Update of the Census for Lea County: The Economic Context
November 15, 2015
The Lea County economy had a dazzling run after 2010, but the high oil prices which put the economy into high gear are gone, with the West Texas Intermediate spot oil price back down in the neighborhood of $40 per barrel. Many producers had entered into hedging contracts that guaranteed high prices well into the future, so the collapse of oil prices did not immediately slow production, although rig counts and drilling activity did fall off and the contracts have come due. Lea County in the Permian Basin is a low cost area with abundant reserves. Drilling and other activities over the past few years have increased dramatically the productivity of individual oil reservoirs. In this period of lower prices, the county and the Permian Basin more generally seem to have attracted interest and investment as major companies were pulling out of more costly tight oil plays in North Dakota and elsewhere. Figure ES.1 pretty much captures the changing reality for oil in the Permian Basin and Lea County over the recent past. What distinguishes the Permian is the fact net oil production (from legacy wells as well as new) has continued to increase. Gas production is also up slightly, although prices for natural gas have continued to fall, with the Henry Hub spot price now in the neighborhood of $2.00 per MMBTU.
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Forecasting New Mexico's Oil & Gas Revenues: The Impact of Technology Change
April 17, 2012
Recent technological improvements in horizontal drilling technologies, in particular the development of a steerable GPS-guided bit, have altered New Mexico's oil industry. As a result, patterns in oil revenues are changing and the revenue estimation process used in recent years by the New Mexico State Land Office (SLO) is not performing as reliably as it once did. The SLO has contracted the University of New Mexico's Bureau of Business and Economic Research (BBER) to assist in identifying approaches and methods of forecasting SLO revenues from oil and gas renewable sources (i.e., bonus payments) and non-renewable sources (royalty income). (Authors: Gwendolyn Aldrich)
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Oil and Gas Revenue Forecasting: New Mexico State Land Office
July 1, 2011
The UNM Bureau of Business and Economic Research (BBER) was requested by the State Land Office to explore alternative methodologies for estimating oil and gas renewable revenue sources (bonus payments, rents and interest earnings) as well as non-renewable sources (royalty income).
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