The rising costs of accessing the Permian Basin in Texas are leading some oil companies to take a geological backdoor through the adjacent state of New Mexico, according to data from Drilling Info Inc.
Oil giants like ExxonMobil, which also supplies lubrication products through Mobil distributors, are increasingly investing in New Mexico as operations elsewhere in the Permian Basin begin to wind down. While the New Mexico rig count is still dwarfed by its Texan neighbour, the difference is narrowing. According to data from Austin-based industry consultant Drilling Info Inc., the last five months saw a 25% increase in rigs on the New Mexico side (to 75), compared to a 2% reduction on the Texas side (to 490). Expansion in the pipeline network may also lead to more sustained growth in New Mexico.
While it still has some way to go, New Mexico is predicted by some to be the next wave. ExxonMobil acquired $5.6bn of assets in the state earlier this year. The company predicts it will receive 20 years’ worth of new prospects from the quarter of a million acres included in the acquisition.
Overall, oil and gas companies are thought to have invested some $13bn in New Mexico during the past two years, with the increasing cost of exploration rights in West Texas causing oil companies to look further afield. It is thought that development and production will further accelerate in New Mexico once it catches up in terms of oil pipelines and other oil infrastructure.