New Mexico is in the middle of an oil boom. The state produces about 1.8 million barrels of oil every day. That makes New Mexico the second-largest oil-producing state in the country, behind only Texas. And the growth has been dramatic. As recently as 2017, New Mexico was producing less than 500,000 barrels per day. Production has more than tripled in less than a decade.
Who Regulates Oil and Gas in New Mexico?
The Oil Conservation Division, or OCD, is the New Mexico state agency that regulates oil and gas. The OCD is part of the New Mexico Energy, Minerals and Natural Resources Department. It issues drilling permits, collects production data, enforces environmental rules, and oversees the plugging of inactive wells. Like the Texas Railroad Commission, the OCD keeps detailed public records of every permitted well in the state.
New Mexico's rules around oil and gas have been changing. In recent years, the state has added new requirements for reducing methane emissions — methane is a greenhouse gas that leaks from some oil and gas operations — and for managing produced water. Operators in New Mexico must stay current with evolving regulations. The OCD's website publishes all current rules and permit requirements.
What Is the Delaware Basin?
The Delaware Basin is the main oil-producing region in New Mexico. It is the western half of the larger Permian Basin. While people often say "Permian Basin," they are usually talking about the Permian Basin's two sub-basins: the Midland Basin in Texas and the Delaware Basin in Texas and New Mexico. The Delaware Basin extends into southeastern New Mexico, specifically into Eddy County and Lea County. These two counties together produce most of New Mexico's oil.
Why Is the Delaware Basin So Productive?
The Delaware Basin has some of the thickest and richest oil-bearing rock in North America. The key formations here include:
- Bone Spring Formation. The Bone Spring has three distinct layers that drillers can target separately: the First, Second, and Third Bone Spring. Each layer contains significant amounts of oil. The rock is tight — meaning oil doesn't flow easily without fracking — but it is very oil-rich.
- Wolfcamp Shale. The Wolfcamp extends into the Delaware Basin from Texas. In New Mexico, it is often called the "Wolfcamp A" or "Wolfcamp B" depending on the layer. It is one of the most productive formations in the basin.
- Delaware Mountain Group. An older set of formations including the Bell Canyon, Cherry Canyon, and Brushy Canyon. These are sandstone formations that hold oil in porous rock — more like traditional oil reservoirs than the tight shale formations above them.
What Counties Produce the Most Oil?
Eddy County and Lea County are the top oil-producing counties in New Mexico. They sit right on the Texas border in the southeastern corner of the state. Together they account for more than 90 percent of New Mexico's total oil production. The cities of Carlsbad (Eddy County) and Hobbs (Lea County) are the main industry hubs. Both cities have grown rapidly as oil production has increased. Hotels, oilfield service companies, and equipment suppliers have expanded to meet demand.
How Has New Mexico's Production Grown So Fast?
The same two technologies that powered Texas's Permian Basin boom — horizontal drilling and hydraulic fracturing — drove New Mexico's surge. Drillers in the early 2010s figured out how to drill long horizontal wells through the Delaware Basin formations. Results were excellent. Wells in the Bone Spring and Wolfcamp in New Mexico turned out to be as good as or better than many wells on the Texas side of the basin. Major companies poured investment into New Mexico acreage. Permit applications to the OCD surged. New Mexico's production numbers followed.
What Are the Challenges?
New Mexico faces real challenges even with its booming production. Water management is a big one. The Delaware Basin is in a dry, arid area. Fracking uses large amounts of water. Managing where that water comes from and where produced water goes is complex and expensive. The state also faces infrastructure challenges — building enough pipelines to carry all the oil and gas being produced, and enough power lines to run the equipment. And regulatory requirements around emissions and water handling continue to tighten.
What Can Historical Records Tell You?
New Mexico has decades of drilling history in the Delaware Basin. Old conventional wells drilled in the 1950s, 1960s, and 1970s provide a treasure trove of subsurface data. Formation tops recorded in those old wells can be used to map the underground structure. Oil shows in old dry holes may now be producible with modern techniques. The OCD archives all of this data. ScoutTickets.io is building tools to access and analyze New Mexico OCD records alongside Texas RRC data, so exploration teams can evaluate prospects on both sides of the state line with the same platform.