New Mexico has emerged as a major player in the Permian Basin’s oil and natural gas production with Lea and Eddy counties becoming particularly prominent.
The Permian Basin Petroleum, Texas Independent Producers & Royalty Owners and Texas Oil & Gas associations say the development has made the Permian even stronger than it already was, although New Mexico’s state regulatory environment remains burdensome.
The U.S. Energy Information Administration says New Mexico’s output increased when companies began tapping the heretofore less-developed Delaware Basin under the Permian there, bolstering the region’s record 5.77 million barrels per day of oil production from 5.3 million b/d in 2022 and 4.7 million b/d in 2021.
“The production coming from New Mexico has been incredible for the state, the Permian Basin and the energy security of our nation,” PBPA President Ben Shepperd said. “Because of production in Lea, Eddy, Chaves and Roosevelt counties, New Mexico is now the second-largest oil-producing state in the country, only behind Texas, and revenue generated by the oil and gas industry now provides for roughly half of New Mexico’s state budget.
“Education, road construction and health care are just a few of the government services in every corner of New Mexico that are supported by revenues from oil and gas production from the Permian Basin.”
But without better support from the New Mexico state government, Shepperd said, it’s questionable how long these levels can be maintained.
“Even with the realized growth in production, companies face new regulatory, legislative and even litigation challenges which serve to limit if not deter operations in the state,” he said. “The rock is incredible in New Mexico, but the barriers to oil and gas development are high and seem to be growing higher.”
Hobbs is in Lea County, Carlsbad in Eddy County, Roswell in Chaves County and Portales in Roosevelt County.
TIPRO President Ed Longanecker said Lea and Eddy hold tremendous potential as the region continues to reach new milestones.
“While approximately 78 percent of production comes from the Texas side of the Permian Basin on a barrel of oil equivalent basis, many prominent Texas-based operators are expanding their investments into New Mexico,” Longanecker said from Austin. “Of the top 10 operators by wells drilled this year in New Mexico, nine are headquartered in Texas.
“The regulatory environment in New Mexico is more stringent than in Texas, but the region is expected to grow in importance from an economic and energy security perspective, helping to counter the call for more burdensome regulations in the future.”
He said there has been an uptick in upstream exploration and production employment in Lea and Eddy counties with the addition of nearly 3,300 jobs to a total of 13,619 between 2021 and 2023.
“That’s still below the high of 15,436 upstream jobs reached in 2019,” Longanecker said. “During that same time frame the direct Gross Regional Product increased by 85 percent in the Lea and Eddy counties upstream sector to $7,161,600,820.”
Citing the EIA, TXOGA Chief Economist Dean Foreman said Lea and Eddy drove New Mexico’s crude oil production to over 2 million barrels per day in June alongside a record-high 9.6 billion cubic feet per day of natural gas marketed production.
“These achievements would not have been possible without the infrastructure and market access provided by Texas,” Foreman said. “As New Mexico’s production has expanded Texas has consistently received over two million barrels per day of oil for seven consecutive months in 2024 or double the volume from 2020.”
He said Texas’ extensive pipeline network, processing facilities and refining capacity have been pivotal in supporting New Mexico’s growth.
“The Permian Basin’s prolific output enabled Texas refiners and blenders to utilize a record-high 5.77 million barrels per day of crude oil while exporting 3.8 million barrels per day in June, reinforcing Texas’ position as a global leader in energy supply,” Foreman said.
