Shutdown shouldn’t alter NM oil and gas bottom line for now

By Rob Nikolewski on October 2, 2013
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NO PAIN … YET: A suspension of federal permits for oil and gas in New Mexico is not expected to have much impact unless the partial shutdown of the federal government drags on for about a month.

By Rob Nikolewski │ New Mexico Watchdog

SANTA FE – While New Mexico‘s budget is highly reliant on the oil and gas industry, the federal government would have to remain shut down for about four weeks for it to really alter the state’s bottom line.

That’s the word from the .

“I’m not so bold as to say it with absolute certainty, but if (the shutdown) stretched to a month then the odds would go up that it would be a major factor,” NMOGA media relations officer Wally Drangmeister told .

Since federal land makes up about , oil and gas production in the state is often extracted on public land. The issues permits on federal property and since the partial government shutdown went into effect Tuesday, the BLM has halted that permitting process.

Drangmeister said a holdup of BLM permits will affect producers differently.

“If you’re a big producer, you may have a lot of (permits) already in hand,” Drangmeister said. “But if there are players who don’t have as much inventory, that could affect them.”

Oil, gas and extractive industries in New Mexico accounted for $1.7 billion in severance taxes in fiscal year 2012, with more than half of that total going to public schools and higher education.

While New Mexico oil and gas producers are casting a careful eye on when the shutdown impasse will be resolved, the national impact of the BLM permitting suspension may be minimal.

, oil and gas consultant David Blackmon bluntly said that since BLM has been issuing permits across the country at a “glacial pace,” he believes the average American won’t be affected.

“Given that getting permits out of these agencies is already comparable to pulling teeth with a rusty screwdriver and no anesthesia,” Blackmon wrote, “further delay added by the handful of days this ‘shutdown’ is likely to last is unlikely to have any significant or lasting impact on the nation’s ability to continue to access cheap oil and natural gas.”

“If (the shutdown) goes on for a few days, I agree, there probably won’t be much effect,” Drangmeister said. “But to slow down an already slow process is not a good thing if it goes on for an extended period of time.”

Contact Rob Nikolewski at and follow him on Twitter @robnikolewski

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