For the third consecutive year in a row, New Mexico’s oil production grew faster than any other state in 2022. The pace of growth was so fast for the state that it accounted for half of all US growth, reports Reuters. A significant portion of the growth came from the Permian Basin in the southeast portion of the state.
New Mexico is maintaining a steady second place standing for overall oil production in the country behind Texas, which produced 1.8 billion barrels of oil last yea. New Mexico produced 574 million, pacing well ahead of North Dakota at 386 million.
Even though Texas holds a sizable lead in production, New Mexico is poised for further rapid growth as the number of oil rigs in the state open. Through May 2023, five new oil rigs were built in the state, while Texas has seen eight rigs closed, according to the U.S. Energy Information Administration [EIA]. It’s a dramatic shift in momentum just since last year, when 100 rigs were built in Texas and only eight in New Mexico.
Daily production, which attained 1.6 million barrels per day for the first time in 2022, is continuing to rise in New Mexico, the EIA reports. Last year’s growth accounted for 0.3 million barrels per day.
The potential of the Permian Basin
Responsible for 40 percent of the oil produced in the United States, the Permian Basin has the potential to become the “most important growth engine for oil production” in the world, Bloomberg reported last year.
Of the greater Permian Basin, there are two counties in New Mexico that will be responsible for acquiring an estimated 30% of the anticipated oil production: Eddy and Lea. Three counties in Texas – Martin, Midland, and Loving – will produce another 30% of it, according to S&P Global.
The US is estimated to have reserves of 76 billion barrels in its oil fields, with the Permian Basin accounting for most of that supply. The basin currently produces 5 million barrels per day between both Texas and New Mexico, with that number expected to grow between 12 and 25% by the end of 2023, according to Bloomberg NEF.
New Mexico’s oil and gas production may be affected, however, by the June 1 passage of a ban on drilling on state trust land that is within one mile of a school. In Lea County, that affects 45 wells with active and pending applications near Hobb’s Jefferson Middle School alone.
