It’s no big surprise to anyone in the industry that New Mexico’s governor is not opposed to the oil and gas industry… after all her state is reaping the benefits in a big way with revenues from oil & gas that help fund education and a host of other public programs across the whole state.
Presidential hopefuls however are jumping on the band wagon and calling for a huge reform in the industry… some more extreme than others. NMOGA amongst others are sharing the recent report published this week by the Global Energy Institute – US Chamber of Commerce which clearly outlines the impact that these hydraulic fracturing bans would have on not only New Mexico, but the world in general.
….a ban on hydraulic fracturing in New Mexico would result in the loss of 142,000 jobs – representing 15.8 percent of the state workforce – and wipe out $86 billion in cumulative GDP from the state’s economy through 2025. Further, New Mexicans would lose out on $26 billion in household income (an average of $10,723 per household in 2025), the state would forego $8.0 billion in state and local tax revenues while federal government tax receipts will be reduced by $8.3 billion over this same period.https://www.globalenergyinstitute.org/
That’s just ONE state, and the US has a lot more than one oil and gas producing state that would be affected by this ‘election bandwagon’ approach to fracking we see all too often lately. The industry has made huge strides in tackling climate issues and continues to develop and implement new technology and production methods whilst maintaining a huge leap in demand and supply.
From 2011 to 2017, Permian Basin methane emissions from oil and natural gas production dropped from 4.8 million metric tons CO2e to 4.6 million metric tons CO2e. Over the same period, combined oil and natural gas production across the basin increased from 638.9 million barrels of oil equivalent to 1.4 billion barrels of oil equivalent.https://www.globalenergyinstitute.org/
There are always going to be two sides to any scenario, but hopefully both sides can work together to create a happy medium that positively impacts global energy, global warming and the global economy, which affects ALL OF US. The Global Energy Institute report is definitely worth a read if you are currently invested, or considering investing in the future of US Oil & Gas.
This little snippet near the end of the report caught my eye as it discusses the financial impact on conventional well drilling. Something to peak the interest of investors looking to pick up on some of the less available conventional projects that are starting to pop up again more and more.
While this hurts consumers, conventional producers would benefit from the higher prices. Imagine a conventional producer who produces 500 MMBtu per day of natural gas in 2025. Under the status quo, the producer would receive $2.90 per MMBtu in 2025, leading to daily revenues of $1,450. Under the hydraulic fracturing ban, however, the producer would receive $12.31/MMBtu, resulting in daily revenues of $6,155.
The producer’s increased revenues of $4,705 per day would not materialize through any individual action but would instead materialize solely from new market conditions under a hydraulic fracturing ban. We define this gain for conventional producers as “windfall profits.” We estimate windfall profits for the entire industry in a similar fashion, for both oil and gas, for each year of the analysis
Dec 10, 2019 3:43 PM
New Mexico is one of the great success stories of America’s energy revolution. A state hard hit by the Great Recession, historic levels of oil and natural gas production – made possible by advancements and improvements in hydraulic fracturing technology – have resulted in new job creation, economic growth, and increases in personal income that are leading the nation.
New Mexico Governor Michelle Lujan Grisham (D) neatly summed up the importance of this historic opportunity, stating, “I could spend well longer than 30 minutes telling you about the benefits of what’s going on in the state of New Mexico because of what’s going on in the oil and gas industry — opportunities that we haven’t seen, ever.”
At a time when national candidates and elected officials are proposing to ban hydraulic fracturing, it is important to highlight both the benefits of the shale energy revolution and the real-world impacts that a ban would have.
This report is an update to the Chamber’s 2016 “Energy Accountability Series,” which modeled the impacts of proposals made by political candidates on energy policy. For the 2020 election cycle, the study is being updated with new numbers and the addition of several new states and expanded data, including the Land of Enchantment. This analysis models the impacts of banning hydraulic fracturing through the use of IMPLAN, an economic modeling tool that allows for calculating the direct, indirect and induced impacts of hydraulic fracturing on New Mexico’s economy. Using this tool can help quantify the impacts if hydraulic fracturing were banned.
In 2018, New Mexico generated $99.4 billion in GDP, had nearly 900,000 people in the workforce and an unemployment rate of 4.9 percent, and a median household income of $48,283. This represents significant gains compared to 2013 when the GDP was $88.4 billion, there were 863,000 people in the workforce, unemployment stood at 6.9 percent, and the median income was 43,368.
A ban on hydraulic fracturing in New Mexico would result in the loss of 142,000 jobs – representing 15.8 percent of the state workforce – and wipe out $86 billion in cumulative GDP from the state’s economy through 2025. Further, New Mexicans would lose out on $26 billion in household income (an average of $10,723 per household in 2025), the state would forego $8.0 billion in state and local tax revenues while federal government tax receipts will be reduced by $8.3 billion over this same period.
Share This Post On: