Oil and gas led New Mexico land use in 2022, State looks to diversify

Energy production was a leading use of New Mexico’s state-owned public land this year, with growth in fossil fuels and renewable power sectors.

The New Mexico State Land Office saw increases in revenue from both forms of energy, as New Mexico maintained its position as the second-largest producer of crude oil in U.S., operations centered in the Permian Basin in the state’s southeast region.

But state leaders also sought to diversify New Mexico’s energy supply, pushing development of renewable energies like wind solar power and hoping to expand the use of state land beyond the state’s largest industry in oil and gas – which accounts for about a third of its budget.

More:Energy companies cashing in on Permian Basin oil and gas growth during market recovery

“Diversification is one of the leading tenets of my administration, and we’re starting to see excellent results from these efforts,” said New Mexico Commissioner of Public Lands Stephanie Garcia Richard.

Here are the biggest accomplishments of the New Mexico State Land Office in 2022, a year of growth in energy sectors but also of a transitioning energy market.

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Oil and gas revenue breaks records for New Mexico

About $2 billion in revenue was generated by the Land Office via fossil fuel production and royalties paid on State Trust land the office leases to oil and gas companies in Fiscal Year 2022.

More:550-mile power line connects New Mexico wind energy to western states. Work begins in 2023

The Office oversaw 6,800 oil and gas leases in FY 2022, records show, along with 255 mineral leases and 556 easements for freshwater and saltwater disposal, totaling about 2.3 million acres of State Trust land.

The land office also reclaimed 98 acres of state land where minerals were previously extracted.

Most of that was in southeast New Mexico in Eddy and Lea counties that share the Permian Basin with rural West Texas.

More:Canadian oil and gas company targets Permian Basin fossil fuels as energy transition looms

The Permian is the largest oilfield in the U.S., generating more than 5.5 million barrels of oil per day, almost half of the U.S.’ total output, according to the Energy Information Administration (EIA).

Growth in fossil fuels on state lands help propel New Mexico to also be second, after Texas, in oil and gas drilling rigs, according to Baker Hughes meaning interest remained high in the state for future production.

Oil and gas also was largely credited in fueling a record $2.4 billion in revenue at the State Land Office this year, money used to fund hospitals, public schools and universities.

More:$2.4B in New Mexico state land revenue driven by growth in renewable, fossil fuel energy

That’s almost half of the $5.4 billion the office generated in the last four years, Garcia Richards’ first term, and almost double the previous record of $1.25 billion brought in for FY 2021.

The State Land Office also reported as of FY 2022, it plugged and remediated more than 100 abandoned oil and gas wells.

Renewable energy could prove a path toward diversifying state land use

Renewable energy, including wind and solar, tripled on State Trust land in FY 2022 since 2019 – the year the Land Office’s Office of Renewable Energy – bringing production from 400 megawatts (MW) that year to 1,200 MW this year.

More:Oil executives argue Permian Basin fossil fuel growth could be blocked by state policy

The past fiscal year saw $12 million in revenue brought in from the developments, records show.

Since 2019, the Land Office reported a 208 percent increase in active leases, a 249 percent increase in leased megawatts and a 1,400 percent growth in annual revenue.

Pattern Energy was a lead producer of renewable energy in New Mexico this year, winning bids for 11 wind energy leases on State Trust land in June, totaling 147,684 acres in Lincoln, Torrance and San Miguel counties.

More:Oil production to increase in Permian Basin next month, as companies move into region

In total, the leases were expected to generate 500 MW of wind power, and $196 million in revenue during their lifetime.

Pattern also took the reigns of the Sun Zia Transmission project, which received state approvals from New Mexico and Arizona in July.

That project would…