The sale of public land to the oil and fuel industry, the recent market crisis caused by the COVID-19 pandemic can be negative for New Mexico taxpayers, environmental equipment warned, while industry leaders argued that leasing land for extraction would put operators in a difficult situation.monetary position when the market recovers.
On August 26, the Federal Bureau of Land Management (BLM) proposed a lease sale of approximately 3,263 acres of public land in New Mexico, Oklahoma and Texas, with the maximum of the sale taking position in the Southeast region of the Basin. Permian of New Mexico. .
The BLM also planned to sell rents on approximately 45,445 acres of federal land also in southeastern New Mexico to the oil and fuel industry, a sale that was postponed in May due to pandemic difficulties.
In its last lease sale, BLM sold approximately 17,024 acres of federal land to oil and fuel operators when it sold on February 6 on 68 plots in New Mexico and Oklahoma.
The sale raised approximately $20.4 million, and the offer will be consistent with the acre destined for the Federal Abstract Company at $31,680 consistent with the acre of approximately 321 acres in Eddy County.
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But Jesse Prentice-Dunn, chief policy officer at the Center for Western Priorities, said the same market and public aptitude issues that led to the postponement of the sale in May were still available in August and lease sales would be delayed further.
“Making this sale just doesn’t make sense,” Prentice-Dunn said.” The industry is in free fall and it is not as if the industry lacks mining rights to drill.It’s bad for the taxpayer. These are public mining rights and deserve to be rented in a responsible manner.»
Prentice-Dunn argued that while the market suffers with low oil costs and declining rigs, New Mexico would have its lowest count of the year this month with around forty-five reported Friday compared to 111 a year ago. the oil corporations would be particularly offering to cut offers.
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Oil and fuel lease sales will stop, he said, until the market recovers and New Mexico taxpayers can get a fair fee for public lands.
“Previous lease sales have already been postponed this year due to market conditions,” Prentice-Dunn said.”They do it again. Auctions are likely to be depressed compared to what they were at a more physically powerful time on the market.”
But Robert McEntyre, spokesman for the New Mexico Oil and Gas Association, said the long-term performance of public land rents for the mining industry would remain strong despite the recent market recession.
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He said that when the market recovers, manufacturers will be able to expand oil and fuel resources further by employing rents acquired during the crisis and generate more profits for the state to counter any potentially lower-than-normal supply.
“When the industry slows down, those resources will still be there,” McEntyre said.”The progression of our federal resources is not only smart for New Mexico, but allows companies to generate significant profits for the state.It is vital for our economy and our long term to make sure BLM makes lease sales”.
And after the industry recovered from the pandemic, McEntyre argued that the federal government would likely impose higher royalties on mining activities on federal land, creating more long-term gains for the state and its taxpayers.
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“Historically, those assets produce the maximum setback for several years, necessarily from the start when the lease is sold,” he said.”The federal government will get a good enough setback for several years.”
But any significant recovery from the industry will wait for the pandemic to end, as the good luck of the industry depends heavily on the demand for fuel that reduced the fitness crisis and consequent travel restrictions.
“The industry will stick tightly to the resumption of the pandemic,” McEntyre said.”Prices seem to reach some of the production cuts since early spring.But ours and relies heavily on our ability to get out of the pandemic and repair people’s ability to return to general life.
“But geology has changed. The long-term price of these resources has changed.”
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At the New Mexico State Land Office, the company chose another route.
Instead of advancing advances in oil and fuel in anticipation of market recovery, Land Ownership Commissioner Stephanie Garcia Richard said the slowdown is an opportunity to diversify New Mexico’s land control economy so that it is not so financially devastated by the next crisis.
Oil and fuel continued to account for approximately 90% of the Land Office’s revenue, up from 94% of the year, and recorded a 5% decrease in royalty payments, from $899 million in fiscal 2019 to $854 million in fiscal 2020.
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Meanwhile, the Bureau of Land reported an 118% increase in wind energy revenues from $406685 in 2019 to $885273 in 2020.
And passing rights bondage bills rose to 58%, from $24.7 million last year to $39 million in fiscal 2020.
While oil and fuel remain the main driving force for the state, Garcia Richard said his workplace intends to continue diversifying its revenue streams for more renewable energy that could affect the state of long-term oil value declines.
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And the market crash is expected to have a more negative effect on profits in fiscal 2021, said Garcia Richard, who probably wouldn’t see $1 billion in profits in fiscal years 2019 and 2020, when the oil and fuel industry was healthier..
“It is vital that the land is noticed as a constant source of profit for the establishments we support,” he said.”We are working hard to diversify our sources of profit to ensure that if we see long-term declines in oil costs, he did this year, other activities are thriving so that beneficiaries are not affected.”
Adrian Hedden can be contacted at 575-628-5516, [email protected] or @AdrianHedden on Twitter.