Crude oil and natural gas resources exist beneath Arizona’s surface, but they are extremely limited in scope. The state is not a major oil-producing region; its total output is negligible compared to states like Texas or North Dakota. Arizona’s entire annual crude oil production is often less than the daily output of a single typical well in a major oil-producing state. Consequently, Arizona is not considered a significant player in the domestic petroleum industry.
Where Oil and Gas Resources Exist
Arizona’s known hydrocarbon deposits are concentrated in the northeastern portion of the state, primarily within the Paradox Basin. This basin is a large, deep structure extending into Utah, Colorado, and New Mexico, with only a small segment in Arizona. The resources are trapped deep underground within ancient sedimentary rock layers.
The most prospective area is near the Four Corners region, specifically on the Navajo Nation lands in Apache County. The oil and gas are sourced mainly from Pennsylvanian black shales and Permo-Mississippian carbonate units. These hydrocarbons are sealed by non-reservoir quality rock and trapped by structures like salt anticlines.
The U.S. Geological Survey estimates the entire Paradox Basin province holds hundreds of millions of barrels of undiscovered, technically recoverable oil. Only a fraction of this resource lies within Arizona’s state lines, centered around the Dineh-bi-Keyah field.
The History of Exploration and Minimal Output
The search for oil in Arizona began in the early 20th century, with the first exploration wells drilled around 1905. These early attempts were unsuccessful. Arizona recorded its first commercial petroleum production in 1954 from a well in Apache County, which yielded a small amount of natural gas and crude oil.
The only consistently significant crude oil deposit found is the Dineh-bi-Keyah field, discovered in the 1960s. It has produced approximately 19 million barrels of crude oil over its lifetime. Production has declined dramatically from its peak to just a few thousand barrels annually in recent years; for example, the state’s total crude oil output in 2024 was only about 6,000 barrels.
While crude oil production is nearly non-existent, Arizona has a more commercially significant output of non-hydrocarbon gases, such as Helium and Carbon Dioxide. These gases are often found in deeper formations below the oil zones in the Paradox and Holbrook Basins. Some older oil operations have been converted to focus on extracting the more economically viable Helium resources.
Why Commercial Production is Not Viable
The primary barriers to large-scale crude oil extraction in Arizona are geological complexity and unfavorable economics. The known reserves are deep and structurally complex, significantly increasing the cost and difficulty of drilling and recovery. The high capital expenditure required often outweighs the potential financial return due to the low yield per well.
The overall volume of the reserves is too low to attract the major investments necessary for full commercial development. Furthermore, the state lacks the necessary infrastructure, such as crude oil pipelines and refineries, requiring any extracted crude to be transported long distances for processing.
The absence of a supporting industry means producers cannot easily refine or transport their product, diminishing the economic viability of new exploration. Ultimately, the combination of low-volume reserves, high extraction costs, and poor logistical support prevents Arizona from becoming a commercially competitive oil-producing state.