The Present and Future of Energy

This brochure is for illustrative purposes only and is intended to provide a general review of programs and policies described. It is not a contract. (c) 2012 New Mexico Economic Development Department.

ConTEnTs

New Mexico: The Present and Future of Energy

3 Commitment to Energy Development

4 Natural Resources

6 Science and Technology Centers 7 Land and Transportation

8 Workforce

9 Quality of Life

10 Tax Incentives

New Mexico Economic Development Department1100 St. Francis Dr. • Santa Fe, NM 87505-4147505.827.0300 • 800.374.3061 • FAX: 505.827.0328 www.gonM.biz

888.715.5293 • nmpartnership.com NMpartnership

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Governor SuSana Martinez has made a firm commitment to growing new

Mexico’s energy industry. new Mexico is a state abundant in natural resources – from

oil and natural gas to wind and sun. as the state strives to be the leader in energy

development, new Mexico will do all it can to ensure a thriving energy economy.

nEw MExiCo Has a Long TradiTion as an EnErgy–ExPorTing sTaTE . . .For nearly a century, New Mexico has been, and continues to be, a leading exporter of oil, gas and electricity generated from coal. The state also has a tradition of uranium mining, nuclear processing and advanced energy research at our national labs and universities. New Mexico is continuing this tradition by adding new energy resources to its portfolio, like renewable energy and biofuels, and new technologies, continuously enhancing their development and use.

. . . wiTH a sTrong and divErsE CLusTEr oF THriving EnErgy BusinEssEsHome to companies like Shell, Conoco-Phillips and Intel, international leaders like Schott Solar, innovators like Sapphire Energy and Urenco, and successful small and medium-sized businesses too numerous to name, New Mexico is open for energy business. We welcome your manufacturing, production or service company to New Mexico.

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nEw MExiCo PossEssEs Many signiFiCanT EnErgy rEsourCEs

natural gas and oilNew Mexico ranks 4th in natural gas production in the United States. Approximately 10 percent of the nation’s natural gas supply is produced here.

New Mexico is the 6th largest producer of crude oil in the continental United States and ranks 4th in crude oil reserves. Pipelines in the state stretch more than 25,000 miles, exceeding the combined mileage of New Mexico’s railroads and highways.

In 2007, over 1,200 new wells were drilled and the state produced 1.6 trillion cubic feet of natural gas and 65.4 million barrels of crude oil.

renewable Energy and BiofuelsNew Mexico ranks 2nd in solar energy resource, 11th in wind resource and 7th in geothermal resource in the nation. The Western Governor’s Association estimates that New Mexico could produce 27 gigawatts of renewable electricity, the highest total of any western state. The state’s Renewable Energy Transmission Authority has been working to accelerate the development of transmission capacity to get this resource to market, leveraging New Mexico’s strategic location at the intersection of all three major U.S.

electricity grids. New Mexico’s sun, abundant brackish water and available land make it an ideal location for algal biofuels as well. uraniumNew Mexico ranks 2nd in uranium deposits in the nation. New techniques like in-situ mining and advances in safety and environmental techniques have made recovery of these resources increasingly attractive. In addition, southeastern New Mexico has excellent geology for the storage and processing of uranium, anchored by the Waste Isolation Pilot Plant since 1999.

Coal A substantial amount of coal is produced in New Mexico, with recoverable coal at producing mines of approximately 380 million short tons. Approximately three-fifths of coal produced is used in state, largely for electricity generation.

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nEw MExiCo is a rEsEarCH & dEvELoPMEnT PowErHousE

New Mexico is ranked 1st in non-industry investment in research & development (2010 State New Economy Index).

New Mexico is the biggest gainer in science and tech workforce (2010 State Technology and Science Index).

wE arE grEEn

The Western Governor’s Association has identified New Mexico as having the leading developable

renewable resources in the western grid, which includes western Canada and Baja California.

Business Facilities has recognized New Mexico as 2nd in solar energy manufacturing leaders – among the 50 states.

wE HavE PLEnTiFuL naTuraL rEsourCEs

New Mexico is ranked 4th in the U.S. in natural gas production.

New Mexico is ranked 7th in the U.S. in crude oil production.

New Mexico is rated 12th in the U.S. in coal production.

New Mexico is rated 9th in the U.S. in total energy production.

New Mexico is a huge net exporter of electricity.

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nEw MExiCo is HoME To LEading advanCEd EnErgy sCiEnCE and TECHnoLogy CEnTErsOur state is home to truly unique science and

technology institutions. All of these institutions are

engaged in advanced energy research. Hundreds of

millions of research dollars are spent on these pursuits

in New Mexico annually.

