Oil and gas production in New Mexico has reached record levels, bringing our state budget surplus along with it.
The Albuquerque Journal reports:
New Mexico’s oil boom continues to reach new heights as recently-published data shows oil production reaching a record-high of 250 million barrels of oil in 2018. The United States Energy Information Administration reports that oil production climbed an impressive 46% from 2017 to 2018, surging 78 million barrels past the previous record of 171 million barrels set in 2017.
This increased production means increased opportunity for New Mexico. State lawmakers currently have a $1.2 billion budget surplus as they craft the budget for the next fiscal year – 80% of which legislative analysts traced directly to oil and gas. This means we have the financial resources to invest in our schools, public safety, and infrastructure – the kinds of investments that can ensure long-term prosperity, not just short-term gains.
Ryan Flynn, executive director of the New Mexico Oil and Gas Association, explained how the historic production levels and surplus benefit the entire state:
“New Mexico’s oil and natural gas industry continues to be the economic backbone of our state. Record energy production is not only good for jobs and the communities where we produce oil and natural gas, it means important funding for our public schools and the entire state budget while protecting our environment and natural resources.”
In addition to the current surplus, state economists have also predicted government revenues will be $852.2 million higher in fiscal year 2021 than they were last year. But the news may be even better, according to state Senator John Arthur Smith, who is chairman of the Senate Finance Committee.
Sen. Smith said the current surplus projections may be too low and predicted that production would continue to rise.
“It appears we’ll generate more than what was forecast in December, even over $1.2 billion,” Smith told the Albuquerque Journal. “And for next year’s budget, we’ll likely see a steady revenue stream from oil and gas. I think production will hit 300 million barrels by the end of this year.”
Recent developments underscore Sen. Smith’s predictions.
First, the U.S. Geological Survey identified the largest continuous oil and gas resource potential ever measured in the Permian Basin, which sits partially below our state. Their estimate included 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas, and 20 billion barrels of natural gas liquids.
Then last week, two major energy companies separately announced that they are each planning to significantly increase production in the Permian. When all is said in done, the two projections combine for nearly 2 million barrels per day within the next five years, a significant portion of which will likely occur in New Mexico. This would potentially make large budget surpluses – such as the one we have now – the new normal.
New Mexico’s economy has struggled in recent years, but thanks to these and other developments, we’re turning the corner. Jobs are being created, unemployment is falling, and economic momentum is building across our state.
“New Mexico’s Permian Basin is among the best in the world for oil and natural gas production,” Flynn also said. “We are rising to the challenge of driving New Mexico’s economy, and we can continue to safely develop our oil and natural gas resources and enjoy robust growth for the foreseeable future.”