Will Permian Basin lead oil and gas’ resurgence from COVID-19?

Southeast New Mexico and the Permian Basin could be a leading region in the oil and gas industry’s recovery from COVID-19.

During the 2021 Carlsbad Mayor’s Energy Summit, an annual gathering of fossil fuel industry executives, state and local policymakers and Carlsbad community members and leaders, officials from some the nation’s largest energy companies affirmed their vow to continue operations in the region after suffering the market fallout of the health crisis.

New Mexico this year became the nation’s second-largest, oil-producing state in the U.S., a feat many credited to the “prolific” Permian Basin and operations in southeast corner of New Mexico in Eddy and Lea counties.

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The growth came on the heels of an historic bust in oil prices and subsequent production amid the COVID-19 health crisis that led to slumping fuel demands and pushed prices below $0 per barrel for the first time in history.

Vice President of the Delaware Basin for ConocoPhillips John Viets on Oct. 21 at the 2021 Walter Gerrells Performing Arts Center in Carlsbad, New Mexico.

But as vaccines for the virus became widely available and demand recovered, the price was driven back up, surpassing pre-pandemic levels at about $80 per barrel throughout October as operators demand outpaced production of oil and gas.

Carlsbad Mayor Dale Janway in his introduction of the event credit oil and gas for bringing $2.8 billion this year to the State’s budget, per a report from the New Mexico Oil and Gas Association.

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“Our state became the nation’s second biggest oil and gas producers,” Janway said. “That’s work that’s happening right here in Carlsbad and Eddy County.”

Vicki Hollub, CEO of Occidental Petroleum, Oct. 21 was among the speaker lineup at the 2021 Carlsbad Energy Summit held at the Walter Gerrells Performing Arts Center in Carlsbad, New Mexico.

Chief Executive Officer Vicki Hollub of Occidental Petroleum – one of the region’s leading oil and gas producers – said during her address to the Summit that the company recently began reducing its international operations, focusing on the U.S. and Permian Basin where she said regulations are more consistent.

Occidental recently bolstered its domestic operations in purchasing Anadarko Petroleum in 2019 for $55 billion after a bidding war with Chevron. That deal was intended to strengthen Occidental’s footprint in major U.S. shale basins, Hollub said, in New Mexico, Texas and Oklahoma.

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Kent Hance, chancellor emeritus of Texas Tech University, Oct. 21 at the Walter Gerrells Performing Arts Center in Carlsbad, New Mexico. Hance was among the lineup of speakers at the oil and gas industry event.

Less than a year after that sale, COVID-19 surfaced in the U.S. and was declared a pandemic by the World Health Organization, leading to the multi-month collapse of oil prices and a reduction in production and operations by companies like Occidental.

Many companies merged or sold off assets in the wake of COVID-19

“The demand destruction was so severe,” she said. “We reacted immediately and started cutting our capital expenses. We were able to get our costs down and get through it.”