New Mexico remains among the most prolific energy producers in the nation according to new data from the U.S. Energy Information Administration (EIA).
The agency just released a report that ranks states by energy production. New Mexico ranks No. 6 in oil production and No. 8 in natural gas production.
That production generates nearly one-third of the revenues for New Mexico’s general fund, which supports schools, public safety and health care.
You can learn more about the importance of oil and natural gas production in the state here.
Support for oil development in the San Juan Basin remains strong, evidenced by the record turnout at a recent energy expo for Navajo allottees and the wider community.
More than 350 people attended “Energy Day” on June 15 at the Nageezi Chapter House, which was hosted by WPX and other local operators.
WPX’s Andrea Felix organized the event, anticipating the potential for 200-300 people. At the end of the day, the turnout was 20 percent higher.
“We’re very pleased with the response,” Andrea said. “Overall, we showcased nearly 20 booths where people could learn about everything from science to safety.”
The goal of the event was to provide a forum where people could visit first-hand with professionals who plan, design and drill oil wells. Lots of conversations even took place over hamburgers and hot dogs as people sat down together to eat lunch and talk shop.
Regulatory agencies and public officials were involved, too, and available to answer questions, including the Department of the Interior, the Federal Indian Minerals Office and the New Mexico State Land Office.
The most popular booth at the expo was staffed by Sr. Geoscientist Renee Wild (shown below) and Geophysicist Jennifer Kennedy. Everyone seemed to be curious about the rocks at their table.
More precisely, those rocks are a silty sandstone from an actual WPX oil well in the West Lybrook unit. These rocks are where the oil is trapped. Fracturing the rock is what helps release the oil.
WPX obtained this “core sample” for further study and analysis from a vertical wellbore that reached some 4,500 feet (almost a mile) deep. And yes, this is a sample of the real rock that contains oil. You can even smell traces of oil from it.
Kelly Swan, who leads the company’s communication and outreach programs, was there to learn himself, listening to story after story from attendees about their love for land and family.
“It’s interesting,” he said, “regardless of whether a person opposes or supports what we do, it essentially comes down to the same factors.
“Everyone we met with wants to protect their cultural lineage and advance their family heritage. For those who partner with us, they’re simply doing what their father or grandfather did years ago.
“Somewhere in their family history, someone signed a lease approving the installation of a pipeline or the drilling of an oil or gas well,” he added.
“Doing the same thing today in 2017, years later, is a way for them of preserving that legacy or providing for their family, just like their relatives before them.
“For us as a company, we want to understand where people are coming from and what they base their decisions on, pro or con. It’s our responsibility to continually learn everything we can from our partners. It’s one of the ways we can show respect,” Kelly said.
Some people talk about wanting fracking to go away…forever. Their goal is to stop oil and gas development in favor of simply “keeping it in the ground.”
That mindset has even crept into the San Juan Basin and other energy-rich areas across the country where companies have invested millions and billions of dollars to partner with landowners and mineral owners to develop critical resources.
If successful, efforts to stop the extraction of fossil fuels over the next two decades could have a profound economic impact on the United States and the communities where energy production happens.
A new study actually looked at the costs and consequences of simply “keeping it in the ground.”
The study assumes a scenario including no new private, State, or Federal oil and natural gas leases; a complete ban on hydraulic fracturing; no new coal mines or expansion of existing mines; and no new energy infrastructure including pipelines.
The results, as one should expect, aren’t pretty. The study found that families and the U.S. economy would suffer the most. Consider that:
“Restrictive policies would take the United States back to an era of energy dependence – all based on the false idea that we must choose between energy self-sufficiency and environmental progress,” said Jack Gerard, president of the American Petroleum Institute.
“Cutting U.S. oil and natural gas production wouldn’t magically reduce world energy demand,” said Gerard.
“But it could raise costs significantly for American families and manufacturers, profoundly damage the U.S. economy, diminish our geopolitical influence, and severely weaken our energy security.”
