Sep. 30--FARMINGTON -- Projecting state budget shortfalls as high as $700 million next year as the natural gas industry continues to struggle, the president of the New Mexico Oil and Gas Association on Tuesday emphasized the role of energy production as the backbone of the state economy.

The remarks were made during the eighth annual county Economic Growth, Development and Excellence Awards banquet hosted to honor the companies that continue to invest in the local economy.

The keynote speaker at the EDGE Awards, New Mexico Oil and Gas Association President Bob Gallagher, noted the oil and gas industry in 2008 contributed

$2.9 billion of the state's $6 billion budget.

The state this year is working to manage a $435 million deficit, due in part to a production industry hurt by low prices and increased regulation, Gallagher said.

"It's the backbone of the entire state of New Mexico," he said. "And those that haven't gotten that message before, they're getting it on a plate every day as we speak."

A review of rig counts statewide since March 2008 indicated that implementation of drilling rigs in New Mexico on average has decreased 28 percent, a stark contrast with neighboring states of Colorado, Oklahoma and Texas where average rig activity has grown by more than 20 percent each, Gallagher said.

"Why are the regulators increasing the burden to do business? ... Why are the rigs moving elsewhere? That's a question we have to answer," he said, urging industry leaders

to better cooperate to address political hurdles.

Although the oil and gas industry generates an unmatched lion's share of the local economy, the annual San Juan Economic Development Service EDGE awards recognize the companies that best contribute to the county in ways only partially measured by the bottom line, said Economic Development Service Director Margaret McDaniel.

That fact is underscored by the companies given top honors Tuesday night, including San Juan Regional Medical Center, TurboCare Generator Services and ACE Services, Inc.

EDGE Award winners typically are "those that invest in their employees and give back for the community," McDaniel said.

But the companies that do the best are those that successfully create new goods and services in San Juan County and attract out-of-region dollars, new money that goes to pay local employees high-wage jobs and gets reinvested throughout the local economy.

"We want to find out what the company does behind the scenes that makes that company something special," McDaniel said of the annual awards, which consider charity work, green business practices and employee wages.

The and gas industry did not go unrepresented. Six of the 10 companies nominated for the EDGE Award in 2009 were gas producers or oil field contractors.

James Monteleone:

jmonteleone@daily-times.com

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