New Mexico is evaluating new oil and gas drilling restrictions that have the potential to impact production and revenue in the coming years, according to a new study released this week by New Mexico’s chief economist.
Proposed setbacks, aimed at limiting the proximity of wells to residential, educational, and environmental areas, could reduce future output by 5.4%, equating to about 12.5 million barrels of oil lost in the first year and over 35 million barrels by the early 2030s. This potential reduction would peak at an estimated $4.5 billion annually by 2034, underscoring the economic stakes.
The restrictions focus on keeping drilling operations at least 2,250 feet away from areas such as homes, schools, and health facilities, as well as limiting their proximity to water bodies and irrigation systems. While advocates like Earthworks argue these measures are essential for protecting public health, industry leaders warn that the financial fallout for New Mexico will be severe. Missi Currier, CEO of the New Mexico Oil & Gas Association, highlighted that a statewide setback could hinder oil and gas development and weaken the state’s economic footing.
New Mexico is already a top oil producer—the second-largest oil-producing US state— generating record revenues from the Permian Basin boom. Additionally, New Mexico has driven the Permian’s oil production growth over the past two years.
The state finds itself caught between replenishing the state’s coffers and a rather ambitious greenhouse gas (GHG) reduction target. Despite these goals, a report from the Environmental Defense Fund found the state is likely to miss its 2030 emissions targets by a wide margin. As production has surged, so has environmental scrutiny, leading to a June court decision (Atencio v. State) that allows a lawsuit on oil pollution to move forward against the state for potentially failing its constitutional duty to protect natural resources.
New Mexico’s leaders are now tasked with balancing continued oil revenue generation with environmental commitments, a balancing act that will likely face increasing pressure as the energy landscape continues to evolve.
By Julianne Geiger for Oilprice.com
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