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Mineral leases selling at a fast clip in New Mexico
The Associated Press
Oil and gas companies are buying up mineral leases on federal and state land in New Mexico at prices that are higher than they’ve been in three years.
Industry officials say prices are not the only reason for the interest in leases. They say the bidding for leases also has been sparked by tougher environmental regulations and challenges that delay production from new leases.
“You have got more and more land under lease because the pipeline (to development) is too long” because of environmental challenges, said oil and gas industry consultant Mark Mathis. “They have to continue to push leases in the pipeline so that down the road they will be ready.”
State Land Office spokesman Kristin Haase said it takes about 3 1/2 years for state oil and gas leases to produce. However, she could not say whether that span has increased.
The state has received more than $142 million from 1.6 million acres of federal and state oil and gas leases since 2000. More discretionary income “With prices high, companies have a little more discretionary income and are willing to take a little bit higher risk because return on investment is higher because of the unusually higher prices, especially in natural gas,” said Bob Gallagher, president of the New Mexico Oil and Gas Association.
Land Office oil and gas lease sales through September surpass the total for the entire years of 2002 and 2003, and likely will pass the $29.4 million raised in 2001.
“I think the state Land Office is set for a record year,” said Chuck Moran, president of the Independent Petroleum Association of New Mexico.
Monthly sales of oil and gas leases average $2.7 million this year, higher than any of the past five years. Federal lease sales this year are more than double the total sales of 2001 through 2003. Leases on about 80,000 acres of federal land in New Mexico have sold for $22.8 million, a 644 percent increase over the 2001 federal lease sales of $3 million.
State leases this year have averaged $191 per acre, compared to $137 an acre in 2001, an increase of nearly 40 percent.
Increasing sales have put environmental groups on alert. Santa Fe-based Forest Guardians, known for challenges to timber sales, is considering challenging what it considers rubber stamp approvals for drilling. Environmentalists, ranchers and those interested in outdoor recreation have formed coalitions to challenge oil and gas leases, particularly at Otero Mesa in south-central New Mexico and Valle Vidal in the Carson National Forest of northern New Mexico.
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