Los Alamos Laboratory (LANL) invented nuclear energy and continues leading research in this area today. LANL also conducts advanced research in biofuels, carbon capture and sequestration, geothermal energy, solar photovoltaics, wind, fossil fuels, fuel cells, the smart grid, superconductivity and hydrogen.

Sandia National Laboratories (SNL) conducts important applied and systems research in the areas of nuclear energy storage and security, fossil fuels, energy efficiency, solar, wind, biomass and geothermal energy, smart grid solutions, and the energy and water nexus.

New Mexico State University has critical capabilities in the environmental mitigation of fossil fuels, solar and wind energy, biofuels and nuclear modeling.

New Mexico Tech leads in the area of fossil fuel exploration, production and management, carbon sequestration, energy market analysis and energy policy.

The University of New Mexico conducts leading research on nuclear and solar energy, the smart grid, energy efficiency, biofuels, and water.

nEw MExiCo suPPorTs your EnErgy BusinEss wiTH TargETEd inCEnTivEsNew Mexico has a wide range of generous incentives to enhance your bottom line and support your operations. We look forward to working with you as our partners in job creation. A complete list of energy business incentives is provided on pages 10 and 11 of this brochure.

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Land and TransPorTaTion

real EstateNew Mexico is the fifth largest state in land area with 121,589 square miles. Unlike states such as Colorado and Oregon, the desert southwest provides flat land, ideal for getting operations built and online quickly and cheaply. Land ownership is consolidated, making it easy to access large parcels, whether it be from the State Land Office or from private landowners. In addition, property is assessed at only 33 percent of market value. Given the large physical investments of many energy projects, New Mexico’s low property taxes confer a significant financial advantage.

TransportationNew Mexico is connected to the east and west coasts and to the Canadian and Mexican borders by three major interstates: I-25 (north-south), I-40 (east-west), and I-10 (east-west), in addition to two- and four-lane highways.

Both Union Pacific and BNSF Railroads serve the state, providing economical transportation of raw materials and finished product throughout the United States. Burlington Northern (BNSF) has a multimodal rail yard near Belen, just 30 minutes south of Albuquerque. Union Pacific and BNSF railroad companies provide rail access to companies in the state’s border region and both will be expanding their intermodal operations in southern New Mexico within the next three years. Several rail-served sites are available throughout the state.

More than 60 airports serve New Mexico with varying levels of service. Commercial service is available in nine cities, with most of the commercial traffic flowing through the Sunport in Albuquerque and El Paso International. The Sunport offers nonstop service to 28 destinations daily and El Paso offers daily flights via seven commercial carriers.

The recently-completed Rail Runner provides commuter access along the Rio Grande corridor from Belen through the Albuquerque metro area to Santa Fe.

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workForCEThe availability of trained, affordable labor concerns all companies. In the energy industry, technical expertise and productivity take on even greater importance.

In the 2008 State New Economy Index, New Mexico was cited as the 3rd “top mover” in workforce education, moving up 15 places in the rankings. In the same report, New Mexico was the top mover in the “Technology in Schools” category.

This is due again to the commitment of the state’s leadership to keep New Mexico at the forefront of growth in high-tech clusters. The same report ranks New Mexico 2nd in the percentage of high-tech jobs and 3rd in the percentage of scientists and engineers in the workforce. Clearly the commitment is paying off.

Training ProgramsCommunity colleges like Central New Mexico Community College, San Juan College, New Mexico Junior College and Mesalands College provide nationally-recognized

training programs in the energy industries. Central New Mexico Community College is a leader in providing customized “just-in-time” training for industry partners. San Juan College provides excellent oil and gas training and has one of the oldest and most established solar-installer training programs in the country. Mesalands College offers one of the top wind technician training programs in the United States, and the only one with a turbine dedicated to student education. New Mexico Junior College has strong nuclear technical training.

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workForCEThe availability of trained, affordable labor concerns all companies. In the energy industry, technical expertise and productivity take on even greater importance.

In the 2008 State New Economy Index, New Mexico was cited as the 3rd “top mover” in workforce education, moving up 15 places in the rankings. In the same report, New Mexico was the top mover in the “Technology in Schools” category.

This is due again to the commitment of the state’s leadership to keep New Mexico at the forefront of growth in high-tech clusters. The same report ranks New Mexico 2nd in the percentage of high-tech jobs and 3rd in the percentage of scientists and engineers in the workforce. Clearly the commitment is paying off.

