ALBUQUERQUE, N.M. — ExxonMobil has announced plans to triple its total daily oil production in the Permian Basin in West Texas and New Mexico by the year 2025.
The global oil giant cited recent corporate tax cuts as making possible the investment, which includes more than $2 billion on transportation infrastructure in the region.
Rising oil prices have also helped fuel a resurgence in oil drilling in New Mexico and elsewhere. As of Tuesday, benchmark West Texas Intermediate hovered at $64 per barrel, its highest level since late 2014.
The Permian Basin is an oil-rich 300-mile expanse stretching from West Texas to southeastern New Mexico, including Lea, Chaves and Eddy counties.
“Our geographic and competitive advantages in the Permian position the company for strong growth and long-term value creation,” said Sara Ortwein, president of ExxonMobil’s XTO Energy subsidiary. “We can deliver profitable production at a range of prices, and we have logistics and technology advantages over our competitors.”
An ExxonMobil press release says it is “one of the most active operators in the Permian Basin.”
“To help achieve this growth, the horizontal rig count in the Permian is expected to increase a further 65 percent over the next several years,” the company said.
This latest announcement follows a $5.6 billion ExxonMobil investment in early 2017 to acquire 275,000 acres of leases in the Permian. That nearly doubled the company’s total holdings there to about 6 billion barrels of oil equivalent hydrocarbons.
That includes about 3.4 billion barrels of reserves in 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 in New Mexico. 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.
Investments by major producers there has helped push the state’s oil output to unprecedented levels in recent years. Year-end statistics are pending, but production hit a record 154 million barrels in the first 11 months of last year, according to state Oil Conservation Division. That’s up from 146.3 million barrels in all of 2016.
“We’re at an all-time high,” said New Mexico Oil and Gas Association Executive President Ryan Flynn. “We’re going to keep climbing because huge companies like ExxonMobil are investing heavily here.”
The oil and gas industry generated $1.74 billion in revenue for the state in the fiscal year that ended last June, according to a new report released Tuesday by the New Mexico Tax Research Institute. That accounted for about 30 percent of the total state budget in FY 2017. More than $900 million went to public education, with the rest pumped into the state’s general fund.