winter 2012 New Mexico’s Natural Gas Resources New Mexico is an energy- Conventional Gas producing state, which means After World War II the demand that we produce more energy for natural gas as an energy than we consume, and we source soared. Exploratory export a significant amount of vertical drilling in the 1950s energy (in the form of oil, gas, and 1960s in the San Juan Basin and electricity) to surrounding resulted in new discoveries of states. This is a result primarily major natural gas reservoirs. of New Mexico’s rich natural Some of these were conventional resources, particularly oil and reservoirs, as the gas was gas. Natural gas is likely to play produced from discrete accumu- an important role in our state- lations in permeable rock. How- wide energy mix down the line, ever, many were widespread, less thanks both to new discoveries permeable (“tight gas”), blanket- in frontier gas provinces as well type accumulations in Upper as expanding technologies for Cretaceous sandstones. This new the development of existing gas not only filled the needs of resources. Furthermore, power New Mexicans, it was exported companies are now investing through interstate pipelines to in gas-generated power plants, California. Production boomed. which are seen as cleaner than Reservoirs filled with natural the traditional coal-burning gas were now sought after rather plants. Finally, for companies than avoided. Additional drill- looking to invest in wind and ing provided data that helped to solar, natural gas offers the define the extent and nature of promise of backup, allowing natural gas reservoirs both in the those industries to provide Basins and uplifts in New Mexico. San Juan and Permian Basins. continuous power to the grid. Even as conventional gas has Natural gas production in development programs followed, and soon declined, discovery of substantial New Mexico dates from 1921 with the many large oil reservoirs were discovered, new and previously unrecognized gas discovery of the Aztec field of the San Juan mostly in the Permian Basin and to a much reservoirs continues to this day. Basin in the northwestern corner of the lesser extent in the San Juan Basin. Crude state. Natural gas was discovered while oil was refined principally into motor fuel Coalbed Methane drilling for oil in the Upper Cretaceous and other products such as heating oil and Farmington Sandstone at a depth of 890 Underground coal miners have long lubricants. Most of the oil fields in New feet. In the 1920s there was little demand known that coal beds are associated with Mexico produced substantial volumes of for natural gas in northwestern New natural gas that, if not properly vented, will natural gas along with the oil. As no wide- Mexico or anywhere in the American result in large and often tragic explosions spread markets existed for natural gas in Southwest, so the gas was piped to the within the coal mines. In the 1980s it was those early days, much of the gas was flared nearby community of Aztec where it was found that coalbed methane (the term used (burned) at the wellhead. Exploration for used for home heating and cooking. for natural gas in coals) could be produced and development of natural gas resources Oil was discovered in the San Juan economically from the Upper Cretaceous remained limited until years later, when the Basin in 1922 and in the Permian Basin Fruitland Formation of the San Juan San Juan Basin was revealed to be a major in 1924. Massive exploration, drilling, and Basin. The Fruitland coals were quickly natural gas province. Published by the New Mexico Bureau of Geology and Mineral Resources • A Division of New Mexico Tech and systematically developed through the borehole without fracking. By increasing The Oil Conservation Division (OCD) drilling of exploration and production reservoir permeability, the process increases of the New Mexico Energy, Minerals and wells. The volume of natural gas produced flow rates and the total volume of gas that Natural Resources Department regulates from the Fruitland coals quickly equaled will eventually be produced by the well. drilling and production of natural gas the production of natural gas from all other Since 1950 the reservoirs in most of the throughout New Mexico. In November conventional/tight gas reservoirs in the San oil and gas wells drilled in New Mexico 2011 the Oil Conservation Commission Juan Basin as well as all of those in the Perm- have been fracked with a technique that held a rulemaking hearing pertaining to ian Basin. Peak coalbed methane production involves pumping water and sand down hydraulic fracturing fluids. The rule was was reached in 1999 when 612 billion cubic the borehole under pressure until the not officially adopted by the commission. feet (BCF) was produced; production has strength of the reservoir rock is exceeded. However, during the commission’s