Oil Production and Development Predicted to Remain Steady in PRB
An oil well is active on the southern end of the city of Gillette. In 2019, Campbell County was home to 3,219 oil producing wells.
Even in the ever-changing global oil market, optimism remains locally for oil development in the Powder River Basin (PRB).
In a short-term energy outlook from the U.S. Energy Information Administration (EIA) last week, the EIA predicted oil prices will remain relatively stagnant throughout 2020, yet show a slight gain moving into 2021 of approximately $3 per barrel for both the West Texas Intermediate and North Sea Brent Crude.
“The U.S. is now the number one oil and gas producer in the world,” Rob Godby, director of the University of Wyoming’s Center for Energy Economics and Public Policy, said, noting that higher production rates in the national and international markets weaken prices and do not create fertile grounds to stimulate production within the current pricing environment.
What does this mean for Wyoming?
Godby believes that the state will continue to see oil growth, but at a slower rate than in recent years.
“From a production standpoint, it still looks like we are in an expansion mode,” he said. “Wyoming is contributing to the country’s oil production but is a relatively small player compared to some other states.”
Nationally speaking, the Cowboy State is the eighth largest oil producer in the U.S., accounting for roughly 2% of U.S. oil and gas, Godby said, adding that Texas produces over a third of the nation’s supply.
Even so, the outlook for Wyoming oil continues to remain promising, Godby said, particularly when it comes to development in the PRB.
Campbell County Board of Commissioners Chairman DG Reardon agreed.
“Oil is coming up, not rapidly like we’ve seen the huge upticks in the past, but it’s on a steady climb,” he said.
“There are oil rigs here that are drilling for Campbell County oil, and there are companies that are supplying those rigs. It’s on an upward swing.” – Reardon
One of those companies is Houston-based EOG Resources that, in 2018, announced two new shale plays, or shale formations that typically contain oil and gas resources, in the PRB. According to EOG spokesman Creighton Welch, the company has added over 1,500 drilling locations and 1.9 billion barrels of oil equivalent of net resource potential.
“We continue to be encouraged by the results of our program in the Powder River and look forward to its growth in the near future,” EOG Resources COO Billy Helms said during EOG’s third quarter earnings call.
Numbers from the Wyoming Oil and Gas Conservation Commission (WOGCC) indicate Campbell County is home to 3,419 oil producing wells and 3,920 idle wells in 2019, with 208 new permits approved for drilling.
According to WOGCC’s data, Campbell County produced 18.2 million barrels of oil, just under 20% of the state’s total oil production last year. Previously, in 2018, the county’s production was slightly lower at the same 20% mark but with 17.3 million barrels produced.
Despite stagnant oil and gas prices, Reardon remains optimistic for the future of oil and gas activity in Campbell County.
“Oil independence is critical,” Reardon said.
“The opportunities our country has with Canada and the opportunities we have with fracking and enhanced oil recovery, those are going to help the state of Wyoming and we, Campbell County, are going to participate in that as much as we can,” he smiled.