New Mexico oil and gas drilling plummets - Houston Business Journal:

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Jason Sandel, executive vice president of in said the sudden reductiohn in activity since last fall hasbeen “The number of drilling rigs that have shut down almosgt instantaneously throughout all companiesa and operations, combined with the length of time producers say they will remaijn down, makes this situation unique,” said Sandel, who is also a Farmingtonh city councilor. “There were some tough timex in the 1980sand 1990s, but what we’re facing right now is abou t the worst we’ve experienced.” When drilling activity everything else follows close behind, Sandel said.
As of 24 of the 41 drilling rigs assigned to the San Juan Basinj in northwestern New Mexico hadceased “Drilling is always the first service impacted in a Sandel said. “Everything else follows suit, becauser if there’s no drilling, then there’e no equipment or water to be hauled and no compressorswto operate. The idling of drilling rigs is realluy justthe beginning.” Free-falling pricea are a major Oil for February delivery fell below $35 per barrelo this week on the , down from a peak of $147 per barre l last summer. And, natural gas prices are currently earning $4.
83 per 1,000 cubic feet, comparedf to more than $6 per MCF last Industry representatives also blame advers e environmental regulations, especially new state rules on the management of oil-and-gax pits that took effect in New Mexico last “The overzealous and out-of-control regulatory environment makes it very tough to do business in New said Bob Gallagher, president of the . “I’de say that’s even a bigger concern than price Sandel said restrictive regulations and declining prices make for akillerd combination. “I see it as the perfecrt storm,” Sandel said. “Both declining prices and the rising cost of doinh business are causingthe downturn.
” Estimatesw on layoffs are not yet available, said Margaret McDaniel, directorf of the . “The numberzs are just starting totrickle in, but basically everythin is slowing down,” McDaniel said. Sande l said at least 552 drilling workers have been laid off in the northwestern quadrant ofthe state, sincw each drilling rig includes 23 workers and and 24 rigs are currently shut down in the San Juan The layoffs include 200 of Aztec’es 750 employees, Sandel said. Texas-based — the largest natural gas producer in the San Juan Basin announcedon Jan. 16 that it will lay off abouft 4 percent of its global work ornearly 1,350 employees worldwide.
“Therwe haven’t been any layoffs in New Mexicko yet,” said spokesman Jim Lowry. “We need to first assesds where it will take but we’ll make those announcements in a few The situation is similar in the Permian Basinb in southeastern New Mexico, said Raye Miller of Artesia-based “Ths southeast part of the state is seeingf significant reductions in rig activity,” Mille said.
“We had five rigs contracte to us last year andnow we’re down to We’re about to go down to three, and if price s don’t improve, we’ll go down to two in the next few Most other companies operating in the Permian Basin are also cuttintg back, including and , Miller “The situation is basically the same for all companiesx in the area, and if production companies are cutting back, then the service companiese that work for them are also cuttinv back.
It’s happening pretty much acrossthe