For the first time since oil prices started falling 18 months ago, production levels in New Mexico are faltering — a shift that could be detrimental to industry in the state.
Despite prices that have hovered around $40 per barrel for both Brent crude and West Texas Intermediate crude, production levels in the state have survived rigs being laid down and layoffs at companies such as Halliburton (NYSE: HAL), ConocoPhillips (NYSE: COP) and others. In fact, production levels in the state have been on track to outpace levels not seen since the 1970s.
According to data from the Oil Conservation Division of the New Mexico Energy, Mineral and Natural Resources Department, 12.7 million barrels of oil were produced in the state in August — a number that fell to 12.1 million in September. Data from the U.S. Energy Information Administration shows a sharper drop in those numbers with 13.1 million barrels produced in August and 12.6 million barrels in September.
If production levels continue dropping and the price of oil fails to increase, which some experts say is likely, New Mexico businesses will be affected. From layoffs in the actual industry to a decrease in construction, to a decrease in the amount of traffic that restaurants and retail outlets in oil town areas see.
Since June of 2014, the price per barrel of WTI crude has dropped from $106 in June 2014 to $37.65 at the close of the markets Monday. Brent crude dropped below $40 per barrel on Monday for the first time since 2009 following Following OPEC’s (Organization of the Petroleum Exporting Countries) decision that it would not decrease its oil production levels in 2016, thereby further hampering the U.S. oil industry.
By: Sal Christ (Albuquerque Business First)
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