No end in sight for NM’s oil boom

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No end in sight for NM’s oil boom

By Kevin Robinson-Avila / Journal Staff Writer
PUBLISHED: Saturday, May 10, 2014 at 12:05 am

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.

Overall, 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

State works to overhaul energy policies (New Mexico)

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State works to overhaul energy policies (New Mexico)

By Kevin Robinson-Avila / Journal Staff Writer
PUBLISHED: Monday, May 12, 2014 at 12:05 am

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.

Public forum May 29 in Albuquerque
What: Final “listening session” for state officials to gather input for new energy policy. The event will focus on natural-gas vehicles, use of recycled and brackish water in oil and gas operations, battery storage technology for solar generation, small modular nuclear reactors, and use of natural gas in manufacturing.
Where: Albuquerque International Balloon Museum.
When: 9 a.m.-4 p.m. on May 29.
For more information, visit New Mexico Tech or Albuquerque International Balloon Museum websites.

“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.”

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.”

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–>

New Mexico energy secretary visits Farmington to begin revising energy plan

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New Mexico energy secretary visits Farmington to begin revising energy plan

Plan is expected to boost economic development in the state

By Chris Roberts The Daily Times

FARMINGTON — The New Mexico Energy Secretary visited Farmington on Wednesday to hear from oil and gas executives on a proposed revision of the state’s energy policy, which has not been substantially changed since 1991.

Dave Martin, secretary of the Energy, Minerals and Natural Resources Department, sat with T. Greg Merrion, president of Merrion Oil and Gas, and others and listened to the concerns and suggestions of local people involved in coal, natural gas, crude oil and energy production. It was the first stop in a tour that will include Hobbs, Santa Fe, Las Cruces and Albuquerque. During those other stops, topics of discussion will include energy efficiency, renewable energy and biofuels.

“All-of-the-above will produce more jobs,” Martin said of including renewable energy. “A lot of these things are going to be region specific.”

Martin said people invited to the Wednesday meeting at San Juan College were “targeted” for their local knowledge of the issues. Media was asked not to attend the actual discussions, so business leaders could speak freely, but when a reporter from The Daily Times showed up at the meeting, he was allowed to sit in. Martin spoke to the press after the meeting. For more of the article use this link–> http://www.daily-times.com/farmington-business/ci_24615895/encana-announces-multi-million-dollar-drilling-plans-2014

Encana announces multi-million dollar drilling plans for 2014 in the San Juan Basin

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http://www.daily-times.com/farmington-business/ci_24615895/encana-announces-multi-million-dollar-drilling-plans-2014

Encana announces multi-million dollar drilling plans for 2014 in the San Juan Basin

By Leigh Black Irvin The Daily Times

FARMINGTON — Encana Corporation announced earlier this month a new company strategy and vision, with much of that strategy being focused on the San Juan Basin where it plans to invest hundreds of millions of dollars in new oil and gas production beginning in 2014.

The announcement has prompted a flurry of speculation among those in the local oil and gas industry that the increased drilling will begin immediately after the first of the year.

In a Nov. 5 news release, the Calgary-based Encana outlined key points of its strategy, the first of which states that it will “focus its capital investment on five oil and liquids-rich resource plays in North America.”

The release goes on to state that Encana will “invest approximately 75 percent of its 2014 capital into five high return oil and liquids-rich plays: the Montney, Duvernay, DJ Basin, San Juan Basin and Tuscaloosa Marine Shale.”

In dollar amounts, this translates to 350 million to 400 million dollars in capital that Encana plans to invest in the San Juan Basin in 2014, said Encana spokesman Doug Hock.

“We will run two to four rigs in the area where oil and liquids are,” said Hock. “Our strategy is to develop oil and natural gas liquids plays in the Mancos Shale over the course of 2014.”

Hock said that to date, Encana has drilled some 20 wells in the Basin at a rate of approximately one well a month, and the increased production plans are a result of the positive drilling performance already seen in the basin, as well as economic conditions that make drilling in this area beneficial to the company. For more of the article use this link–> http://www.daily-times.com/farmington-business/ci_24615895/encana-announces-multi-million-dollar-drilling-plans-2014

US Gas and oil boom benefits consumers

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US Gas and oil boom benefits consumers

By Kevin Robinson-Avila / Journal Staff Writer | Sun, Nov 17, 2013

After years of steadily rising prices, “low-cost fuel” may seem like an oxymoron.

But thanks to a steady surge in domestic oil and gas production, energy experts say consumers could enjoy inexpensive gasoline and natural gas for years to come.

“The outlook is for a low-cost energy economy in the U.S.,” said Daniel Fine, associate director of the New Mexico Center for Energy Policy, which is run by the New Mexico Institute of Mining and Technology in Socorro. “This is a long-term trend, not an isolated event, and it’s something almost revolutionary.”

The country’s newfound oil and gas boom, made possible by modern drilling technologies, has helped keep gasoline prices well below the $4-per-gallon peaks that consumers faced just a few years ago. It’s also driven home-heating bills to record lows since 2009.

Now, with production still climbing fast, Fine and others say natural-gas prices will remain moderately low for another five to 10 years at least. And gasoline prices likely will continue to fall into 2014, before stabilizing at somewhere above $2 per gallon for the foreseeable future.

“I believe gasoline will reach $2.35 a gallon or less quite soon, within a year at most,” Fine said.

Gregg Laskoski, a senior policy analyst with the online price-tracking service Gas Buddy, agreed.

“That may seem shocking, but it’s not as outlandish as it sounds,” he said. “The potential is certainly there.” For more of the article use this link—> http://www.abqjournal.com/302397/biz/oil-gas-production-booms.html