New Mexico’s oil and gas industry is teetering on a near-shutdown, slammed by plunging demand for oil and an unprecedented global market glut that’s slashed prices to 20-year lows.
New drilling in the Permian Basin in southeastern New Mexico is screeching to a halt, and many producers are starting to shut in existing wells to await better times. That, in turn, foreshadows a double whammy on the state budget, as government revenue tumbles from plummeting oil prices and forthcoming production declines.
“It’s not pretty down here,” said Raye Miller, president of oil company Regeneration Energy Corp. in Artesia. “Probably the most activity we’re seeing now is from folks moving rigs out of the oil fields and into storage yards.”
Although unemployment data is not yet available, State Rep. Larry Scott, R-Hobbs, said companies are slashing their payrolls.
“We’re seeing layoffs, salary reductions and equipment moving back to storage yards,” said Scott, a longtime oilman and owner of Lynx Petroleum in Hobbs. “I know of several companies that have announced substantial layoffs of 80 to 100 workers.”
One industry expert predicts a loss of more than 60% of New Mexico’s active oil rigs, which would translate to more than 2,000 layoffs.
Oil producers in New Mexico and elsewhere are hoping for some relief this week, because the Organization of Petroleum Exporting Countries, Russia and other oil-producing nations plan to meet Thursday to discuss potential, collective cutbacks in output to reduce world oversupply and lift prices.