Now, more than ever, it’s vitally important to keep developing the vast amounts of oil and gas reserves that are literally right beneath our feet about a mile or so deep. What’s in the ground warms you in winter, cools you in summer and keeps your car on the go.
Sometimes, just hearing the word is enough to get people all worked up. But why? Hydraulic fracturing has been around since the 1940s. That’s right, oil and gas companies have used the technique for nearly 70 years now.
The process is used to create tiny holes in layers of rocks, shale or sandstone to free up oil and natural gas from where its been “trapped” for a long time. It’s sorta similar to “sand blasting,” except in this case the sand creates tiny holes (called fractures) instead of cleaning a surface.
Without fracking, there would be a lot less oil and gas in the marketplace – a LOT less. By most reasonable accounts, somewhere between 60-80% of today’s energy production wouldn’t even be possible….without fracking.
Just think of what you’d be paying to fill up your tank if 60-80% of the nation’s oil supply suddenly vanished. Thankfully, it doesn’t have to because fracking is a time-tested and totally proven process that’s safe, reliable and effective.
Despite what you may have heard, fracking doesn’t take place anywhere near shallow fresh water zones. Normally, somewhere between 4,000-8,000 feet (up to 1.5 miles) of solid impermeable rock separates those water sources from where fracking actually occurs, which is much, much deeper down in the earth.
WPX works with Native American workers and mineral owners in both North Dakota and New Mexico where we have close business ties with the Three Affiliated Tribes and Navajo allottees.
Here in the San Juan Basin, the primary vendors we hire to support our drilling activity employ more than 800 people, approximately 40 percent of whom are Native American.
We’re grateful for these relationships and the critical role Native Americans play in helping develop new supplies of oil and natural gas.
Together, this kind of work results in lower energy costs for everyone. Lower prices saved drivers $30 billion at the gas pump last year and roughly $1,300 per family in cheaper heating, cooling and utility costs in 2015.
According to a story in the Farmington Daily Times, “A recent increase in drilling rigs in the San Juan Basin has some wondering if the downturn in oil and gas production might be starting to turn around.”
The story quotes Wally Drangmeister, the spokesman for the New Mexico Oil and Gas Association, who said “that oil and gas companies in northwest New Mexico have demonstrated incredible resilience and innovation in dealing with challenges of increased regulations and low commodity prices.”
You can see the full story by Leigh Black Irvin here.
Business Editor Leigh Irvin with the Farmington Daily Times reached out to WPX to talk about the number of industry rigs (4) in the San Juan Basin.
The number of rigs is rising compared to the past few years when local activity basically came to a halt after oil prices crashed to less than $30 per barrel. Today, prices are slightly above $50 per barrel.
In the interest of transparency, here’s how we responded to the question about what adding more rigs means for the region:
“At WPX, we’re planning to invest up to $170 million locally this year to run a rig, drill about 40 wells and build new infrastructure.
The uptick in activity supports a lot of local jobs. Our primary vendors alone employ roughly 800 people, approximately 40 percent of whom are Native American.
The corresponding increase in oil production also raises more money in state taxes and royalties for the government, private landowners and Navajo allottees who are now receiving close to $1 million per month based on the success of our new oil wells.
Overall, our activity has generated more than $200 million in taxes for the state, more than $200 million in royalties for the federal government and more than $150 million for private landowners over the past decade.
Navajo allottees have received close to $100 million in leasing and royalties from WPX over the past three years since our new oil discovery.
There’s much for the region to gain by strongly supporting this kind of economic development.”
Scientists are doing a study to examine the relationship between energy and the mule deer population in the San Juan Basin near Navajo Lake.
WPX sponsored the seven-year, half-a-million dollar project that involves the Farmington BLM office and the New Mexico Department of Game and Fish.
