New Mexico State Land Office: revenue driven by oil and gas, other industries to grow

Adrian Hedden
Carlsbad Current-Argus

New Mexican householders saved up to $1,100 on their taxes last year, thanks to activities conducted on State Trust land – mostly oil and gas and agricultural operations.

A recent study from New Mexicans for Economic Prosperity (NM4EP) titled “Prosperity for the Public: State Lands and the New Mexico Economy,” pointed to a record $852,2 million in revenue generated to the State’s Land Grant Permanent Fund and Land Maintenance Fund from 9 million acres of State Trust land in 2018.

Both funds contributed up to $3.5 billion in the last five years, records show, and $6.5 billion in the last decade.

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Oil and gas developments accounted for 93.5 percent of the revenue, despite less than a quarter of State Trust lands leased for such operations, read the study.

Pipeline rights-of-way alone generated $15.4 million in state revenue last year.

“The economic activities that take place on our state trust lands are an important source of jobs in multiple industries from agriculture and energy to mining and outdoor recreation,” said Kyler Nerison, executive director of NM4EP.

“They also generate hundreds of millions of dollars every year for education and health care across New Mexico.”

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Aside from oil and gas, the report pointed to opportunities to grow renewable energy developments and outdoor recreation, read the study, diversifying New Mexico’s economy.

“By capitalizing on opportunities available on state trust lands, we can expand and diversify New Mexico’s economy, create jobs in multiple industries, and help build a stronger future by generating increased revenue for education, health care, and public institutions around the state,” Nerison said.

New Mexico State Land Commissioner Stephanie Garcia Richard meets with oil workers at an XTO site, Dec. 4, 2018 in Carlsbad.

Renewable energy to see gains in next decade

While New Mexico was ranked high for potential wind and solar capacity, read the report, renewables only accounted for about $937,000 or 0.1 percent of State Trust land revenue last year.

But at the end of fiscal year 2018, the State Land Office (SLO) reported it was processing 15 applications for renewable energy developments.

And a recent analysis from the SLO identified about 475,000 acres of state land which could be used for wine turbines, based on wind speed and elevation.

That acreage could support up to 3,711 wind turbines and generate about $27.9 million annually in revenue.

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Job growth in solar installation and wind turbine service could be at 112.6 percent and 57.5 percent between 2016 and 2026, read the report, and hundreds of miles of transmission lines would be built to support such activities and energy delivery on State Trust lands.  

“These transmission lines, particularly high-voltage lines that can support industrial-scale projects, can take years to build because of patch-work permitting processes and opposition from landowners and environmental groups,” read the study.

“Like oil and gas pipelines, transmission lines across state trust lands pay for leases and rights of way on state trust land and offer another opportunity to increase revenue for the state.”

More:New Mexico breaks oil production record in 2018, as renewable agenda continues in Santa Fe

State looks to grow agriculture sector

About 8.8 million acres were leased to farmers and ranchers in New Mexico, and more land is available to allow the industry’s continued expansion, said Chad Smith, chief executive officer of the New Mexico Farm and Livestock Bureau.

He said leasing State Trust land is essential for many ranchers to provide enough space for a viable herd.

“Most ranchers don’t own enough private land to provide forage for a decent sized herd, so they lease land from the state land office and are charged a fee per animal, per month,” Smith said.

The SLO announced in March a 1.8 percent decrease in grazing fees, at $5.56 per animal unit month (AUM).

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The rate was determined my market-drive metrics such as beef cattle prices and the overall cost of livestock production.

More than 16,000 jobs are support my beef cattle ranching in New Mexico, records show, with $1.68 billion in economic output and $448 million in labor income.

Smith said agriculture goes beyond creating state revenue as farmers and ranchers often improve the land and local wildlife through their practices.

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“Agriculturists are great stewards of the land, making improvements for livestock that also benefit the state’s wildlife,” Smith said.

In further support of agriculture on State Trust lands, New Mexico State Land Commissioner Stephanie Garcia Richard announced modifications to streamline applications for renewing agricultural leases.

Stephanie Garcia Richard

She eliminated a requirement for lessees to have a land appraisal, opting instead to look to existing formulas to determine the agricultural land value and rental fees, read a news release from the SLO.

Applicants can also seek a re-evaluation of their grazing land carrying capacity – or the number of livestock that can be sustained a segment or parcel of State Trust land.

This metric determines the annual rent the SLO charges lessess.

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“Since taking office, I have been listening to the concerns of everyone that leases state trust land and looking for ways to make our processes easier and more streamlined for applicants. Hundreds of hard working farmers and ranchers lease our land for livestock grazing,” Garcia Richard said.

“I am constitutionally obligated to steward the land while raising money for New Mexico public schools, hospitals, and colleges. I am dedicated to being a good partner to our lessees and this rule change is a small part of that commitment.”

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