Report: NM Now #1 in Oil and Gas, but Challenges Persist

Santa Fe - New Mexico is number one in the Intermountain West when it comes to oil and gas production, according to a new report, and being on top comes with certain challenges. Report author Ben Alexander of Headwaters Economics says the state has surpassed Wyoming in production, and is doing a pretty good job of capturing that energy revenue. However, he says, Santa Fe seems to be relying too much on those oil and gas dollars, contributing to the state's current big budget deficit.

He says one other finding that came as a surprise was that New Mexico is at the bottom of the heap in the Rockies when it comes to returning some of that energy revenue to the local governments where energy development is actually taking place.

"That can mean that local jurisdictions can have a very difficult time handling the impacts on basic government services, and also providing the infrastructure and sustaining the infrastructure, particularly roads and bridges."

The study goes on to say that policy makers should look for ways to lessen the state's dependence on volatile oil and gas revenue to fund essential public services. It also recommends transferring more of that revenue to local governments to help deal with the effects of energy development, and being more aggressive about savings to offset future downturns in the economy and energy prices.

Alexander says researchers looked at proposed plans for drilling in the Otero Mesa area as a case study. He says they found energy development could have more downside than up, citing impacts on agriculture, tourism, quality of life, and the relatively low number of new local jobs to be created in Otero County. But he adds that one of the biggest issues has to do with the possible impacts on water and the Salt Basin Aquifer beneath the mesa.

"There is some concern that drilling activities could compromise large potable water reserves that would be important not just for Otero County, but importantly for the growing metropolitan areas of Las Cruces and El Paso."

The U.S. Bureau of Land Management says it takes measures to ensure that aquifers are not contaminated by drilling, but Alexander says more detailed study of the aquifer is needed, a stance that has also been supported by state officials.

The report is at www.headwaterseconomics.org