ExxonMobil: Investments May Bring $64 Billion in NM Benefits

ExxonMobil investments in New Mexico could kick up a $64 billion tidal wave of benefits for the state over the next 40 years, according to a new study released Friday by the oil giant.
The study calls the company’s existing and planned activities in the Permian Basin in southeastern New Mexico and West Texas a “world-class mega project” that for New Mexico alone will generate about $62 billion in net fiscal benefits over four decades from leases, royalties and taxes. Local communities could also benefit from about $1.8 billion in economic growth.
“The Permian Basin is the engine of America’s energy renaissance and New Mexico residents will see direct economic benefits and opportunities from our planned investments,” ExxonMobil Chairman and CEO Darren Woods said in a statement. “We will be a significant, long-term economic contributor to the state of New Mexico and will work hard to be a trusted member of the community.”
Gov. Michelle Lujan Grisham expressed optimism about ExxonMobil’s projections.
“The benefit to this state’s bottom line, as represented by investments from companies like ExxonMobil, has been enormous,” the governor said in a statement.
ExxonMobil’s public and government affairs division commissioned the Texas-based economic consulting firm Impact DataSource for the study, given the company’s massive investment plans in southeastern New Mexico.
ExxonMobil subsidiary XTO Energy plans to drill about 6,500 wells on more than 400,000 net acres in Eddy and Lea counties over the next four decades, representing $55 billion in capital expenditures for drilling, facilities construction and oil and gas extraction operations.
The company said in March that XTO’s Permian Basin activities in both New Mexico and Texas will climb to 1 million barrels per day of oil equivalent by 2024. That’s up from a previous forecast in early 2018 of 600,000 barrels by 2025, which ExxonMobil predicted after investing $5.6 billion in 2017 to acquire 275,000 acres of leases in the Permian.
That purchase nearly doubled the company’s total holdings there to about 6 billion barrels of oil equivalent hydrocarbons, more than half of it on the New Mexico side of the Delaware Basin, an oval-shaped rock formation within the Permian that protrudes from southwest Texas northward into Lea and Eddy counties.
That area has become one of the country’s most-prolific oil and gas zones, producing some of the highest returns for oil firms operating in the U.S. today and converting New Mexico into the nation’s third largest oil-producing state.
Most of the $62 billion in projected government revenue would come from direct payments to the state, including $44 billion from lease and royalty charges and $8.5 billion from severance taxes.
It could be a conservative estimate, because the projections are based on $40-per-barrel prices. At $56 per barrel, the study estimates $83 billion in net fiscal benefits.
By: Kevin Robinson-Avila (ABQ Journal)
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