New Mexico’s record oil production boom is “no surprise” to industry observers and the state’s natural resources department, according to the state’s top energy official.

Ken McQueen, Cabinet Secretary for New Mexico’s Energy, Minerals and Natural Resources Department, told Western Wire that his state’s oil production boom in 2017 was expected by those closely tracking industry indicators like rig count.

“New Mexico’s record production is no surprise to those who follow the rig count closely,” said McQueen. “New Mexico’s rig count set an all-time record of 103 rigs on October 24, 2014, which cratered with the oil price collapse and later bottomed out at 13 working rigs on March 18, 2016. Since that time, New Mexico has added a larger proportion of rigs than any other state, standing at 87 working rigs today, 84% of the record high.”

McQueen said that the state’s recovery outpaces that of other states, even neighboring Texas, which shares the Permian Basin’s resources with New Mexico. “By comparison, Pennsylvania is the next highest at 69% rig recovery, running 42 rigs today compared to their record of 61 rigs back in 2014. Texas has recovered only 56% of their max 2014 rig count, and North Dakota has only recovered 26% of their maximum rig count,” McQueen explained.

“States that have seen the greatest year by year increases in production from rising rig rates are Texas, New Mexico, and Colorado,” McQueen said.

Rep. Larry Larrañaga (R-27) told Western Wire earlier this week that the increased production in the Permian Basin has been “absolutely great for New Mexico.”

“The volumes coming out of there, the production coming out of there, it’s been absolutely astonishing,” Larrañaga said.

The City of Carlsbad, New Mexico, located in the southeast corner of the state, has seen its gross receipts tax jump 30 percent in the last year. Carlsbad’s Finance Director, Wendy Hammett, told the Carlsbad Current Argus that the increase in oil and gas production has contributed to that spike.

“In a broad sense, I’d say it’s all of it,” she said. “It has a significant impact.”

Hammett said the $7 million increase in gross receipt tax revenue for FY 2018 to $30 million means an opportunity to rebuild cash reserves for future infrastructure projects.

“The increased revenues that the city is receiving from oil and gas has a big impact on future project and capital funds,” she said. “We see an upward trend, month after month.”

McQueen said that a combination of new technologies and favorable climate in southeast New Mexico has created ideal conditions for increasing well productivity.

“Operators are choosing to drill in the Delaware Basin of New Mexico because the technological advances in horizontal drilling are producing some of the most productive wells in the country. In addition to southeast New Mexico’s milder winters, operational costs in the state are also lower than most other parts of the country,” McQueen said.

According to EIA data, hydraulically fractured horizontal wells account for more than two-thirds of oil and natural gas wells drilled and 83 percent of total linear footage drilled.

“The combination of horizontal drilling and hydraulic fracturing has increased the rate of recent U.S. crude oil, lease condensate, and natural gas production,” EIA wrote in January. Hydraulically fractured horizontal wells have been the predominant method for oil and natural gas development since October 2011, according to EIA data.

McQueen said that operators in New Mexico “have figured out how to be profitable at $62/Bbl in the Delaware Basin,” based on current activity levels and record production.

This week, EIA’s review of petroleum production noted that “New Mexico surpassed California and Alaska to become the third-largest crude oil-producing state in the second half of 2017.”

“U.S. onshore crude oil production growth in 2017 occurred almost entirely in the Permian basin, most of which is situated in West Texas and Southeast New Mexico. Permian crude oil production grew by 460,000 b/d from 2016 to 2017, accounting for 93% of the growth in the regions covered in EIA’s Drilling Productivity Report (DPR),” EIA wrote.

McQueen broke down the growth New Mexico has experienced over the last five years.

“As a result of this activity, December 2017 reported production from New Mexico is almost one-third higher than a year ago. And New Mexico production has doubled over the last 57 months, now standing at 556,032 Bbl per day,” McQueen said.

The boom may not bust any time soon either if prices remain stable, according to McQueen, and continued growth is not out of question.

“If current prices and activity levels persist, New Mexico will see additional production coming online,” McQueen said. “This added production has recently outpaced Alaska, Oklahoma and California to place New Mexico as the third largest oil producer in the U.S.”