By Georgina McCartney
NEW YORK (Reuters) – A top economist for New Mexico state, the second-largest U.S. oil producer, this week released a study on possible drilling restrictions that could cut up to 5.4% of future crude oil production and results meet. in billions of dollars in lost revenue.
The study evaluated counterproposals from the 2024 legislative session that would limit how close operators can drill to certain structures and environmental areas. They are intended to protect the public from oil and gas pollution.
“The topic is complex and requires more time to evaluate and analyze than what was provided during the session. This presentation was intended to provide the committee with further analysis,” said Ismael Torres, chief economist at the Legislative Finance Committee of New Mexico.
“It is too early to know what setbacks will be proposed in the coming session,” he added.
The setbacks evaluated in the report would go into effect in 2026 and affect 15% of new wells in the state, of which Torres said about a third would be lost.
That would mean a loss of roughly 12.5 million barrels of oil production in the first year, and about 35 million barrels by early 2030.
Lost production value would peak at about $4.5 billion per year in 2034.
New Mexico is home to parts of the fertile Permian shale field, which also extends into Texas. The state produced about 2.04 million barrels per day in July, according to the most recent data from the U.S. Energy Information Administration.
The report estimates that more than half of the affected wells are on private property, with a quarter of those located in Lea County, one of the fastest-growing oil-producing counties in the United States.
“A state-wide setback would not lead to a greater reduction in human health impacts from oil and gas production, but would be detrimental to the continued development of oil and gas resources and ultimately to the state of New Mexico,” said Missi Currier, chief oil and gas production officer. executive officer of the New Mexico Oil & Gas Association industry group.
The report was presented to the state Legislative Finance Committee on Tuesday.
The setbacks evaluated in the report would prevent operators from drilling within 686 meters of most residential, educational, health or justice institutions, and from drilling 200 meters from streams, lakes, ponds, wetlands or suspend irrigation infrastructure.
It would limit activity within 300 feet of all other surface water.
“The costs to human health and our natural resources far outweigh the revenue that would be lost to the state,” said Charlie Barrett, a New Mexico environmentalist and thermographer with the environmental group Earthworks.
“Adversities are critical to protecting communities, schools and businesses,” he added.
(Reporting by Georgina McCartney in New York; Editing by Matthew Lewis)
