Oil Drilling Growth Creates a Path to Increased Prosperity in New Mexico
The New Mexico oil-fueled economy is being propelled to new heights. Firstly, the current oil price range of $65 to $70 is hovering in the middle ground - somewhere between historical lows and the peaks seen over ten years ago. This indicates that the industry is balancing demand and supply quite comfortably. In line with this, the number of rigs in the state has climbed to 103 (more than 6 times the paltry 15 it was reduced to in 2016), but the expansion appears smooth with manageable progression.The most convincing of all indicators is the collective sentiment of the industry’s most knowledgeable executives. They seem to agree that everything concerning the recent upsurge is sustainable. For the first time they speak with one voice, emphatic in the idea that the current pace is really only a trot - possibly escalating into a gallop by 2023.In this review of the Permian Basin, embracing both New Mexico and Western Texas, there’s a real sense of composure and calm assessment regarding the way things are developing. This basin is furthermore a leader in a wave of drilling activity that will inevitably enable the US to regain its stature as the world’s biggest oil producer. More than this, the country will become a net exporter, making a huge contribution to the balance of payments (as much as $700 million of “new money” in the fiscal year 2019).So, the question is really, “Why does this momentum in New Mexico suggest long-term success?”
Well for one thing, the oil drillers have innovated new fracking technology - a solid influence on this seismic change that has reduced costs considerably.
Continuing from this, lower costs and rising prices are a sure formula for boosting ROI with higher margins.
Moreover, the evidence is that the improved profits are being invested back into expansion across the Permian oil fields; $13 billion at last count so far this year alone, funding new rigs in places within the Basin where they have never appeared before.
This took production volumes to 87.5 million barrels over the 5 months ended May 2018. This is 33% up for the same period in 2017 and should easily blow past last year’s production of 171 million barrels before December.
Then there’s the ripple effect: prosperity has impressed itself on the fabric of secondary oil businesses and industry, creating full employment at an average pay per hour at least three times the national average.
Not to mention the build-up of thriving service and contracting professionals, thus heralding in a newly wealthy “artisan-class” in this New Mexico. Clearly, 10.9 million bpd and going up in the US (according to the Energy Information Administration), pushed by the Permian Basin has irrevocably spread its benefits over so many lives.
With a confident forecast of doubling domestic output in the next 5 years supported by a vibrant international environment in which OPEC is managing its members with a far more balanced approach, stability and sustainability look destined to keep this New Mexican momentum on a forward and upward track.
Share
Chase Energy Services
Chase Energy Services is one of the largest privately held integrated oilfield services company in the US, providing end-to-end oilfield services through an experienced management team, innovative technologies and an unrelenting focus on safety. With more than 500 employees, the company serves customers across Southwest New Mexico and West Texas in frac and acidizing, well construction and completion, cementing solutions and well servicing. learn more
Chase Energy Services, Inc.11344 Lovington HWYArtesia, NM 88210(575) 748-1288
