BLM: New Mexico receives $486M for lease sales near Carlsbad

Adrian Hedden
Carlsbad Current-Argus
Katharine MacGregor, deputy assistant secretary of land and minerals management at the U.S. Department of Interior presents a check to the State of New Mexico for $486 million in revenue from a recent lease sale, Dec. 11, 2018 at the Bureau of Land Management's Carlsbad Field Office.

Eddy and Lea counties are the source of almost half a billion dollars in state revenue, coming from lease sales of federal land in southeast New Mexico to the oil and gas industry. 

The Bureau of Land Management’s September lease sale of federal land to the oil and gas industry generated about $972 million, with about $486 million going to the State.

The sale included 142 parcels and grossed more revenue, records show, than all of the BLM’s 2017 sales combined.

Thirty-one parcels, many near the boundary of Carlsbad Caverns National Park were deferred following protest from environmentalist groups.

More:Carlsbad has high gas and oil activity, says the BLM. How do other oil states compare?

Representatives from the BLM’s Washington D.C. headquarters presented a check for the state revenue, Tuesday at the BLM’s Carlsbad Field Office.

Katharine MacGregor, deputy chief of staff at the U.S. Department of Interior, commended the work at the Carlsbad office and vowed continued support for the surrounding rural communities.

“We’re so proud of having a lease sale of this size,” she said. “I can’t tell you how thrilled we were to give away the biggest check we ever have. I think it’s clear President (Donald) Trump and (Secretary of the Interior) Zinke are committed to rural prosperity.”

More:Carlsbad BLM office the busiest in the nation

MacGregor said the Carlsbad Field Office holds about 40 percent of BLM activity nationwide – the busiest office in the country – reporting 1,533 applications to permit drilling in fiscal year 2018.

The next closest office was the entire state of Wyoming with 1,227 during that same time frame.

Katharine MacGregor, deputy assistant secretary of land and minerals management at the U.S. Department of Interior presents a check to the State of New Mexico for $486 million in revenue from a recent lease sale, Dec. 11, 2018 at the Bureau of Land Management's Carlsbad Field Office.

But MacGregor said the BLM is committed to uses other than oil and gas, such as grazing and recreation.

She said a balance must be struck to encourage the ongoing economic benefit of extraction, while preserving traditional uses such as farming and ranching and the local way of life.

More:Complaint filed against BLM lease sale, environmentalist cite air pollution concerns

“It will always be multiple use,” MacGregor said. “What is clear is that this is a unique basin. It’s really a matter of striking that balance. Rural prosperity isn’t just energy.”

Ken McQueen, cabinet secretary of the New Mexico Energy, Minerals and Natural Resources Department said the boost from the lease sale will continue to support education across New Mexico, along with local infrastructure in southeast New Mexico.

He said the Permian Basin region is an important priority for the state’s administration, as it provides a significant portion of New Mexico’s revenue.

Earlier this year, the State reported about $1 billion in surplus funds, mostly driven by oil and gas revenue.

More:BLM looks to strike balance between extraction, environment in Carlsbad resource plan

And with the majority of active rigs in southeast New Mexico, McQueen said the priority should be obvious.

“We’re just glad to have this really unexpected bonus into the state government,” McQueen said. “The fact that most of these leases are in Eddy and Lea counties is just an indication of what’s to come. This is an indication of billions of investments to come.”

More:BLM delays sale of land for oil drilling near Carlsbad Caverns, amid protests

McQueen pointed to the New Mexico Department of Transportation’s $60 million project to upgrade U.S. Highway 285, where much of the oilfield traffic travels in and out of Carlsbad, and $43 million in state funds appropriated to remediate the Carlsbad Brine Well beneath the South Y – the main highway junction in southern Carlsbad.

“I think there is a lot of interest in Santa Fe that the investments here keep up with the development,” he said. “We just need to collaborate as we move forward. We need to find a way to spend the money in the best interest of the citizens of New Mexico.”

That also means continuing to support the oil and gas industry at the state level through, McQueen said, as oil production in the Permian is not expected to slow down.

The U.S. Geological Survey reported last week that the biggest oil and gas shale ever discovered could be beneath southeast New Mexico and west Texas.

The report estimated that the Wolfcamp Shale and overlying Bone Spring Formation could contain about 46.3 billion barrels of oil, 281 trillion cubic feet of natural and 20 billion barrels of natural gas liquids (NGL).

More:New Mexico rig counts up, despite drop in price

“The stage has already been set,” McQueen said. “This is an important precedent. Oil and gas will continue to be the largest contributor to the state budget for years to come. It’s important to safeguard that resource.”

Jim Stovall, director of the BLM’s Pecos District said activity at the Carlsbad Field Office has continued “busy and steady.”

He said the office is hiring more staff to work with the State office to identify parcels ideal for mineral leasing.

More:New Mexico ranked last for methane emission prevention

State headquarters handles the actual bidding, but Stovall said his employees are instrumental in determining which parcels of land should be opened to drilling.

“We work closely with the state office. It’s a collaboration,” Stovall said. “The employees are the unsung heroes. These guys work very hard.”

Meanwhile, the BLM’s quarterly lease sale in December generated about $39 million for 107 parcels or 86,814 acres in New Mexico, Texas and Oklahoma.

More:Proposed EPA changes raise ire of New Mexico officials, activist groups

The highest bid per acre was $35,003 by Oklahoma-based Reagan Smith Energy Solutions Inc., for 40 acres in Lea County.

The highest per-parcel bid was by Flat Creek Resources LLC for $2.9 million for 160 acres in Eddy County.

“The BLM is a key contributor to the Trump Administration's America First Energy Plan, which is an all-of-the-above plan that includes oil and gas, coal, strategic minerals, and renewable sources such as wind, geothermal, and solar – all of which can be developed on public lands,” read a BLM news release.

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.