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Federal oil production in New Mexico has increased every consecutive year since FY 2007 and, last year, production increased more than 41% over FY 2014 levels.
In contrast, gas production has generally decreased in New Mexico since FY 2006, likely because gas prices have decreased more than 60% since FY 2006.
Source: BLM FY 2015 Idle Well Report (IM No.2012-181)
Historically, in New Mexico, federal minerals have been chiefly-valuable for natural gas, rather than oil. Almost two-thirds of federal wells in the state are gas wells.
Because federal minerals in New Mexico are chiefly valuable for gas, industry interest in leasing and drilling is closely tied to natural gas prices. The chart above illustrates the direct relationship between the amount of federal acreage nominated for leasing in New Mexico and gas prices.
Further, the vast majority of oil and gas production in New Mexico comes from two areas: the Permian and San Juan basins. And BLM has already leased most of the federal minerals in those areas for oil and gas development, with 83 percent of the Carlsbad Field Office (Permian) roughly 79 percent of the Farmington Field Office (San Juan) currently leased. Thus, not only have prices declined, but the industry has already leased most of the productive federally-managed areas in the state.
As shown above, state and federal leasing have steadily declined in New Mexico since FY 2003. These decreases are likely because the two major basins in the state—the Permian and San Juan Basins—are already almost entirely leased for development. On federal lands, 79% of BLM’s Farmington Field Office1 and 83% of BLM’s Carlsbad Field Office2, which overlap the San Juan and Permian Basins, respectively, are already under lease.