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Ken McQueen, secretary for the New Mexico Energy, Minerals and Natural Resources Department, talks natural gas, coal development. The Daily Times staff

The event was sponsored by the New Mexico Business Coalition, which fosters pro-business policies and promotes job creation

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FARMINGTON – The state's top energy official says oil and gas activity is on the rise in New Mexico, but he warned that deteriorating oil and gas prices present the single biggest challenge to an extended recovery.

New Mexico Energy, Minerals and Natural Resources Department Secretary Ken McQueen, the featured speaker at the New Mexico Business Coalition's "Energy Bash," also said low natural gas prices will make it difficult for developing coal production.

Local oil and gas industry leaders, government officials and other county residents interested in the future of energy development in the state came together Thursday evening at the Courtyard by Marriott in Farmington for the event.

"While we support other forms of energy, we're big proponents of oil and gas, and we believe we need to advocate for the industry," said coalition president and organizer Carla Sonntag, after welcoming the participants. "There have been attacks on the industry, and that's something we have to be vigilant of. We need to stand united to protect the oil and gas industry."

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The New Mexico Business Coalition is run by wife-husband team Carla and Jeff Sonntag, who are headquartered in Albuquerque. The couple, along with others involved in the coalition, travel around the state with the goal of fostering policies that help businesses and promote job creation.

Sonntag briefed the crowd on the 2017 legislative session, saying that the downside is that the state still does not have a budget. But Sonntag praised local legislators' efforts to advocate for the oil and gas industry.

"You are very blessed to have a good contingency representing you," she said. "I applaud them for standing up for you and the state."

McQueen, who was vice president of WPX Energy before his appointment to Gov. Susana Martinez's Cabinet, said he was glad to be back in San Juan County where he oversaw the company's activities. WPX has been a consistent producer in the San Juan Basin, even through the recent slump.

The single biggest challenge for New Mexico oil and gas production, McQueen told the crowd, is the deterioration of oil and natural gas prices.

"We are, however, seeing a return in activity to New Mexico," he said. "Last week we were back up to 48 rigs in the state, and have seen a three-fold increase in activity in the last few months."

McQueen said the state is currently examining other possible world markets for the state's oil and gas products, including Mexico. He said only 6 percent of Mexico residents have natural gas in their homes.

"Virtually all their electricity today is fuel oil, and we see that as an opportunity," he said. "Natural gas is so much cleaner."

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McQueen spoke of an "energy roadmap" his office is working on to develop viable energy production in the state and exploring ways to make New Mexico's energy competitive. The goal, he said, is to foster economic development.

Specific to the San Juan Basin, he said finding ways to promote natural gas and raise prices will be key. But his office is not focusing just on petroleum options, he added.

"The goal is to develop a plan to target policy changes and adapt to changing energy," he said. "We have a diverse energy state — there are lots of opportunities including solar, wind, hydroelectric and geothermal, in addition to oil and gas. We're limited only by our own thinking."

McQueen also said that low natural gas prices will affect the future of coal development.

"The low prices make it very difficult for coal production," he said. "It's difficult for old coal plants (to compete with) modern gas plants."

McQueen said he does not believe a "methane hot spot" detected over the Four Corners area can be attributed solely to oil and gas operations, even though recent studies have shown it is largely caused by venting, flaring and leaks,

"The Basin is encircled by coal seams that have been emitting methane for millions of years," he said. "Anyone here will admit our operations emit some methane, but you can't say that they're principally responsible for the methane hot spot."

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McQueen said his office plans to analyze the data produced by NASA and universities that participated in the study.

For more information on the New Mexico Business Coalition, visit nmbizcoalition.org.

Leigh Black Irvin is the business editor for The Daily Times. She can be reached at 505-564-4621.

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