More federal revenue generated by energy production came to New Mexico than any other state last year as drilling continued to surge in the state’s southeast corner.
New Mexico is the second-highest producer of oil in the U.S. after Texas, with which it shares the Permian Basin.
Recent data from the Department of the Interior (DOI) showed New Mexico earned $2.93 billion in federal revenue from energy production, largely oil and gas.
The next highest was Wyoming at $832 million, followed by Louisiana at $177 million and Colorado at $153 million.
North Dakota, third in the nation for oil production after Texas and New Mexico, was at $132.66 million in federal energy revenue, the report read, and Texas was sixth in the U.S. at $108.27 million.
“The disbursements provide funds for states and Tribes to pursue a variety of conservation and natural resource goals, including irrigation and hydropower projects, historic preservation initiatives, conservation of public lands and waters, and investments in maintenance for critical facilities and infrastructure on our public lands,” read a DOI statement.
Overall, Interior’s Office of Natural Resources said it disbursed about $4.7 billion in revenue in FY 2023 from energy production to states where energy is produced.
About $600 million of those dollars came from renewable energy, the DOI reported.
More oil means more money to New Mexico, for now
In New Mexico, about half of oil and gas production occurs on federal land, mostly in the Permian Basin.
The Permian was expected to generate about 5.98 million barrels per day (bpd) in December, according to the latest forecast from the Energy Information Administration (EIA), a growth of about 5 million bpd from last month.
Natural gas production was also expected to grow in the region by about 113 million cubic feet per day (cf/d), to a total of about 24.8 billion cf/d in December, the EIA reported.
The basin, including Texas and New Mexico, contributed the most to growth in American oil production than any other states, read an EIA report.
New Mexico grew the most in 2022 for the third year in a row, the report read, by 300,000 bpd to a total of 1.6 million bpd.
“The Permian Basin, a productive oil basin located on the border of West Texas and eastern New Mexico, leads in oil production for these two states,” read the report. “We forecast U.S. crude oil production will continue to increase in 2023 and 2024.”
Ahead of the 2024 Legislative session, New Mexico Legislative Finance Committee reported the state would have $3.6 billion in “new money” in FY 2024, and that revenues would surpass records set in FY 2023.
Is New Mexico too reliant on fossil fuels?
The LFC warned New Mexico’s continued reliance on oil and gas revenue could subject the state to dramatic up and down swings in its finances tied to shifts in national and global energy markets.
The report estimated oil production in New Mexico would peak at about 2 million barrels per day (bpd) in 2028 and decline steadily to about 500,000 bpd by 2050.
“New Mexico’s dependence on the energy sector makes oil market volatility the largest, most significant risk to the forecast—on the upside and the downside,” read the report.
“A significant downside remains, with a global recession likely to push oil prices lower and higher input prices increasing the risk for oil prices to fall below breakeven prices, necessitating production declines.”
But for now, fossil fuels appeared poised to continue to rise as global energy companies continued to invest in projects aimed at increasing production of oil and gas, despite ongoing concerns that pollution was driving climate change.
The International Energy Agency’s annual World Energy Outlook called for a shift toward renewables to avoid global warming of more than 1.5 degrees Celsius, an international benchmark believed tied to extreme weather events.
Environmentalists argued deals like ExxonMobil’s $60 billion buyout of Permian-focuses shale drilling Pioneer Natural Resources, and Chevron’s $53 billion merger with Hess conflicted with the scientific community’s conclusion that fossil fuels should be phased out by 2030.
These deals came as the DOI’s Bureau of Land Management planned to lease more federal public land in New Mexico to oil and gas companies.
The BLM planned to hold an auction for up-to-10-year leases of the lands in the second quarter of 2024, totaling in 6,282 acres of public land in southeast New Mexico and Kansas,
Patrick Grenter with the Sierra Club said President Joe Biden and the federal administration should reject any such new fossil fuel projects in the U.S. to avoid further pollution impacts.
“The IEA report makes strikingly clear what many of us in the environmental movement already know too well – we are running out of time to wind down the use of fossil fuels,” said Grenter said.
“The transition to renewable, clean energy will not happen on its own and that is why we need President Biden and his administration to lead the way and reject any new or expanded oil and gas project. Fossil fuel extraction and export is not in the public interest, plain and simple.”
This article originally appeared on Carlsbad Current-Argus: Oil and gas sends $3B to New Mexico