October 17, 2018

Revised Regulation to Boost New Mexico's Economy

The Bureau of Land Management (BLM) recently revised the Waste Prevention Rule, a federal regulation on venting and flaring of natural gas, and it is set to boost New Mexico’s economy. Literally, with the stroke of a pen, the government solidifies the contributions that oil & natural gas producers have provided to New Mexico's recent prosperity. The Obama Administration originated the regulation to target methane emissions despite evidence that methane emissions were declining even in the face of rapid energy production growth. The facts are that new oil & gas technologies have drastically improved efficiency and environmental protection in recent years. Countrywide methane emissions are down by 16.3% over the last 15 years, while energy production has at the same time grown by 28% (for oil) and 52% (for natural gas). In New Mexico alone, oil production growth is outperforming at 104% (double the national average). Despite the rapid increase in production, methane emission has decreased between 6% (in the Permian Basin) and a mind-boggling 47% (in the San Juan Basin). New Mexico’s latest report of a $1.2 billion budget surplus is primarily funded by the tax revenue produced by the oil and gas industry. Currently, more than 50% of New Mexico's oil and natural gas production occurs on federally-managed lands. This means that a significant portion of New Mexico's tax revenue is directly correlated to federal land regulations. With this revised regulation, New Mexico's economy and budget surplus are predicted to grow even further, helping fund schools, roads, utilities, and public services. Just how important is the oil and natural gas industry to the state of New Mexico? For decades, New Mexico’s oil and gas producers have played a vital role in the state’s economy. The industry provides New Mexico schools, roads and public facilities with more than $2.5 billion in funding each year. It is the state’s largest civilian employer and it’s the leading educational supporter, providing over 90% of all school investments through the Permanent Fund. The oil and gas industry also makes up 15 to 20% of New Mexico’s General Fund revenues. These are distributed to public schools and state colleges, fund the construction of public roads, buildings and state parks, and help keep New Mexico’s government operational. The ripple effect of the new oil prosperity is boosting the incomes of engineering contractors, electricians, plumbers, and all kinds of oil supply entities - not to mention the emergence of real estate brokers, physicians, retail outlets, and the like to support the oilfield communities. This means more spending (a prolific GDP multiplier) and tax inflow on top of the direct revenues from the drillers. Energy management is committed to continuing the methane reduction program. The revision of this rule plays into this mission, all but ensuring its continuation. For now, there is a clear sense that regulation is here to aid growth, not hamper it.


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