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Data: Kayrros, WellDatabase, Federal Reserve Bank of Dallas; Chart: Will Chase/Axios

President Biden's freeze on new federal lands oil leases will deter Permian Basin output to a limited degree but will also push development from the New Mexico side of the basin to Texas, per a new Dallas Fed forecast.

Why it matters: It's an attempt to gauge the impact of emerging federal policies in the country's most prolific shale basin.

The big picture: The recently imposed leasing moratorium, combined with slower approvals of permits on existing acreage, would lower projected oil output compared to what's expected without those policies.

  • Check out the "hybrid" above, which shows Permian production in 2025 around 200,000 barrels per day less than the "reference" case.
  • That's hardly nothing, but not huge compared to the millions of barrels per day produced in the Permian.
  • They also modeled aggressive restrictions that bars new drilling permits on existing leases ("restrictive" above), which lowers projected recovery from the pandemic decline even more.

Threat level: Restrictions have a much bigger future effect in New Mexico, which produces far less than the Texas side but is still a key source of revenues for the state.

  • Half of New Mexico's Permian production is on federal lands, while in Texas production occurs on state and private lands.
  • Under the leasing freeze combined with slower permit approvals, New Mexico's production in 2025 is 400,000 barrels per day lower than in the reference case.
  • "With an expected shift in drilling from federal acreage, employment moves across state borders from New Mexico to Texas."

The intrigue: While the Biden administration has frozen new federal lands leasing, it has not moved to end permitting on existing tracts.

  • Interior officials say large numbers are still going out the door despite tighter scrutiny.

Of note: Their analysis is based on WTI at $50 per barrel, which is well below current levels, so the production estimates should be considered conservative.

Charted: Visualizing New Mexico's oil future
Data: Kayrros, WellDatabase, Federal Reserve Bank of Dallas; Chart: Will Chase/Axios

This chart from the Dallas Fed analysis looks at New Mexico's projected Permian output under the leasing freeze and hypothetical permitting ban.

By the numbers: In the fiscal year ending in mid-2020, New Mexico received $2.6 billion from industry fees, royalties and taxes.

  • Over $800 million came from the state's cut of revenues from federal acreage, the analysis notes.
  • Under the leasing freeze case, production keeps returning from the pandemic decline this year, dips a bit in 2022, and then stabilizes and "preserves state royalty and tax revenue closer to current levels."
  • If permitting ended as well, much more revenue would be at risk.

Go deeper

Biden: There won't be "American forces moving into Ukraine"

President Joe Biden told reporters Tuesday that he does not foresee U.S. troops moving into Ukraine.

Why it matters: Biden's comments come as tensions between Russia and Ukraine persist, and a Russian invasion of Ukraine appears increasingly likely.

Updated 3 hours ago - Politics & Policy

Omicron dashboard

Illustration: Shoshana Gordon/Axios

  1. Health: Axios-Ipsos poll: Omicron's big numbersAnother wave of death — FDA limits use of Regeneron and Lilly antibody treatments — Fauci: "Confident" Omicron cases will peak in February.
  2. Vaccines: Pfizer begins clinical trial for Omicron-specific vaccine — The shifting definition of fully vaccinated.
  3. Politics: Biden admin withdraws temporary vaccine-or-test mandate for large employers — New York Supreme Court strikes down Gov. Hochul's mask mandate for public areas — Sarah Palin tests positive, delaying defamation trial — Virginia school boards sue Gov. Youngkin for lifting mask mandate.
  4. World: U.K. to lift travel testing requirement for fully vaccinated — Beijing Olympic Committee lowers testing threshold ahead of Games.
  5. Variant tracker

The Robinhood M&A rumor mill churns

Illustration: Sarah Grillo/Axios

Robinhood's valuation is now just over $11 billion, a fraction of where it traded in August and below that of its last private round of funding. Cue the M&A mongers.

Why it matters: It's not just Robinhood—falling values of growth-oriented tech stocks have raised speculation that formerly high-flying fintechs could be snapped up by more well-capitalized buyers.