Training ProgramsCommunity colleges like Central New Mexico Community College, San Juan College, New Mexico Junior College and Mesalands College provide nationally-recognized training programs in the energy industries. Central New Mexico Community College is a leader in providing customized “just-in-time” training for industry partners.

neW MeXiCo iS: 1st in Manufacturing Momentum (Business

Facilities 2008)

1st in Research & Development Intensity (National Science Foundation 2008)

4th Highest Concentration of Tech Workers in the Country (Cyberstates 2009)

3rd Best Highway System in the U.S. (Reason Foundation 2008)

4th Nationally in Technology Concentration and Dynamism (2008 State Technology and Science Index)

1st in Renewable Energy Potential (Western Governor’s Association 2009)

4th in Natural Gas Production in the U.S. (New Mexico Oil and Gas Association)

2nd in Uranium Resources (U.S. Energy Information Administration 2010)

San Juan College provides excellent oil and gas training and has one of the oldest and most established solar-installer training programs in the country. Mesalands College offers one of the top wind technician training programs in the United States, and the only one with a turbine dedicated to student education. New Mexico Junior College has strong nuclear technical training.

nEw MExiCo is a PLaCE To THrivE and ProsPEr In the 2008 State Technology and Science Index published by the Milken Institute, New Mexico received an overall ranking of 16th of the 50 states. With a population of less than 2 million, New Mexico is the 5th largest state

a Land of Multicultural History and Tradition

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Advanced Energy Tax CreditSolar-thermal, photovoltaic electricity-generating facilities and other advanced energy facilities are eligible for an income tax credit equal to 6 percent of facility-development and facility-construction expenditures.

Alternative Energy Product Manufacturers Tax CreditManufacturers of electric or hybrid vehicles, fuel-cell systems, renewable-energy systems, IGCC systems and carbon-sequestration equipment may claim a tax credit of up to 5 percent of capital expenses.

Biodiesel Blending Facility Tax CreditInstallers of biodiesel-blending equipment for the production of blended biodiesel fuel may claim a credit against gross receipts tax and compensating tax, equal to 30 percent of the purchase cost of the equipment and the cost of installation.

Biomass-related Equipment & Biomass Materials Tax DeductionsDeductions in computing the compensating tax due apply to the value of a biomass boiler, gasifier, furnace, turbine-generator, storage facility, feedstock-processing or feedstock-drying equipment, feedstock trailer or interconnection transformer, as well as the value of biomass materials used for processing into biopower, biofuels or biobased products.

Blended Biodiesel Fuel Tax CreditCorporate income tax credits may be claimed for each gallon of blended biodiesel fuel (2 percent biodiesel minimum) upon which the special-fuel excise tax was imposed in the taxable year.

Chemicals & Reagents Gross Receipts Tax DeductionReceipts from selling chemicals or reagents to any mining, milling or oil company for use in processing ores or oil in a mill, smelter or refinery or in acidizing oil wells, and receipts from selling chemicals or reagents in lots in excess of 18 tons may be deducted from gross receipts.

Electricity Production & Transmission Compensating Tax ExemptionElectricity used in the production and transmission of electricity is exempted from the compensating tax.

Oil & Natural Gas Gross Receipts Tax & Compensating Tax Exemptions

The following are exempt from gross receipts tax or compensating tax in lieu of other taxes:• Receipts from the sale of or leasing of oil, natural gas or mineral

interests;• Receipts from the sale of products;• Receipts from the sale or processing of products;• Receipts from the sale or processing of natural resources the severance

or processing;• Receipts from the sale of oil, natural gas, liquid hydrocarbon or any

combination thereof consumed as fuel in the pipeline transportation of such products; and

• The use of oil, natural gas, liquid hydrocarbon or any combination thereof as fuel in the pipeline transportation of such products.

Renewable Energy Production Tax CreditEach renewable-energy generator of one megawatt or more may earn an income tax credit (personal or corporate) of 1 to 4 cents per kilowatt-hour over 10 years for the first 400,000 megawatt-hours (400,000,000 kilowatt-hours) of electricity, beginning with the first year of production.

Renewable Energy Transmission Equipment Gross Receipts Tax DeductionReceipts from selling equipment to the New Mexico Renewable Energy Transmission Authority (RETA) or an agent or lessee of RETA may be deducted from gross receipts if the equipment is installed as part of an electricity- transmission facility or an interconnected storage facility acquired by RETA.

Renewable Energy Transmission Equipment Compensating Tax DeductionThe value of equipment installed as part of an electricity-transmission facility or an interconnected storage facility acquired by the New Mexico Renewable Energy Transmission Authority.

