American Oil and Gas Reporter - November 2017 - 90

ConventionCoverage: New Mexico Oil & Gas Association
leading producer and refiner of oil and
natural gas is more than just a fleeting
circumstance," he said.
New Mexico plays a major role in
this 21st-century energy revolution, ranking
eighth in dry natural gas production and
seventh in crude oil production, Gerard
noted. But, he asserted, if New Mexico
and other producing states are to sustain
their energy industries, federal policies
must be supportive.
"That starts with federal land man-

agement and regulations that allow the
responsible development of more of our
nation's natural resources," he said. "When
it comes to energy infrastructure, allowing
the private sector to decide where to invest
its capital is good for consumers, through
lower energy costs and our economy, by
creating thousands of well-paying jobs
all along the skills continuum for middleclass families across the country."
The U.S. Energy Information Administration projects that oil and natural gas

still will supply 60 percent of U.S. energy
needs through 2040, Gerard quoted, while
global energy demand will increase 48
percent by then and fossil fuels will meet
78 percent of that rise.
"The issue is who will supply the energy that the world needs," he concluded.
"I would suggest that it should be North
American energy. It should be our
economies and workers who benefit from
ever-increasing demand for energy." r

New Mexico's Rig Recovery Continues
SANTA FE, N.M.-A resurgent rig
count is proof of New Mexico's reviving
oil industry, Ken McQueen, secretary of
the New Mexico Energy, Minerals and
Natural Resources Department, told the
New Mexico Oil & Gas Association's
annual convention.
Analyzing the eight weeks before the
meeting, held Oct. 2-3 in Santa Fe, McQueen noted Texas, Louisiana, Oklahoma,
North Dakota and Pennsylvania all posted
downturns in their rig counts during that
period, while Colorado held flat.
"Interestingly enough, New Mexico
is the only state that continues to climb
in its rig count," he observed. "New Mexico stands at 69 rigs. We have been
chasing Louisiana the past several weeks,

Ken McQueen, secretary of the New Mexico Energy, Minerals and Natural Resources Department, tells the New Mexico
Oil & Gas Association that the state's
rig count continues to climb. Addressing
the annual convention, held Oct. 2-3, he
said in the eight weeks before the meeting, New Mexico's count increased to
69 rigs, while Texas, Louisiana, Oklahoma,
North Dakota and Pennsylvania all posted
downturns.

90 THE AMERICAN OIL & GAS REPORTER

and we finally surpassed it to become
the third-largest rig count state in the
United States. New Mexico has recovered
69 percent of its maximum rig count,
while the national average is 49 percent."
Twice a year, state economists prepare
projections for New Mexico's oil prices
and production volumes. McQueen reported legislators used the December
2016 forecast of $48 a barrel to prepare
the fiscal year 2018 budget. The latest
forecast, in August, revised the price estimate down to $44.50 a barrel, with
steady increases in both prices and volumes
seen for the near term. The gas price projection for FY 2018 is $3.30 an Mcf,
with a declining outlook for the next five
years.
According to McQueen, while New
Mexico saw a spike in drilling activity,
its uncompleted well inventory fell, which
he attributed to economic factors. "With
the improvement in oil prices, the DUC
count has been decreasing. Before the
last price gyrations, we would see at any
point about 450 wells that had been
drilled and waiting on completions," he
said.
New Mexico's natural gas production
has been relatively flat, ranging between
3.2 billion cubic feet a day to 3.5 Bcf/d,
he observed. However, McQueen noted
the production mix had changed, with
2017 being the first year associated gas
produced in southeast fields surpassed
traditional San Juan output.
New Mexico now is the fifth-largest
oil-producing state in the United States,
and is likely to surpass California in the
next 12 months, McQueen predicted.
"The state's oil production marched along
for many years at 175,000 barrels a day,"
he said. "With the advent of horizontal
technology, New Mexico has been a big

beneficiary, and has seen a huge increase
in oil production, the bulk of which is
coming from the southeast oil basins.
The state set an all-time high for oil production in February. In May, the state
surpassed that, with more than 460,000
barrels a day."
State Lands
Discussing the replacement of the
state's ONGARD system, used to track
oil and gas production, taxes and royalties,
State Land Commissioner Aubrey Dunn
told NMOGA his office and other state
agencies were on different system switching timelines.
According to the New Mexico Taxation
& Revenue Department, the state plans
to implement its ONGARD replacement,
the Severance Tax Replacement Project,

The New Mexico Taxation & Revenue
Department plans to implement its ONGARD replacement, the Severance Tax
Replacement Project, early in 2018, according to State Land Commissioner
Aubrey Dunn's update to the New Mexico
Oil & Gas Association.

American Oil and Gas Reporter - November 2017

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