New Mexico considers oil drilling restrictions which would reduce output and revenue
New Mexico's chief economic officer said in a recent report that the state is currently studying new drilling restrictions. These could affect up to 5.4% its future crude production and cost the state billions in revenue.
The study looked at proposed setbacks, or restrictions on how near operators can drill certain structures and areas of the environment. These are meant to protect people from oil and gas contamination.
Ismael T. Torres is the chief economist for New Mexico Legislative Finance Committee. He says that in 2026, the setbacks analyzed in this report will take place and more than one-third of new wells won't be put into production.
This would be equivalent to approximately 12.5 million barrels in oil production lost the first year and 35 million barrels around the beginning of 2030.
By 2034, the production value lost will reach a peak of $4.5 billion per year.
New Mexico is home to a portion of the Permian Shale field that crosses over into Texas. According to the latest data from the U.S. Energy Information Administration, the state produced around 2.04 million barrels of oil per day in the month of July.
According to the report, more than half the wells affected are located on private land. A quarter are located in Lea County, which is one of the fastest growing oil-producing counties of the United States.
Missi Currier is the chief executive of the New Mexico Oil & Gas Association. She said that a statewide setback wouldn't increase the mitigation of the human health effects of oil and natural gas production. But it would harm the development of oil & gas resources in New Mexico and ultimately the State of New Mexico.
The report, which was based on proposals made during the 2024 legislative session in New Mexico, was presented Tuesday to the Legislative Finance Committee of New Mexico.
The report's setbacks would prohibit operators from drilling within 2250 feet (686m) of residential, educational, health, or correctional facilities, and stop drilling 650ft from streams, lakes ponds wetlands or irrigation infrastructure.
This would restrict activity to within 300 feet of any other surface water.
"The costs to human health and natural resources would far exceed any revenue that the state might lose," said Charlie Barrett. Barrett is an environmentalist and thermographer with the environmental group Earthworks in New Mexico.
He added that "setbacks are crucial to protect communities, schools and business." (Reporting and editing by Matthew Lewis in New York, Georgina McCartney from New York)
(source: Reuters)
