Oil and gas leads New Mexico to earn more than $1 billion from state land
Energy development on state land was a primary driver in a more than $1 billion contribution to the State of New Mexico this year.
In Fiscal Year 2019, the State Land Office estimated it received about $1.1 billion in revenue, overtaking $852 million received in FY 2018, for the most earned in a single year, read a news release from the State Land Office.
Funds will become available this fall, when royalties are collected, the release read, and the estimation was based on projections from the last three months of the fiscal year.
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New Mexico State Land Commissioner Stephanie Garcia Richard said the money would go to support public schools, universities and other institutions across the state, drawn from oil and gas companies, along agriculture, renewable energy and outdoor recreation.
The dollars were also used to fund State Land Office’s operation costs which were $17.4 million or about 1.5 percent of the total projected revenue.
“This is a record year for New Mexico,” Garcia Richard said. “The State Land Office is open for business, and our business is making a huge impact. The Land Office is one of the most unique billion-dollar enterprises in the Southwest - every dollar that we raise goes directly back into our communities, helping build a better future for all New Mexicans.”
She said the revenue was crucial to supporting public services in New Mexico and supporting taxpayers’ bottom lines.
“Not everyone knows that we financially support 22 public institutions, so when the Land Office succeeds, public schools, colleges, hospitals and other institutions succeed as well,” Garcia Richard said.
“We do business with a diverse array of companies – oil and gas, small and large businesses, wind and solar investors, farmers and ranchers, outdoor recreation outfits – and because of these strong partnerships and relationships with various industries, New Mexico households and taxpayers are getting a break.”
Revenue was raised through land lease payments, oil and gas earnings and rights-of-way when operations cross into State Trust land.
Dollars also come from livestock grazing leases, permits, interest, fees and royalties, the release read, and funds that do “not permanently” deplete a source – such as renewable energy or livestock grazing are deposited into the State’s Land Maintenance Fund, distributed monthly to beneficiaries.
Earnings from deals that do deplete a source, such as royalties from oil and gas extraction, were earmarked for the Land Grant Permanent Fund to be distributed to beneficiaries by the State Investment Council.
The State Land Office is the only contributor to the Land Grant Permanent Fund.
“The State Land Office provides two different, but equally important, sources of income for the public institutions that we support,” Garcia Richard said.
“Not only do we distribute funds on a monthly basis, but we also are the sole contributor to the Land Grant Permanent Fund - the third largest public education trust in the nation – which has grown exponentially and provides vital resources to our public schools and other beneficiaries.”
Oil and gas revenue showed a 36 percent increase compared to FY 2018, and commercial lease payments saw a 30 percent growth, records show.
Income from oil and gas bonuses were projected at about $142 million, up from about $106 million in FY 2018, while oil and gas rentals decreased slightly from $1.84 million to $1.82 million.
Oil and gas interest payments also dropped from $3.4 million in FY 2018 to $1.5 million this year.
Royalties from oil and gas climbed to about $890 million in FY 2019 from $679 million in FY 2018.
Monthly oil and gas royalty payments ranged from about $60 million to $85 million, peaking in March at about $84.7 million.
Renewables saw the most growth, with solar energy lease payments increasing by more than 1,300 percent, and wind energy lease payments growing by 400 percent.
This meant collected income from solar energy grew from $29,130 in FY 2018 to $411,214 this year, and wind energy grew from $37,748 to $192,262.
Revenue from rights-of-way increased by 61 percent.
Kyler Nerison, executive director of New Mexicans for Economic Prosperity urged the State to continue to provide a business-friendly environment to oil and gas and other energy developers to continue to raise money for New Mexico.
He said the State Land Office must continue to expand energy development to support New Mexico’s economy.
"The incredible new numbers from the State Land Office show that our current approach to oil and gas production on state trust lands is maximizing economic opportunity while also generating record revenue for New Mexico schools and other public institutions,” Nerison said.
“Continuing to expand energy development on state trust lands while also taking advantage of opportunities in agriculture, outdoor recreation, and renewable energy will expand and diversify New Mexico’s economy, create jobs in multiple industries, and help build a stronger future for our state."
The news comes on the heels of an announced from the U.S. Energy Information Administration that U.S. oil production surpassed 12 million barrels per day, largely driving by production in the Permian Basin of West Texas and southeast New Mexico.
Kathleen Sgamma, president of the Western Energy Alliance said the Permian, combined with booms in other regions across then nation, will continue to establish America as a global leader in energy production.
“It certainly is an exciting time to be in the industry, as shale oil production continues to climb,” she said.
“The huge increases in the Permian of New Mexico and Texas combined with increases in the Bakken in North Dakota and the Powder River in Wyoming mean that American producers are meeting new global demand while keeping prices at the pump low for consumers here at home.”
More oil and gas news
- Natural gas production coming to Carlsbad, Lea County gets new plant
- Waste to water: Oil and gas industry looks to mitigate water waste during boom time
- Study: New Mexico loses on federal oil and gas leases, industry calls for quicker approvals
- Companies partner to bring remote healthcare to oil and gas workers
- Navajo Refinery to be expanded, oil and gas landfills going in across the Permian Basin
- Devon Energy bringing office to Hobbs, New Mexico second in oil and gas rig count
Adrian Hedden can be reached at 575-628-5516, firstname.lastname@example.org or @AdrianHedden on Twitter.