Oil and Gas Market Decimated by COVID-19 in 2020, Production Poised for Recovery Next Year
New Mexico’s fossil fuel market finished 2020 in recovery from the COVID-19 pandemic and historic losses in the value of oil and gas and production levels throughout the state.
After April’s market crash to as low as -$40 per barrel, the lowest price in history, and a dramatic drop in New Mexico’s rig count by more than 60 percent in the months after the pandemic struck the state in March, the late fall and early winter saw some slight rebound.
But the market was still far off from the record-setting, pre-pandemic growth.
As of Tuesday, Nasdaq reported domestic oil was trading at about $47 per barrel, following a steady increase this month after starting December at about $44 per barrel.
The year started at about $61 per barrel, well above the $50 benchmark most analysts say is needed for operations to remain profitable.
That increase in price was followed by an uptick in active oil and gas rigs in New Mexico, Texas and the shared Permian Basin.
As of Dec. 18, the latest data from Baker Hughes showed New Mexico had 66 active rigs, averaging 62 so far in December after climbing to 59 on Dec. 4 and 60 on Dec. 11.
The growth in December continued an upward trend that started in the fall, reversing a downward spike from a peak of an average 114 rigs in February and March to a valley of 44 rigs in September.
Texas also saw big losses in rigs this year, starting 2020 with an average of 398 rigs but dropping to 105 in August.
The Lone Star State also saw a slight recovery in its rig county this fall, inching up to an average 154 active rigs so far in December.
The Permian Basin, the U.S.’ most active oil play spanning southeast New Mexico and West Texas, was down 240 rigs in the last year to 174, but was up six rigs in the last week, records show.