Commentary: LAS CRUCES -- Reports that oil extraction within New Mexico exceeded record numbers are being met with blind optimism by groups like the New Mexico Oil and Gas Association who continue to push for more extraction and less regulation. State and Federal agencies announced today that in 2017, 172 million barrels of oil were produced in New Mexico, much of which came from the Permian Basin wells in the southeastern part of the state.
According to NMOGA this is twice the output of the state in 2011.
While some have been quick to celebrate the record numbers and try and tie them to economic growth in New Mexico, a host of mitigating factors have been left out of most of the stories so far published.
“Claiming this is a financial boon for New Mexico without addressing the $180-$240 million dollars lost each year from wasted natural gas is disingenuous at best,” said Lucas Herndon, Political Director at ProgressNow New Mexico. “We know that the industry focuses on what it is extracting and not on what it’s losing because to them the losses are minimal. But to the citizens of New Mexico it’s literally tens of millions in unpaid taxes and royalties that should be going to schools and other programs,” Herndon said.
For instance, estimates are that by capturing this wasted natural gas and collecting tax and royalty revenue off of it, New Mexico could increase Pre-K enrollment by 50 percent and provide 5,000 more New Mexico kids access to quality early childhood education.
Lost revenue is only part of the issue in regards to the increased drilling and extraction of resources in New Mexico. The physical effect of lost methane has created a cloud over the state nearly the size of Delaware. The amount of lost energy from these operations is enough to fuel every home in New Mexico every year with some to spare.
As pointed out by NMOGA, part of the success of Permian oil is due to artificially depressed world prices from other oil conglomerates in the Middle East and Russia. While the price of crude has risen back about $60 in recent months, anything less than that threatens the viability of all the investment in Permian oil. Additionally, it was reported last week that production of crude is set to outpace the resources needed to refine the crude oil into usable products later this year. That means either crude will become stockpiled and drive prices lower or that production will be artificially slowed down until refineries can catch up.
“New Mexicans have seen this boom and bust movie before,” added Herndon. “We know that global markets can give, they can just as quickly take away. That is why it is so imperative for the state and the oil and gas industry to step up now and address this methane waste problem. Once this natural gas is burned off or otherwise wasted, it is gone.”