New Mexico’s oil and gas industry could take at least three more years to fully recover from a historic collapse brought on by the COVID-19 pandemic and subsequent shrinking fuel demands.
Bernadette Johnson, vice president of market intelligence at Enverus said the market for crude oil likely won’t recover to pre-pandemic levels until 2023 when the price per barrel of West Texas Intermediate – a grade of crude used as a domestic pricing benchmark – was between $50 and $60 per barrel.
In April, the price dropped to below $0 per barrel but by July had recovered to about $40 per barrel.
But Johnson said it was unlikely the price would continue to climb quickly, as fuel demands were slow to increase during the ongoing pandemic.
She presented predictions for the oil and gas markets and how New Mexico could be impacted during a Wednesday meeting with New Mexico Legislative Finance Committee held in Cloudcroft.
“Crude prices have staged a pretty impressive recovery this month compared to where we were several months ago,” she said. “It’s been volatile. This environment we’re in is historic but it’s also historic for oil and gas prices. We’ve never seen this level of disruption.”
Johnson pointed to a continual drop in the number of active drilling rigs across the U.S. Records show the U.S. had 246 active on-land rigs as of July 10, per the latest data from Baker Hughes, compared with 930 last year.
The Permian was at 125 rigs as of July 10, compared with 437 last year, records show. New Mexico was down to 49 rigs compared with 102 last year, and Texas had 107 compared with 456 a year ago.