Reposted with permission from the Hobbs News Sun.

NEW USGS REPORT

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This map illustrates the oil and natural gas area assessed in a USGS report.

 

With New Mexico the third largest oil producing state in the nation and Lea County the largest producer in the state, new data from the U.S. Geological Survey came as a boost to oilfield predictions.

The USGS on Thursday reported an estimated 46.3 billion barrels of oil assessed in the Wolfcamp Shale and overlying Bone Spring Formation in the Delaware Basin portion of Texas and New Mexico’s Permian Basin. Also reported were 281 trillion cubic feet of natural gas, and 20 billion barrels of natural gas liquids.

New Mexico Oil and Gas Association President Ryan Flynn said, “Simply put, New Mexico is sitting on top of a wealth of recoverable oil and natural gas.”

Flynn credited hydraulic fracturing and horizontal drilling for producers now able to safely extract resources previously unrecoverable.

“This assessment shows that we have the resources to safely produce energy right here at home, and at the same time provide critical funding for New Mexico’s schools, roads and public safety,” he said. “New Mexico’s oil and gas industry already provides one-third of the funding for the state budget, and with a growing oil and gas industry, that’s even more money to hire teachers, build roads, or provide health care to those most in need.”

He estimated, based on the USGS assessment, “(W)e can continue to be the foundation for our economy for decades to come.”

New Mexico produced 172 million barrels of oil in 2017 and entered this year with experts anticipating another record-breaker at more than 200 million barrels. Data for 2018 are not yet available.

Meanwhile, a report by the International Energy Agency said early this year the Permian Basin shows no signs of stopping and that daily oil output in the basin will double by 2023.

State Rep. Larry Scott, R-Hobbs, who is co-owner of Lynx Petroleum, showed no surprise at the new USGS announcement.

“That’s a lot of reserves,” he said. “There are a lot of people that believe that every square foot of the Permian basin on the New Mexico and Texas side will eventually prove to be productive.”

The flurry of activity in southeastern New Mexico has put pressure on everything from housing and schools to highway infrastructure. Concerns also have been raised by state Land Commissioner Aubrey Dunn about the environmental impacts as state and federal regulators have had a difficult time keeping up with the pace of development across the region.

The boom also has resulted in a significant budget surplus that will give incoming Gov.-elect Michelle Lujan Grisham and the Democrat-led Legislature more options as they hash out spending priorities for everything from education and public safety to infrastructure.

Recognizing infrastructure challenges for Lea and Eddy counties, the New Mexico Oil and Gas Association simultaneously encouraged support for a new pipeline started by San Antonio-based Epic Midstream Holdings.

“It is no secret that our oil and gas production has increased, creating more and more revenue for our state,” said Flynn, “But infrastructure challenges are causing a bottleneck, forcing producers to slow production because of a lack of ability to transport product.

“Building the Epic Pipeline will allow us to move 600,000 barrels of oil per day. This will allow the already lucrative basins to expand to new records, making New Mexico an even greater energy powerhouse and boosting economic growth nationwide,” Flynn concluded.

Taking advantage of the oil boom, Flynn said pipeline construction will create new jobs in the state and the finished product will allow producers to increase production, create jobs for more New Mexicans, and build a stronger economy “and a brighter future for our state.”

Earlier this year, a group of about 17 large oil companies organized as the Permian Strategic Partnership to help allay some of the infrastructure issues.

Scott, discussing the record-setting year 2017, credited directional drilling and hydraulic fracturing for the increased production.

“The increase in production is completely a consequence of technology improvements and improvements in fracture stimulation in the horizontal drilling realm,” Scott told the Hobbs News-Sun. “The industry has figured out how to do more with less.”

The USGS estimate is for continuous (unconventional) oil and consists of undiscovered technically recoverable resources.

Although the agency’s geologists acknowledge more study would be needed to determine if it would be profitable to go after the resources, some of the largest energy companies in the U.S. have already invested billions of dollars in the Permian Basin on both sides of the Texas-New Mexico state line.

Undiscovered resources are those that are estimated to exist based on geologic knowledge and already established production, while technically recoverable resources are those that can be produced using currently available technology and industry practices. Whether it is profitable to produce these resources has not been evaluated.

The USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources of onshore lands and offshore state waters.

Curtis C. Wynne may be contacted at reporter3@hobbsnews.com. The Associated Press contributed to this story.