New Mexico oil and gas drilling plummets - New Mexico Business Weekly:

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Jason Sandel, executive vice presideng of in Farmington, said the sudden reduction in activitgy since last fall hasbeen startling. “The numberd of drilling rigs that have shut down almost instantaneouslty throughout all companiesand operations, combined with the length of time producersd say they will remain down, makes this situatiobn unique,” said Sandel, who is also a Farmingtohn city councilor. “There were some tough timees in the 1980sand 1990s, but what we’ree facing right now is about the worstr we’ve experienced.
” When drilling activity drops, everythingy else follows close behind, Sandel As of mid-January, 24 of the 41 drilling rigs assignex to the San Juan Basin in northwestern New Mexicoo had ceased operations. “Drilling is always the firsrt service impacted ina downturn,” Sandel said. “Everythiny else follows suit, because if there’s no then there’s no equipment or water to be hauler and no compressorsto operate. The idling of drillingf rigs is really justthe Free-falling prices are a major problem. Oil for February deliver y fellbelow $35 per barrel this week on the , down from a peak of $147 per barre l last summer.
And, natural gas pricesd are currentlyearning $4.83 per 1,00p0 cubic feet, compared to more than $6 per MCF last Industry representatives also blame adverse environmentalo regulations, especially new states rules on the management of oil-and-gas pits that took effect in New Mexico last June. “Thr overzealous and out-of-control regulatory environment makes it very toughh to do business inNew Mexico,” said Bob president of the . “I’d say that’s even a biggedr concern than price instability.” Sandel said restrictivwe regulations and declining prices make for akillerr combination. “I see it as the perfecty storm,” Sandel said.
“Both declining prices and the rising cost of doing business are causing the Estimates on layoffs are notyet available, said Margaret McDaniel, director of the . “The numbers are just startinhg totrickle in, but basically everything is slowing McDaniel said. Sandel said at leas 552 drilling workers have been laid off in the northwesternb quadrant ofthe state, since each drillinhg rig includes 23 workers and supervisors, and 24 rigs are currentlyt shut down in the San Juan The layoffs include 200 of Aztec’s 750 Sandel said. Texas-based — the largestg natural gas producer in the San JuanBasibn — announced on Jan.
16 that it will lay off abou 4 percent of its global work ornearly 1,350 employees “There haven’t been any layoffsa in New Mexico yet,” said spokesman Jim “We need to first assess wherr it will take effect, but we’lpl make those announcements in a few The situation is similar in the Permian Basi n in southeastern New said Raye Miller of Artesia-based “Thr southeast part of the state is seein g significant reductions in rig activity,” Miller said. “Wr had five rigs contracted to us last year andnow we’re down to four.
We’re about to go down to and ifprices don’t improve, we’ll go down to two in the next few Most other companies operating in the Permian Basih are also cutting back, including and , Millerr said. “The situation is basicall the same for all companies in the and if production companies arecuttingy back, then the service companies that work for them are also cuttingy back. It’s happening pretty much acrosszthe board.
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