October 15, 2020 Read More →

New Mexico solar power now considerably cheaper than coal, gas

New Mexico Political Report:

Just a few weeks after the pandemic hit New Mexico, the price of oil plunged into negative territory for the first time in history. Production screeched to a halt worldwide, workers were laid off, and wells were temporarily plugged while operators hoped to wait out a price war between two of the world’s largest oil suppliers, Russia and Saudi Arabia.

More than six months later, the oilfields in New Mexico are starting to show signs of life. Some of the wells that were shut in earlier in the pandemic are now back online, though just 47 well rigs—which drill new wells—are up and running, representing 40 percent of those operating in 2019 before the pandemic hit. 

“We’re hearing anecdotally that some producers are choosing to restart some of that production. “We’re still holding fairly steady, with a rig count in the 40s,” Robert McEntyre, director of communications at the New Mexico Oil and Gas Association, said. “The industry is still closely monitoring prices, we’re not in an ideal price environment. It is certainly much better than it was only a few months ago, and we’re still continuing to work through some of the challenges that the pandemic and the coronavirus has presented to the industry.”

The fracking boom in the U.S., and particularly in the Permian Basin, has only helped to further drive the price of oil down. A separate analysis conducted by the Institute for Energy Economics and Financial Analysis found shale operators in particular have reported negative cash flows every year for the last ten years. 

[Kendra Chamberlain]

More: States faces billions in well plugging costs as Fed buys millions in oil and gas bonds

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