ALBUQUERQUE, N.M. — A Delaware company announced Thursday it will invest $52 million in a truck-to-rail facility in Milan to help move oil from the Four Corners region to market.
NLG Energy Partners’ facility will create 62 jobs initially and another 50 or so within five years, according to the state Economic Development Department.
Most of the jobs will be New Mexico-based truck driving positions, and wages overall will average $92,000 a year plus benefits, said Angela Heisel, spokeswoman for the state Economic Development Department.
Cibola County will receive $1.2 million in Local Economic Development Act funds from the state to help with capital expenses on the project, Heisel said.
Oil trucked from the Four Corners area will be loaded into rail tankers at the facility, from which it can be shipped elsewhere.
Operations at the Milan truck offloading/rail loading facility are expected to begin in the third quarter of 2015.
“New Mexico is geographically positioned to become a leading logistics hub and we’d like to see this region replicate the success that’s taking place at our southern border with the location of Union Pacific there,” Gov. Susana Martinez said in announcing the facility.
Steve Henke, president of the New Mexico Oil and Gas Association, said the difficulty of transporting increasing volumes of crude oil from a region of the state where the infrastructure is geared to natural gas means that producers have to discount that oil $10 to $12 per barrel to cover added transportation costs.
“Anything that will help reduce the cost of transporting that oil out of the San Juan Basin just aids in the economics of that production investment,” Henke said. “We’re certainly not talking the volumes (of crude oil) that are coming out of the Permian Basin, but again, to be able to help continue that growth in drilling and production in that Mancos Shale, we need to keep that cost on those margins as attractive as possible.”
Crude oil production in the San Juan Basin has doubled in the past three years.
Data compiled by the state Oil Conservation Division show more than 1.1 million barrels of crude were produced from northwestern New Mexico oil wells in 2012 and more than 2 million barrels produced in 2013.
The region is on track to top last year’s crude production in 2014 with nearly 2.1 million barrels produced between January and August this year, according to the OCD.
NGL Energy Partners is a Delaware-based business that serves the energy industry at various points throughout the supply chain.
The company owns a network of terminals, rail cars and other facilities.