BLM: Oil and gas lease sale in southeast New Mexico nears $1 billion
Industry leaders tout sale as proof of New Mexico's energy prominence
- The sale broke the record for most revenue set in 2008.
- 142 parcels were leased for 10 years in southeast New Mexico.
- New Mexico got more than $400 million from sale.
Revenue from the Bureau of Land Management’s latest lease sale of land to the oil and gas industry totaled almost $1 billion, with about $400 million going to the State of New Mexico.
The two-day sale, held in early September grossed more revenue than all of the BLM’s lease sales in 2017 combined.
The 142 parcels totaled in about $972 million, records show. Initially, the sale was to include 173 parcels, with many near Carlsbad Caverns National Park.
After protest from environmentalist and other groups, 31 parcels were deferred and not offered in the sale.
Secretary of the Interior Ryan Zinke commended the administration of President Donald Trump putting policy in place to ensure America’s “energy independence.”
He said Trump’s agenda has encouraged interest in leases on federal land.
“Critics of the administration's American energy dominance policy often falsely claim there is little to no interest in federal oil and gas leases,” Zinke said. “Today, they are eating their words and once again President Trump's policies are bearing fruit for the American people.
The revenue allocated to the State, Zinke said, will benefit the people of New Mexico by creating funding for public services and infrastructure.
“The people of New Mexico will see about half a billion dollars of this right back into their roads, schools, and public services," Zinke said. "This historic lease sale shows what is possible when we leverage the vast natural resources we have in our country, using innovation, best science, and best practices.
He said the “historic” sale continued to establish New Mexico as a national and global leader in extraction.
“We can ensure reliable, safe, abundant, and affordable energy for all Americans, and New Mexico is a centerpiece of our all-of-the-above energy future,” Zinke said. “I applaud the president for his leadership on this issue and look forward to continuing the success."
BLM Deputy Director for Policy and Programs Brian Steed said the administration’s philosophy of inviting and allowing multiple uses on federal public lands can ensure prosperity for the American people, while creating opportunities for local communities.
“The results of this sale show the success that comes with sound energy policy that seeks to use working public lands to ensure reliable energy sources and job growth opportunities," Steed said.
"The administration remains committed to an era of American energy independence through our multiple-use mission that ensures opportunities for commercial, recreational and conservation activities on healthy and productive public lands.”
The sale was hosted by the BLM’s Carlsbad Field Office brought in more than double the revenue from the previous record-holding sale held in 2008, which brought in about $408 million, records show.
In just the first day, 71 parcels were leased for a total of $386 million, overtaking revenue from all of 2017’s lease sales which raised about $358 million.
The sale also broke the record for the highest-price single parcel lease, which was a 1,240-acre parcel in Eddy County sold for $81,889 per acre, for a total of $101.5 million.
The previous single-parcel record was $76,680,000 raised in September 2016 in New Mexico, and the previous per-acre records was $40,001 set in December 2017 in the same state.
Forty-eight percent of that revenue went to New Mexico, and subsequent royalties during the 10-year leases will also be shared with the State.
Ryan Flynn, executive director of the New Mexico Oil and Gas Association said the sale is another example of New Mexico’s growing energy industry.
He said the Permian Basin in southeast New Mexico is one of the most attractive oil plays in the world.
“This just continues to underscore New Mexico’s place at the forefront of the industry, and it also shows the power of the industry,” Flynn said. “This trend of record breaking, this is a trend we are going to continue to see. This is the new norm.”
The State of New Mexico recently announced an about $1.2 billion surplus, and Flynn said oil and gas was a major driver of the extra funds.
He also pointed to an estimated $13 billion in oil and gas investments last year across the State.
About one third of the State’s revenue is supported by revenue from the industry, records show.
Business-friendly regulations, and the unique geology of the region are the two biggest factors to explain the growth, Flynn said.
“Over the next few years, we’re going to continue to see investment and production continue to grow,” he said. “The Permian Basin, with its stacked reservoirs, is extremely attractive to producers. The Permian Basin is central to their activities. You can’t deny the geology.”
With New Mexico Gov. Susana Martinez leaving office in January, Flynn said he hoped the next administration will continue to encourage development through favorable policies.
“We’ve had a stable, consistent regulatory environment,” he said. “New Mexico has really emerged as being at the forefront of these investments. They need to have confidence that they’re going to get a return on those investments.”
To sustain the growth, Flynn called on the industry to invest in infrastructure and help support public services such as schools.
“There’s no separation between what’s good for the industry, and what’s good for the community,” he said.
Adrian Hedden can be reached at 575-628-5516, email@example.com or @AdrianHedden on Twitter.