AN EVALUATION OF KNOWN REMAINING OIL RESOURCES IN THE STATES OF NEW MEXICO AND WYOMING Project on Advanced Oil Recovery and the States Volume IV

The Interstate Oil and Gas Compact Commission (lOGCC) has conducted a series of studies to evaluate the known, remaining oil resource in twenty-three (23) states. The primary objective of the IOGCC's effort is to examine the potential impact of an aggressive and focused program of research. development, and demonstration (RD&D) and technology transfer on future oil recovery in the United States. As a part of this larger effort by the IOGCC, this report focuses on the potential economic benefits of improved oil recovery in the state of New Mexico. Individual reports for seven other oil producing states and a national report have been separately published by the IOGCC. Several major technical insights for state and Federal policymakers and regulators can be reached from this analysis. ?At the conclusion of conventional recovery operations, two-thirds of the known original oil- in-place will remain in New Mexico oil reservoirs. ?The remaining resource, over 10 billion barrels, is the target for future improved oil recovery techniques. However, a significant   portion of this remaining oil resource has already been abandoned. An even greater portion is in imminent danger of abandonment if cost-effective and efficient recovery techniques are not applied. ?Resource abandonment will significantly impact the economic producibility of future production and reserves under improved oil recovery techniques. Major capital investments will be needed to reacquire the leases, rebuild the infrastructure, and more importantly, drill new wells to regain access to the New Mexico target resource. ?New Mexico's future oil production depends on the development of efficient and cost-effective oil recovery technologies, technology transfer to domestic producers, and the timely and successful application of such technologies, given the steady decline in New Mexico production and the accelerating level of well abandonment over the past decade. ?The effective transfer of existing technology could result in 430 to 640 billion barrels of new reserves from analyzed New Mexico reservoirs at oil prices ranging from $20/B to $28/8, potentially increasing the state's current proved reserves by 60% to 90%. ?Technology advances resulting from a focused RD&D effort could result in additional post-conventional reserves of 350 to 400 million barrels. The effective transfer of existing technology, coupled with the development and application of new technologies, could more than replace current proved reserves in New Mexico. ?Public sector revenues from future improved oil recovery activity would total between $2.3 and $4.3 billion given currently available recovery practices and oil prices of $20/B to $28/8. Technology advances could increase these totals by $2 to $3 billion over the same price range, with roughly 40% of the total flowing to the state treasury. ?Potential improved oil recovery would replace imports of foreign oil, keeping between $9 billion and $18 billion in the U.S. economy. This figure is only the direct cost of imports avoided due to increased domestic activity. The true value to the country is actually much higher due to multiplier effects as this money circulates in the economy.

Tags: kmd