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Oil production grows in Texas and New Mexico’s Permian Basin

Updated: Jun 9, 2023

The number of oil rigs and crude production is growing in the Permian Basin of Texas and New Mexico.

The EIA recently published its monthly report on crude oil production in the United States, and it was the Permian Basin that contributed the most to this growth. In comparison to 2021, crude oil production increased by 5.6% or 0.6 million barrels per day (b/d) across the country in 2022.

The Permian Basin, which spans the states of Texas and New Mexico, saw the most significant growth in oil production in the United States for the third consecutive year in 2022. From 2021 to 2022, output in New Mexico increased by 0.3 million b/d, reaching a total of 1.6 million b/d, which is a record for the state.

The remaining eight states that produce crude oil experienced a growth of 0.6%. Among these states, California, Alaska, and North Dakota (which had previously been a leader in this area) saw a decline in their production, while the other five states experienced slight growth.

The increase in drilling activity has led to a higher rate of oil production growth, and we monitor the number of active drilling rigs reported by Baker Hughes. Based on this data, the number of land rigs increased by 8 in New Mexico, 100 in Texas, and 85 in all other states combined in 2022.

As reported by the EIA, in the first week of May 2023, the number of land rigs decreased by 8 in Texas and increased by 5 in New Mexico.

The Agency predicts further production growth in the coming years, with expectations of reaching 12.5 million b/d in 2023 and 12.7 million b/d in 2024.

The Permian Basin of Texas and New Mexico
The Permian Basin

The historic relevance of Texas and New Mexico as oil producers

Texas and New Mexico have played a crucial role in the history of oil production in the United States. The story begins in the early 20th century when significant oil discoveries transformed these states into major oil producers.

In the early 1900s, oil was discovered in the Spindletop oil field in Jefferson County, Texas, East of Houston, triggering the famous Texas oil boom. This discovery marked the beginning of Texas' rise as the leading oil-producing state in the country. The development of drilling techniques and the establishment of major oil companies, such as Texaco and Gulf Oil, further propelled Texas to the forefront of the industry.

New Mexico, while not initially as prominent as Texas, entered the oil scene in the 1920s with significant discoveries in the Permian Basin, in Lea and Eddy Counties. The Permian Basin soon became one of the largest and most productive oil fields in the world, solidifying New Mexico's position as a key oil producer.

Both Texas and New Mexico became integral to meeting the nation's growing demand for oil. They supplied vital energy resources for domestic consumption and played a significant role in supporting the Allied forces during World War II.

From an economic perspective, the oil industry brought immense prosperity to both states. It led to population growth, job creation, and economic diversification. However, it also came with environmental challenges, which prompted increased regulation and efforts to mitigate the industry's impact on the environment.

Texas and New Mexico emerged as major oil producers in the United States due to significant discoveries in the early 20th century. Their contributions to the oil industry have shaped their economies, communities, and the overall energy landscape of the nation.

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