New players and a change in direction for a current operator are coming to Lea County’s thriving oil and gas industry in the fourth quarter of 2023.
Most recently, LM Energy Holdings, LLC has announced the sale of portions of its Touchdown Crude Oil Gathering System located in Lea and Eddy counties. Multiple buyers are involved in the sale that will allow LM to grow its gas gathering sector. The deal is expected to close before the end of 2023.
“LM began the development of its crude oil gathering business in 2019 and has constructed over 130 miles of pipelines, two terminals with 136,000 barrels of combined storage capacity, and grew volumes from zero to approximately 75,000 barrels per day on a 100 percent greenfield basis,” states a LM Energy Holdings press release.
Even with the success of its crude oil gathering operations in the Permian Basin, LM is changing its focus to natural gas. LM’s Chief Executive Officer Elliot Gerson stated in the press release, “This transaction positions LM as a stronger and even better capitalized company that is focused on our gas business.”
LM already has and continues to expand its gas gathering systems in southeastern New Mexico and West Texas. To date, LM has constructed over 70 miles of pipelines and has five compressor stations. A sixth compressor will be commissioned in late 2023. These systems “…currently provide low pressure gathering, dehydration, compression, liquids handling, and high pressure gathering services,” states the press release.
As many Lea County folk are aware, natural gas production in the region – especially the Northern Delaware Basin – is on an upswing and at the same time efforts are being made to curtail flaring – the burning off of natural gas. “That combination creates a massive need for additional gas gathering and processing infrastructure,” stated Gerson. “With our existing team, assets, and relationships, we are extremely well positioned to continue growing our gas business.”
The Energy Information Administration (EIA) is on the same page as LM about the growing need to increase the area’s natural gas gathering capacity. The EIA predicts that in the Permian Basin 4.2 Bcf/d of “new pipeline capacity will come online by the end of 2024, allowing more production to reach consumption markets and liquefied natural gas terminals on the U.S. Gulf Coast,” states an EIA article.
Currently ranked third in the United States by the EIA for its natural gas “production growth among major shale regions”, the Permian Basin remains second in the U.S. when it comes to actual gas production.
The EIA predicts that oil production in the Permian Basin will “…decline by the most of any shale region this month, dropping by 26,000 barrels of oil per day (bopd) … but remaining the most productive region in the U.S. with about 5.8 million bopd,” states an article posted at CurrentArgus.com.
Although Baker Hughes (BH) data says that overall drilling rig count in the U. S. was down by seven to 623 working rigs the week ending September 29, BH confirmed that “two additional rigs” were included in New Mexico’s working rig count, making a healthy “102 for the week”.
According to MineralAnswers.com, as of June 2023 Lea County ranked #1 in New Mexico for BOE produced in the state. From July 1973 – June 2023, 18,603 wells have been drilled.