Renewable Energy Transmission Services Gross Receipts Tax DeductionReceipts from providing services to the New Mexico Renewable Energy Transmission Authority (RETA) or an agent or lessee of RETA for the planning, installation, repair, maintenance or operation of an electricity-transmission facility or an interconnected storage facility acquired by RETA may be deducted from gross receipts. Solar Energy Systems Gross Receipts Tax Exemption

new Mexico has a wide range of tax incentives and programs to support all types of energy businesses. The following two pages provide a brief overview. Additional detailed information is available through the Economic Development Department. Please contact us for assistance.

aDvanCinG enerGY: new Mexico tax incentives and Programs

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Advanced Energy Tax CreditSolar-thermal, photovoltaic electricity-generating facilities and other advanced energy facilities are eligible for an income tax credit equal to 6 percent of facility-development and facility-construction expenditures.

Alternative Energy Product Manufacturers Tax CreditManufacturers of electric or hybrid vehicles, fuel-cell systems, renewable-energy systems, IGCC systems and carbon-sequestration equipment may claim a tax credit of up to 5 percent of capital expenses.

Biodiesel Blending Facility Tax CreditInstallers of biodiesel-blending equipment for the production of blended biodiesel fuel may claim a credit against gross receipts tax and compensating tax, equal to 30 percent of the purchase cost of the equipment and the cost of installation.

Biomass-related Equipment & Biomass Materials Tax DeductionsDeductions in computing the compensating tax due apply to the value of a biomass boiler, gasifier, furnace, turbine-generator, storage facility, feedstock-processing or feedstock-drying equipment, feedstock trailer or interconnection transformer, as well as the value of biomass materials used for processing into biopower, biofuels or biobased products.

Blended Biodiesel Fuel Tax CreditCorporate income tax credits may be claimed for each gallon of blended biodiesel fuel (2 percent biodiesel minimum) upon which the special-fuel excise tax was imposed in the taxable year.

Chemicals & Reagents Gross Receipts Tax DeductionReceipts from selling chemicals or reagents to any mining, milling or oil company for use in processing ores or oil in a mill, smelter or refinery or in acidizing oil wells, and receipts from selling chemicals or reagents in lots in excess of 18 tons may be deducted from gross receipts.

Electricity Production & Transmission Compensating Tax ExemptionElectricity used in the production and transmission of electricity is exempted from the compensating tax.

Oil & Natural Gas Gross Receipts Tax & Compensating Tax ExemptionsThe following are exempt from gross receipts tax or compensating tax in lieu of other taxes:• Receipts from the sale of or leasing of oil, natural gas or mineral

interests;• Receipts from the sale of products;• Receipts from the sale or processing of products;

• Receipts from the sale or processing of natural resources the severance or processing;

• Receipts from the sale of oil, natural gas, liquid hydrocarbon or any combination thereof consumed as fuel in the pipeline transportation of such products; and

• The use of oil, natural gas, liquid hydrocarbon or any combination thereof as fuel in the pipeline transportation of such products.

Renewable Energy Production Tax CreditEach renewable-energy generator of one megawatt or more may earn an income tax credit (personal or corporate) of 1 to 4 cents per kilowatt-hour over 10 years for the first 400,000 megawatt-hours (400,000,000 kilowatt-hours) of electricity, beginning with the first year of production.

Renewable Energy Transmission Equipment Gross Receipts Tax DeductionReceipts from selling equipment to the New Mexico Renewable Energy Transmission Authority (RETA) or an agent or lessee of RETA may be deducted from gross receipts if the equipment is installed as part of an electricity- transmission facility or an interconnected storage facility acquired by RETA.

Renewable Energy Transmission Equipment Compensating Tax DeductionThe value of equipment installed as part of an electricity-transmission facility or an interconnected storage facility acquired by the New Mexico Renewable Energy Transmission Authority.

Renewable Energy Transmission Services Gross Receipts Tax DeductionReceipts from providing services to the New Mexico Renewable Energy Transmission Authority (RETA) or an agent or lessee of RETA for the planning, installation, repair, maintenance or operation of an electricity-transmission facility or an interconnected storage facility acquired by RETA may be deducted from gross receipts. Solar Energy Systems Gross Receipts Tax ExemptionReceipts from the sale and installation of on-site solar-electric and solar-heating systems may be deducted from gross receipts.

Solar Market Development Income Tax CreditUp to $9,000 of income tax credits may be claimed for the purchase and installation costs of a solar-thermal system or photovoltaic system for a home or business, in addition to the federal solar tax credit.

Special Fuel Gross Receipts Tax DeductionReceipts from selling special fuel consisting of at least 99 percent vegetable oil or animal fat may be deducted from gross receipts.

Sustainable Building Tax Credit

new Mexico tax incentives and Programs (cont’d)

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