New Mexico’s oil and gas production was at its peak in 1969, but that high-water mark is in danger of being eclipsed.

“The unconventional oil production made possible by horizontal drilling has really revived New Mexico oil production. From the first completion in 1924 through the mid-1960s, production increased about 11% each year. Production peaked out at about 129 million barrels a year in 1969 and it started going downhill,” according to Ron Broadhead, principal senior petroleum geologist at the New Mexico Bureau of Geology and Mineral Resources.

Speaking at the Rocky Mountain Association of Geologists meeting in Denver, Broadhead talked about the significant impact hydraulic fracturing and horizontal drilling has had on the state’s oil and gas production.

“Over the last three to four years unconventional drilling, especially in the Delaware Basin, has boosted state production to more than 100 million barrels per year with an increase of 17- to 19% per year, and if this continues we’re going to surpass the record in 1969.”

New Mexico has four producing basins: San Juan, Raton, Delaware and Permian.

“There are also two frontier basins to watch, the Pedregosa Basin in the southwestern part of the state and the Tucumcari Basin in the east-central part of the state.”

San Juan Basin

Production in the San Juan Basin is from the Upper Cretaceous Mancos Shale and the basal Niobrara (Gallup) offshore marine sandstone bar play in the southwest. Production also comes along the southeastern and northwestern flanks of the basin from the naturally fractured Mancos and “offshore” shales with thinly interbedded sands that occur northeast of the offshore bars. The Gallup is mature and has produced most of the conventional oil within this basin. Gas production, said Broadhead, is mostly from vertically drilled wells in to the Lewis Shale.

“The shallower Mancos along the south flank of the basin is within the oil window, and the deeper Mancos in the northern part of the basin is within the thermogenic gas window. With the advent of horizontal drilling and multi-stage hydraulic fracturing, this play now has the potential to be economically developed on a large scale. Recent exploratory drilling has been positive,” Broadhead said.

Raton Basin

The Raton, like the San Juan, is a Laramide basin. According to Broadhead, “There have been some shale gas wells there. It’s coalbed methane and most of the production began in 1991.” Broadhead also said that “the shale potential is the sleeping giant of the basin with most of the production from Niobrara wells. Most of the established wells have been vertically drilled. Probably the primary shale gas potential is somewhere in the Pierre Shale to Niobrara. There may be some oil potential in there.

“There has been a modest amount of gas produced from Upper Cretaceous from five vertical wells completed in the lower part of the Pierre and the upper part of the Niobrara shales, and these are in the thermogenic gas window in the deeper parts of the basin oil window and to some extent the biogenic gas window.

Gas production could improve with horizontal drilling, he added.

Delaware Basin, Permian Basin

The Delaware Basin is the deep marine part of the Permian Basin and holds Bone Spring. In the upper part of the Bone Spring is the Avalon Shale. “A lot of the production started out as vertical drilling there. Horizontal drilling in the second and third sand of Bone Spring really kicked off production,” Broadhead said.

“The Permian Basin has multiple targets for unconventional oil and gas, and at the current forefront are the fine-grained clastics in Bone Spring. Other shales are intriguing including the Mississippian Barnett Shale and the Devonian Woodford.”

Horizontal drilling and hydraulic fracturing have opened up large and less-permeable portions of these formations to commercial production. This is especially true for the Bone Spring, which has initial well production rates comparable to those found in the Bakken and Eagle Ford shale formations, according to Broadhead.

“The Bone Spring sandstones have been mostly responsible for the rise in New Mexico oil production from 70 to 100 million barrels over the last three years,” he added.

Pedregosa Basin

Located in the southwestern part of the state, the Pedregosa Basin was developed in the Pennsylvanian and Permian. There are thick sections of Ordovician, Permian and Pennsylvanian carbonates and there is Jurassic and Triassic and thick sections of Lower Cretaceous sections.

“There are two units that could have interest for shale production, the Percha Shale and Mojado,” Broadhead said. “The Percha Shale has a rich organic content in south-central New Mexico. It’s a black shale and it has attracted exploratory interest.

“Current interests are aimed at pursuing Mancos Shale oil from the southern flank of the basin and eventually gas in the northern part of the basin with long lateral horizontal wells with multi-stage hydraulic fracturing.”

Tucumcari Basin

Broadhead was asked to comment on the Tucumcari Basin. His response: “The Tucumcari has had some gas discovered with some good extended flowtests. It’s in Pennsylvanian Sands that are interlayed with organic-rich source rocks and are in the sub-basins within Pennsylvanian-aged grabens.

“In some of the areas, towards the base of the Pennsylvanian, when you get just a few hundred feet off Precambrian, you carry some helium in there.”

Helium is used in cryogenic applications such as mass-producing computer chips, fiberoptic cables and cooling MRI magnets in hospitals.

“Helium is going to be one of the productive gases of the future. Right now, it’s about $80 or more per Mcf, and given that we are drawing down our reserves of helium at the storages facilities near Amarillo, it’s just going to get higher. A place like Tucumcari, I think, could end up being a place where you produce some methane from the deeper parts of the Pennsylvanian section, the elevator basins, and producing those as the byproduct of helium.”