According to New Mexico’s Legislative Finance Committee, offering the market rate of 25 percent for premium oil and gas leases is projected to contribute an additional $50 million-to-$75 million annually to the Land Grant Permanent Fund. Oil and gas royalties from the State Land Office are transferred to the fund and invested by the State Investment Council before distribution. The council estimates that this increased inflow of royalties could boost the fund’s value by $1.5 billion-to-$2 billion by 2050 and result in an additional $750 million-to-$1.3 billion in cumulative distributions from the fund by 2050.
This higher rate, used for the first time in auction July 15, applies only to new leases on state lands in the most productive oil-producing regions of southeast New Mexico. The last time the royalty rate was adjusted was in the 1970s, long before the full economic potential of New Mexico’s oil and gas resources was understood. Commissioner Stephanie Garcia Richard advocated for the public to receive a fair share of oil and gas earnings after taking office in 2019.
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