Driving around the Permian Basin in early February, it was impossible to miss. New Mexico has increased its oil production tenfold since 2010 and was the first major oil-producing state to surpass its pre-pandemic output levels — dramatically so. And the evidence is everywhere. At night, strings of drilling rigs light the plains east of Highway 285 between Carlsbad and Loving. In the middle of the day, driving Highway 128 across the rolling, tan, treeless plain between Loving and Jal, the sun glints on drilling rigs every couple of miles. Those rigs continue in all directions down dirt side roads, and orange flares burn off natural gas at new wells and compressor stations.
The industry had a record-crushing year in New Mexico in 2022. COVID-19 triggered a steep production decline in 2020, when oil and gas prices dropped so much that the state encouraged producers to shut in wells, keeping money in the ground. But state oil production at the end of 2022 was 36% higher than its pre-pandemic peak, and natural gas production was 32% higher. That extra production coupled with high oil and gas prices have bumped New Mexico’s state budget to $9.57 billion — another record.
