Growth in the Permian Basin oilfields drove the economy of Carlsbad for years, while southeast New Mexico provided an energy supply used throughout the country and world.
In the wake of the COVID-19 pandemic, which led to an historic drop in oil prices and production, the market’s regrowth spurred a rebuilding of the Permian’s operations – leading it to be the largest oil-producing basin the U.S. which leads the world in crude.
Production was expected to climb again to a record of more than 5 million barrels per day (bpd) coming out of the Permian in November, almost half of total U.S. output of about 11 million bpd, according to the U.S. Energy Information Administration.
Much of that is attributable to New Mexico and its southeast region containing the cities of Carlsbad and Hobbs, as the state became the second-largest oil producer in the U.S. behind Texas which shares the Permian, records show.
That also meant more drilling rigs appeared in New Mexico than any other state aside from Texas, and big business for local communities like Carlsbad.
The City’s Mayor Dale Janway said the industry regrew in the two years since the pandemic began in New Mexico, providing a stream of jobs and tax revenue for the Carlsbad, Eddy County and State governments.
This year, the New Mexico Legislative Finance Committee reported lawmakers would have an estimated $2.5 billion surplus to use during the upcoming legislative session in January – a bump largely credited to oil and gas revenue.
“The oil and gas industry has shown steady overall growth since 2020. This is clearly important to the community because this industry provides thousands of jobs to our residents. It also provides a gross receipts tax (GRT) base for the City, County and State,” Janway said in an emailed statement.
As the region boomed, Janway hoped to see more oil and gas giants like Chevron and ExxonMobil opening offices in the Carlsbad area, affirming their commitment to develop fossil fuels but also provide continual support for the host community.
“What we’d like to see is for oil and gas companies to continue to open regional offices in Carlsbad – for our community to become a hub for these companies’ administrative offices and technical teams,” the statement read.
But that growth could be hampered by ongoing governments efforts, Janway warned, to reduced the industry’s pollution.
In the last two years, New Mexico Gov. Michelle Lujan Grisham and her administration enacted multiple regulations of the oil and gas industry to reduce air-polluting emissions from the industry and ensure better safety for the people of the state’s oil and gas regions.
And the federal Environmental Protection Agency sought to enact tougher rules of its own that would apply to operators in all U.S. states.
Regulations at both levels would tighten requirements for detecting and reporting leaks at oil and gas facilities, increase gas capture requirements and seek to reduce emissions known to pollute the air and exacerbate climate change.
About 32 percent of nationwide methane emissions come from oil and gas operations, according to the EPA.
The agency reported 16 percent of carbon dioxide (CO2) was emitted from industries through fossil fuel generation and consumption, and 33 of CO2 emissions came from the transportation sector which largely burns fossil fuels.
Joe Vigil, spokesman with the New Mexico Oil and Gas Association said the industry was working to comply with the stronger standards and develop better gas-capturing technologies to meet a goal to capture 98 percent of produced gas by 2026, as required by recent state rules.
That work will become even more important in the coming decades, Vigil said, as energy demand was expected to grow 30 percent.
“The industry continues to balance American energy security while maintaining a long-term focus on environmental stewardship with continual innovation,” Vigil said. “Through programs like advanced oil recovery and gas capture, the industry continues to provide the opportunity for American energy independence, while producing a cleaner, economical, and more reliable energy.”
Janway contended regulations at the state and federal level could prove harmful to the oil and gas industry, and leaders should endeavor to support the companies that extract fossil fuels from the region.
He touted donations from oil companies to local charities, supporting a recent fundraiser to provide school supplies to children in need as evidence that the industry was beneficial to Carlsbad.
“We’d like to see continued, steady growth of the industry and our community,” Janway’s statement continued. “This is, of course, assuming that state or federal officials do not inhibit this important industry in pursuit of their own political aims.”
Adrian Hedden can be reached at 575-628-5516, [email protected] or @AdrianHedden on Twitter.