WPX Regulatory Specialist Heather Riley talked about the importance of working together and the company’s commitment to protecting wildlife.
Reporter Frances Madeson recently reached out to us to talk about the formation of our Rodeo unit.
We covered a variety of topics, including the “wash station” you see pictured, which helps ensure that we’re not tracking mud and sediment off of our current drilling site.
In the interest of transparency, the reporter’s questions and our detailed responses are listed below:
1. With respect to the state application for approvals in connection with the Rodeo unit, is WPX considering concerns about setbacks expressed by the community after the Nageezi fire?
WPX’s Response: Navajo allottees are our business partners and we work together on energy development. Setbacks are negotiated in each lease agreement with allottees. Before we construct a drill site, we obtain input from the resident and regulatory agencies. For example, a resident may have a preference on the path or placement of a road that leads into a site. Last week (Jan. 17) we held an informational meeting in Farmington for allottees who are part of the Rodeo Unit. Roughly 200 people attended. The feedback we heard pertained to the timing of development, environmental compliance, the leasing process and how royalties are paid and administered. If the unit is approved, our first drill site in the unit is planned for this year. The nearest structure to that particular location is roughly 4,700 feet away (note: a mile is 5,280 feet).
2. Has WPX provided a copy of their Emergency Plan to any of the chapter houses?
WPX’s Response: For clarity, emergency management plans are kept and maintained by the county, San Juan County Emergency Management. We have met with the Nageezi Chapter House President and Chapter Coordinator twice since the July fire, including making introductions for them with San Juan County Emergency Management. Additionally, we have followed up on our pledge to provide key essentials at the chapter house for anyone that should find themselves displaced for any type of emergency evacuation. We provided air mattresses, blankets, personal products, cleaning supplies, bottled water and snacks.
3. Are there any plans to assist local communities with repairing roads?
WPX’s Response: Our permits stipulate that we take care of the roads that lead to our drill sites. We do this with permission from the county. For our part, we also have made significant investments in infrastructure to take as many trucks off the road as possible. For example, we have installed gathering pipelines in our operating area to transport oil, water and natural gas from our production sites. This eliminates a lot of truck trips for oil and water hauling. At our current drill site in the basin, we have also installed wash stations (see picture) for trucks to help ensure that we’re not tracking mud and sediment off our site considering the weather conditions we’ve been dealing with.
Back in 2013, WPX made some history in the San Juan Basin with our oil discovery in the Gallup Sandstone formation. You can read that press release here.
Since then, WPX has invested more than $1 billion in northwest New Mexico on drilling, development and infrastructure. That’s right, $1 billion.
That level of expenditure in one region by one company could fairly be described as a little history-making in itself, particularly if you ask the local chamber of commerce or the service companies (and their employees) who benefitted from the economic investment.
And that’s just the half of it. Over the past decade, WPX’s activity in the basin has generated more than $200 million in taxes for the state, more than $200 million in royalties for the federal government and more than $150 million for private royalty holders.
The Bureau of Land Management’s office in Farmington, which oversees energy development in the basin, is in the process of updating its Resource Management Plan (RMP) which governs the usage of local public lands.
One of the local voices who’s speaking up for industry and our commitment to doing things the right way is WPX’s Russ Knight, Sr. Production Foreman.
At a public meeting, Russ took to the microphone saying, “My company alone has earned at least 15 awards in the basin for responsible development, cooperation and best practices.
“Considering alternatives, being mindful of the area’s cultural heritage, and getting input from surface owners already happens on every well we drill.
“Our oil discovery has generated $100 million in revenues for Navajo allottees that we work with. Just doing nothing with the land is not a realistic plan for anyone. I encourage the BLM to stay the course for permitting energy development and to do it quickly.
“It’s completely possible to make history while preserving history.”
Russ was born and raised in Farmington, N.M., and still resides in the area. He has 28 years of industry experience, including six with WPX.
You can read the full transcript of Russ’s remarks here.