delib- subsequently fallen by 33 percent to 407 Fractures start to form, slowly radiating eration it was determined that an operator BCF as developed reservoirs have started out from the well bore at depths where would need to file a disclosure form with to deplete. Peak natural gas production in the well’s steel casing has been selectively OCD within 45 days of the completion New Mexico was reached in 2001 when perforated. Because almost the entire well of the well. Texas and Colorado have 1.68 trillion cubic feet (TCF) was produced; bore is protected by heavy steel casing that since passed more stringent requirements production has since fallen by 22 percent to has been cemented in place, fractures can regarding disclosure of the composition 1.3 TCF during 2010, largely as a result of develop only along reservoir intervals where of hydraulic fracturing fluids. On federal depletion of coal reservoirs in the San Juan the steel casing has been perforated or in lands, drilling and production are regulated Basin but also with depletion of known, selected intervals where the well remains by the Bureau of Land Management. conventional gas reservoirs in both the San uncased. Before 1950 wells were fracked Juan and Permian Basins. by lowering a cylinder of nitroglycerin into Shale Gas In 1999 coalbed methane production the well bore and setting off an explosion U.S. gas production has increased in recent began from the Upper Cretaceous and lower at the depth of the reservoir. This was not years through the identification and devel- Tertiary Raton and Vermejo Formations only less controllable and less effective opment of shale gas reservoirs. A decade in the Raton Basin of north-central New than the hydraulic method, it was very ago, shale gas accounted for only about 2 Mexico, after more than a decade of explora- dangerous. Development of the tight gas percent of all U.S. gas production. In 2011 tion and evaluation. The coals are thinner, sandstone reservoirs of the San Juan Basin, shale reservoirs contributed 14 percent of more lenticular, and in general less thermally once considered unconventional, is now U.S. gas production, and they are expected mature than those in the San Juan Basin, routine, and these reservoirs currently yield to contribute 46 percent of all gas produc- and they cover only a fraction of the area about one-third of the state’s gas through tion in 25 years. that the Fruitland coals cover. Nevertheless, 30,000 wells. The first commercial gas production 26 BCF of coalbed methane was produced Hydraulic fracturing is not without in the world was shale gas obtained in annually from 2006 through 2010 from its controversies. The potential for the 1821 from wells penetrating shales near Fredonia, New York. Production was 2,000 at low volumes because of the very low permeability of shale reservoirs. Although 1,500 production soon spread throughout many 1,000 parts of the Appalachian and Michigan BCF BCF Basins, these early shale gas wells provided 500 only low volumes of production. With the 0 advent of deeper drilling techniques in the Annual Annual production, late 1800s, shale gas was eclipsed by the 1924 1929 1934 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 higher volumes of production obtained from conventional reservoirs in sandstone Annual historical gas production in New Mexico from 1924 to 2010, in billion cubic feet (BCF). and carbonate rocks. The increase in production in the 1990s was due to the discovery and production of coalbed methane in the San Juan Basin. Compiled with data obtained from U.S. Bureau of Mines, U.S. Department of About 10 years ago, two advances in Energy, and New Mexico Oil Conservation Division. well drilling and completion technology rendered shale gas competitive: the development of economically viable the Raton Basin, supplying 2 percent of contamination of ground water from methods to drill wells horizontally through New Mexico’s total gas production and fracking is a major concern in parts of reservoirs, and the development of bringing substantial economic activity to the country, particularly the eastern and techniques for multistage fracking of shale the Raton area. southeastern U.S. At the end of 2011, the reservoirs penetrated by these horizontal Environmental Protection Agency issued wells. Horizontal drilling permits the well Hydraulic Fracturing a preliminary report that linked hydraulic to come in contact with a much larger The growth of natural gas production in fracturing in Wyoming with ground water volume of the reservoir than is possible New Mexico has been possible by routine contamination. Most of the natural gas with traditional vertical wells. Multistage use of artificial fracturing (“fracking”) of oil reservoirs in New Mexico are thousands hydraulic fracking increases the perme- and gas reservoirs. The tight gas sandstone of feet below the shallow aquifers.