Oil production in New Mexico picked up steadily in the last year as the price of crude rose, bringing the state nearly back to levels seen before the 2008 recession, according to a report released Wednesday.
But the number of people in the state with jobs in the oil and gas industry remains at about 1 percent of total employment, says the report by the nonprofit Headwaters Economics, based in Bozeman, Mont.
The report analyzed the status of New Mexico's oil and gas industry from 2000 to 2012. The report looks at drilling rig activity, jobs and the value of the produced mineral.
Declines in oil and gas production in 2008 and 2009 were related to price drops, not to any state regulations such as the pit rule, said Chris Mehl, a spokesman for Headwaters Economics. The 2008 pit rule regulates disposal of oil and gas wastes in pits, sumps and underground tanks. It is under review by a state commission after industry representatives, who claim the pit rule hurt drilling and production, asked the state to amend the rule.
"There's no indication the pit rule has impacted drilling in the Permian Basin [of southeastern New Mexico]," Mehl said.
The rebound was driven by increases in the price of crude oil, according to the report. While prices have fallen in recent weeks, they saw a steady climb in the last two years. The Permian Basin, rich in oil, benefited from the shift.
At the same time, an oversupply of natural gas, due to the success of new drilling techniques, drove the price of that resource down. The natural gas-rich San Juan Basin region of northwestern New Mexico has seen a precipitous drop in new wells. For the first time in more than a decade, the produced value of oil in New Mexico surpassed natural gas in April 2010. In March, the value of oil, at $682 million, was three times that of produced natural gas in the state.
New Mexico's drilling rig count rebounded well compared to neighboring Colorado and Wyoming in the last two years, according to the report. The state's active drilling rig count as of June 15 was at 90, still below a high of 100 in 2006. New Mexico's share of a six-state regional drilling rig activity is slightly less than it was a couple of years ago, but second only to North Dakota. The rig count, tracked by the company Baker Hughes, is one measure of the industry's willingness to put in new wells and pump out resources.
New Mexico's advantage over Colorado and Wyoming, both slower to recover, is a better balance in natural gas and oil resources. A decline in the price of one will often be offset by an increase in the price of the other, Mehl said.
In terms of jobs, the industry employed 10,985 people in 2010, according to the latest statistics from the federal Bureau of Economic Analysis. The number of jobs rose to 14,886, according to Energy Advances New Mexico, an industry-backed organization.
The Headwaters Economics report claims the "green jobs" sector in New Mexico, meanwhile, employed 17,725 people in 2010, or 2.1 percent of all people employed in the state, according to an analysis by the Brookings Institute, a think tank based in Washington, D.C. Opportunity for growth in the renewable-energy sector remains high.
