The report underlines the Farmington area's continued reliance on fossil fuels as the commodities face increasing economic and regulatory obstacles.

Natural gas and coal operations are major employers and taxpayers in San Juan County.

"Natural gas and coal production will continue to be the anchor of our economy in San Juan County for the near term," said Farmington Mayor Tommy Roberts.

New Mexico mines produced 21.9 million tons of coal in 2011 worth $797 million, according to the report.

A majority of the coal mined in New Mexico comes from two large mines west of Farmington, Navajo Mine and San Juan Mine. The mines are operated by BHP Billiton's New Mexico Coal division.

Navajo Mine produced nearly 7.9 million tons of coal in 2011, while San Juan Mine produced almost 4 million tons.

Navajo Mine is likely to produce less coal in 2013 because of a plan to decommission three of the five stacks at Four Corners Power Plant, the mine's only customer.

Coal generated $25.6 million in state taxes in 2011, far more than any other commodity. Potash was second at $5.9 million, according to the state agency's report released Thursday.

Meanwhile, new natural gas drilling continued to decline. Only 246 wells were completed in New Mexico in 2011, according to the Oil Conservation Division. That's down from 258 in 2010 and a recent high of 1,035 in 2007.

San Juan County led the state in natural gas production at 480 billion cubic feet in 2011. Rio Arriba County was second with almost 343 billion cubic feet. Statewide, wells yielded nearly 1.2 trillion cubic feet of natural gas.

In 2011, 63 percent of New Mexico's natural gas production occurred on federal lands, 17 percent on state lands, 16 percent on private lands and 4 percent on American Indian lands.

For oil production, San Juan County came in fifth with 1.25 million barrels. Lea County produced the most oil with 33.4 million barrels, followed closely by Eddy County at 33.3 million barrels. Chaves County was third and Rio Arriba County was fourth.

Farmington officials hold out hope oil exploration will boost the economy. A few major producers, including Encana Corp., are drilling wells to test the viability of producing oil from the Mancos Shale, a geologic layer in the San Juan Basin.

"Hopefully oil plays a bigger role in our economy," Roberts said. "That would be a shot in the arm."

The area also needs to see rigs drilling new wells, he added. "We would want to see increased drilling in order to replace the reserves that are being produced."