FARMINGTON — The equation is simple. An operating drilling rig equals jobs.
Speculation has loomed of a pending San Juan Basin oil boom from production in the Mancos Shale, but whether or not the boom materializes, one thing is for certain, a drilling rig puts people to work.
"I can account for 50 people whose employment is directly tied to that specific rig," said Jason Sandel, vice president of Aztec Well Operations.
Though some people have speculated that a drilling rig can create as many as 200 jobs, Sandel is conservative and bases his estimates on what he knows.
In addition, he said, the 50 jobs are full-time and pay an average $75,000 annual salary.
As of early July, T. Gregg Merrion, president of Merrion Oil and Gas Corp., said 11 drilling rigs are operating in the San Juan Basin, which is a fraction of those operating during the heyday of natural gas drilling. In 2008, at the height of drilling activity, the San Juan Basin had 36 operating rigs, most of which were drilling for natural gas. In 2012, the drilling rig count hit its recent low point with two operational drilling rigs.
Sandel said about 1,800 jobs were lost after a precipitous drop in natural gas prices.
But companies probing the Mancos Shale for oil say the formation is showing promise, and that jobs might return as more rigs go up. But advancing technology can also take a toll on the job numbers, some in the industry say.
Jeff Kirtland, WPX spokesman, said that with increased efficiencies in drilling technology and the use of horizontal drilling techniques, there could be less demand for drilling rigs.
"There is going to be a difference because of the technology and the advancement of horizontal drilling," he said.
Kirtland said that WPX has been horizontally drilling for natural gas in the Piceance Basin near Parachute, Colo., for the past several years and production has become more efficient creating less of a need for drilling rigs.
He said that in an area where they used to use 15 rigs they are now "down to nine rigs, basically producing the same amount of gas."
Although gas and oil are different products and use different techniques, he said horizontal drilling for oil also has increased efficiency resulting in a need for fewer drilling rigs.
Sandel said advances in technology shouldn't reduce the need for drilling rigs.
When drilling was at its height, the wells being drilled were vertical which was a three- to four-day process after which the rig would move to the next hole.
Horizontal drilling, which can explore a large radius from a single well, used to take 20 days, when companies first started drilling in the Mancos. Now it takes about 10 days, Sandel said.
"It was all natural gas. It was relatively shallow," Sandel said of natural gas drilling. "The reaches that we are going down, a mile down and a mile across, is really the game changer."
The technology in drilling rigs has remained largely the same, he said, so each rig still creates about for 50 jobs, which is the same amount created during the height of the natural gas boom before 2008.
"We use the same number of people that we did 10 years ago," he added.
Regardless, gaining permits to drill wells has been a slow process.
State Rep. James Strickler said during a recent Legislative Finance Committee hearing, that in 2008, the Bureau of Land Management issued about 900 permits to drill, and in 2013 only 100 permits were issued.
"This is critical," said the Farmington Republican. He cited a New Mexico Tax Research Institute study that indicated about 31.5 percent of the state's revenue comes from the oil and gas.
"It's probably 35 percent, and this state would be dead in water without oil and gas," he said. "We are critical to the success of our states' economy."
New Mexico Energy Secretary David Martin said the state has an agreement in place in which San Juan College students would help the BLM speed up the leasing process by identifying the land and the required processes related to the land status.
Lands in the Mancos Shale drilling area can be BLM, state, Navajo, Navajo allottee or private land.
"We funded a project through San Juan College for students to help and work with the BLM and (the Bureau of Indian Affairs) to speed things through the process," he said.Erny Zah is The Daily Times business editor. He can be reached at 505-564-4638.and firstname.lastname@example.org. Follow him @ernyzah on Twitter.