New Mexico senators defend oil and gas amid renewable energy agenda
Southeastern New Mexico lawmakers continued to defend the oil and gas industry during the ongoing legislative session in Santa Fe, despite the renewable energy agenda presented by newly-elected Gov. Michelle Lujan Grisham.
In hopes of reminding the Legislature that oil and gas is an essential segment of New Mexico's economy, and must be protected amid increased emphasis on renewables, two state senators introduced Senate Memorial 20, declaring Feb. 6 "Oil and Gas Industry Day."
SM 20 was sponsored by State Sen. Gay Kernan (R-42) who represents Eddy and Lea – New Mexico’s two highest oil and gas-producing counties.
It was co-sponsored by State Sen. Stuart Ingle (R-27). He represents Lea, Curry and Chaves counties.
Kernan said the memorial received a "warm" reception on the Senate Floor, as many in attendance testified to the importance of oil and gas in supporting New Mexico's bottom line.
"Many of us who support the industry are playing defense," Kernan said. "There are a number of bills introduced that I would call destructive to the industry. We're aggressively fighting those bills."
She pointed to Senate Bill 459, which proposed a four-year ban on hydraulic fracturing, and Senate Bill 15, an effort to drastically increase the state's renewable portfolio.
"Oil and gas is the most important industry in New Mexico," Kernan said. "We need to recognize that in Santa Fe. At this point, we're just going to wait and see. It's early in the administration. We'll see how these bills advance."
The memorial pointed to New Mexico's rank as third for oil production in the country and ninth in natural gas, crediting mineral discoveries in the Permian Basin as the main driver for the boom.
“The Permian basin is at the center of an energy resurgence attracting interest from around the world," read the memorial.
A 2018 report from the U.S. Geological Survey, described the “largest continuous oil and gas resource ever assessed” in the Permian Basin, with an estimated potential for extracting more than 46 billion barrels of oil, 281 trillion cubic feet of natural gas and 20 billion barrels of natural gas liquids.
All those resources mean more jobs, read the memorial, and revenue to support New Mexico’s public schools and infrastructure.
The oil and gas industry provides more than 90 percent of school capital investment across New Mexico, read the memorial.
“The oil and natural gas industry is the largest private sector employer in New Mexico, providing more than one hundred thousand direct and indirect jobs for state residents,” read the memorial.
“The revenues collected from New Mexico's oil and natural gas industry help fund the state's schools, roads and public facilities.”
Rig counts continue spike
The first month of the year saw oil rigs in New Mexico growing at the second-highest rate in the country, when compared with other oil-producing states.
With 112 active rigs, per a Feb. 1 report from Baker Hughes, New Mexico gained 27 compared with the state’s total of 85 at the same time last year.
That count is up nine rigs from the previous records of 103, set in July 2018.
That growth was second only to Texas, which had 514 rigs – the highest in the nation – per the report, gaining 49 from last year’s total of 465, the report read.
New Mexico also had the third-highest rig count, just 10 behind Oklahoma, which reported 122 rigs, a growth of 5 rigs from last year’s total of 117, records show.
The largest losses in rig counts were reported in California, which lost eight in the last year, and Ohio which lost five.
The United States gained 82 oil rigs, for a total of 847 when compared with last year’s total at the same time of 765, per the report.
Gas rigs gained 17, for a total of 198 as of Feb. 1, records show.
The price per barrel of oil dropped about $2 in the last week, from about $54 to $51.96, per the most recent from NASDAQ on West Texas Intermediate – a grade of crude oil used as a bench mark for domestic prices.
But that slight dip followed a spike starting in mid-January, read the report, when WTI traded as low as $43.
Robert McEntyre, spokesman for the New Mexico Oil and Gas Association said oil and gas operators are remaining optimistic about investing in the state.
Despite fluctuations in oil prices, McEntyre said New Mexico’s oil and gas infrastructure continued to grow.
“If producers weren’t optimistic, they would pull back their operations,” McEntyre said. “Rigs and drilling are up.”