Analysis by the father of American Geopolitics Dr. Daniel Fine, MIT.

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No end in sight for NM’s oil boom


No end in sight for NM’s oil boom

A pumpjack operates near Carlsbad. New Mexico's oil production jumped 17 percent in 2013, with more growth projected this year. (Courtesy of NMOGA)

Copyright © 2014 Albuquerque Journal

The oil boom in southeast New Mexico just keeps growing, and there’s no end in sight.

Oil production jumped by another 17 percent in 2013, according to the latest statistics from the state Oil Conservation Division. That puts New Mexico production back to 1973 levels.

And, this year, experts project another 18 to 20 percent increase.

“Déjà vu,” said Daniel Fine, associate director of the Center for Energy Policy at the New Mexico Institute for Mining and Technology in Socorro. “We’re now back in the early 1970s, which was a period of energy self-sufficiency and independence. It’s a remarkable energy revolution.”

Output reached 99.1 million barrels last year, up from 85.1 million in 2012 and 71.3 million the year before. That represents two straight years of double-digit growth that has pushed production up 39 percent since 2011.

a01_jd_10may_oilOverall, oil output has grown 67 percent since 2008, when the state first began to reverse a three-decade decline that had begun in the early 1970s.

This year, the Center for Energy Policy expects production to expand to between 117 and 119 million barrels.

“We’re at about 270,000 barrels per day now, but we project that to reach between 320,000 and 325,000 per day in 2014,” Fine said. “That would give us the equivalent of about two-thirds of all the oil production in Alaska. In just a few years, we’ll be back at our all-time peak of 129 million barrels, which was achieved in 1969.”

The industry’s newfound fortune comes from modern drilling techniques, including three-dimensional imaging to pinpoint pools of oil and natural gas that producers ignored in the past, hydraulic fracturing to bust open extremely tough shale rock formations and horizontal drilling to push sideways into hydrocarbon deposits.

Those techniques have opened up vast new oil and gas plays around the country, while giving new life to aging basins, such as the Permian in West Texas and Southeast New Mexico, where production originally dates back to the 1920s.

Horizontal drilling in particular has allowed producers to slice into layers of shale bed, where huge pockets of liquids and dry gas are trapped.

“That’s made a huge difference,” said New Mexico Tech geologist Ron Broadhead. “More than half the active wells in New Mexico have been drilled horizontally. About 40 percent of the state’s production is due to that.”

Thanks to the new technologies, the Permian Basin is now estimated to contain some of the largest underground deposits of oil in the world, Fine said.

That’s good news for New Mexico, where royalties and taxes on oil and gas production account for about 31 percent of the state’s general budget, according to a new study released in January by the New Mexico Tax Research Institute. Last year, that amounted to $1.7 billion of the state’s $5.5 billion general fund.

Still, sustaining industry momentum depends on a number of things, especially adequate infrastructure. Road repair, construction of new pipelines and refineries, and more housing for workers are all critical.

“Oil production in New Mexico is no longer a drilling issue;it’s a matter of infrastructure development,” Fine said. “We need to work on that or it will begin to affect production.” For the complete story use this link–> http://www.abqjournal.com/397859/news/no-end-in-sight-for-nms-oil-boom.html

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State works to overhaul energy policies (New Mexico)


State works to overhaul energy policies (New Mexico)

Copyright © 2014 Albuquerque Journal

A statewide effort is underway to forge new, comprehensive policies and strategies to promote energy development.

The initiative, which the Energy, Minerals and Natural Resources Department launched last fall, aims to shore up the state’s energy-related industries as a force for job creation and long-term economic development.

That includes virtually every energy sector from oil and gas to biofuels, renewable electric generation and even nuclear power, said Daniel Fine, associate director of the Center for Energy Policy at the New Mexico Institute for Mining and Technology in Socorro.

New Mexico Tech is assisting in the initiative, which includes statewide “listening sessions” to collect public input.

“Underlying the whole effort is that today’s energy policy should emphasize economic development and jobs in New Mexico,” he said. “You hear everywhere that New Mexico is rich in natural resources, but it’s still such a poor state. We want to build policies that help resolve that contradiction.”

MARTIN: Policy must be renewed

That requires a comprehensive approach on a range of issues, including investment in infrastructure, deployment of new technologies, efforts to streamline bureaucracy, and creative solutions to water and environ-mental problems, said Energy, Minerals and Natural Resources Secretary David Martin.

Gathering direct input

And that, in turn, means creating a broad new policy framework based on direct input from industry and local communities.

“Policy must be renewed periodically,” he said. “The last comprehensive policy was in 1991 under former Gov. Bruce King, and a lot has changed since then.”

A drilling rig rises in the background near a pumpjack, both in operation in southeastern New Mexico. (Journal File)

Many basic issues are fundamentally different now, particularly in the oil and gas sector, Fine said. In the early 1990s, oil production was in decline. And while natural gas output was still climbing in the 1990s, by the turn of the century it, too, entered a sharp downturn.

As a result, policies in past decades focused largely on energy conservation and how to achieve energy security in the U.S. But today, thanks to advanced hydraulic fracturing and horizontal drilling technologies that have opened vast, untapped oil and gas deposits, New Mexico is enjoying an unprecedented boom in oil production.

The central issue now is how to maintain that momentum, Fine said.

Since the fall, the state has held five listening sessions around New Mexico, each one analyzing different energy issues of particular interest to local communities.

All energy sources

In Farmington and Hobbs, participants discussed oil and gas production, plus electric generation and nuclear power. In Santa Fe and Las Cruces, attendees analyzed renewable technologies, energy efficiency, biofuels and water issues. And in Socorro, they looked at water and environmental concerns related to hydraulic fracturing, as well as potential for small modular nuclear reactors to provide future electric generation.

Nearly 400 people have participated to date, including industry executives, energy experts, public officials and community representatives.

A final session is scheduled for May 29 at the Albuquerque International Balloon Museum, where the public is invited to discuss water issues related to hydraulic fracturing, including new technologies to tap brackish groundwater and recycle produced water. The session also will review battery storage technology for solar generation, and use of liquid natural gas for fuel.

The results of all sessions will be compiled in a final public document with proposals and recommendations in the fall, Fine said.Use the link above for the rest of the story–>

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