The downturn in the oil and gas industry could cost New Mexico around 2,000 jobs, according to estimates from officials with the state Energy, Minerals and Natural Resources Department.
The number of drill rigs operating in the San Juan and Permian basins has dropped from 85 to 60 over the past year, and state energy Secretary David Martin said each rig directly employs 50 workers and another 50 to 70 in support jobs.
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"So far we haven't seen a decrease in oil production in New Mexico, but we expect it to begin leveling off and that means lost revenue and jobs in the coming months," he said Tuesday during an annual energy conference in Farmington.
The reduction in rigs comes as some producers scale back plans to compensate for dropping oil prices, which have fallen from more than $100 per barrel last summer to less than $45 in mid-March.
While it can take months for the effects to trickle down to the oilfield workforce, state lawmakers have already been forced to pare down spending plans for the next fiscal year due to less tax revenue from the industry.
Industry leaders participating in the conference said the lower prices are forcing them to be more innovative and more efficient.
Companies are leaning on new techniques and technology to get more oil out of every well they drill and cutting costs in an effort to keep U.S. oil competitive with much lower-cost oil flowing out of the Middle East, Russia and elsewhere.
Daniel Fine, associate director at the New Mexico Institute for Mining and Technology's Center for Energy Policy, said a price war by OPEC will prolong the industry's troubles and there's no indication things will be better next year.
"Saudi Arabia has made a historic decision to no longer support oil prices. It's now survival of the fittest," he said.
David Lawler, the CEO of BP America's onshore business, announced Tuesday at the conference that the company has no plans to sell its assets in the San Juan Basin, which include thousands of operating and idle natural gas wells.
BP hasn't drilled a well in the basin in about seven years, but Lawler said the company has plans to drill two wells this year, with eight more in other basins in the country.
"We're going to have to change as a company because the status quo is not going to work in the long-term," Lawler said during the conference. "And we don't believe there's going to be a significant rise in prices any time soon."