DOUGLAS — For a couple of months now, folks have been optimistic that maybe things are looking up in the energy industry. And although we appear to be in the middle of the busted part of an often recurring boom-and-bust cycle, the prevalent attitude in the industry appears to be one of cautious optimism.
Industry watchdog Oil and Energy Insider (oilprice.com) researcher and senior editor Julianne Geiger said U.S. and Canadian oil rig counts continue to rebound.
The energy news website reported Enverus Drilling Info’s daily U.S. rig count as of Monday is up to 335 rigs, an increase of 2% in just 24 hours.
Wyoming Oil & Gas Conservation Commission Supervisor Mark Watson reported a few days ago that 376 applications for drilling permits were received in September, an increase of 98 over August.
“The latest rig count is five; one in Campbell County, two in Converse County, one in Niobrara County and one in Sublette County,” Watson said Monday.
Last year at this time, Wyoming boasted 33 rigs, according to Baker Hughes.
“Production has gone up a bit, but will soon start to drop because of the low rig count. Remember, production from horizontal wells drop by 50% in the second and third year of production,” he said.
As of noon Oct. 26, West Texas Intermediate (WTI) dropped 3.46% from $38.47 a barrel, losing $1.38; Brent Crude showed a high Monday morning of $40.38 but also lost $1.39, coming in at a 3.33% loss.
Worldwide watchdogs are blaming further decreasing oil prices on a second wave of coronavirus cases and the U.S. presidential election.
“Obviously there are unknowns associated with the election. There are concerns that if the Democrat is elected we will see a radical shift away from oil. Fundamentally, we have a diminishing consumption of oil, likely pandemic driven, which is playing into it. Until we see a change in that – in development, prices will stay quite depressed,”
Converse County Commission Chairman Robert Short said. Short – whose family businesses are involved in the oil and gas service sectors –said the good news is that gas prices are up.
According to Oilprice.com writer Irina Slav, three trades for liquefied natural gas cargoes executed by commodity trading major Vitol made the company the talk of the LNG town as it pushed the Asian regional LNG benchmark up by as much as 20 percent.
Slav reported the deals included one purchase of an LNG cargo from PetroChina, one from Gunvor, and one from Trafigura. The prices varied from $6.62 per mmBtu for the first cargo to $6.87 per mmBtu for the third one.
Following these trades, the Japan-Korea Marker benchmark surged 20 percent to $6.761 per mmBtu—the year’s high, she said.
Short said, “We’re lucky in Wyoming. We have an abundance of gas. Gas has been very strong for us. However, we shouldn’t believe there is going to be any radical elimination of oil. Oil will stall, but we still need oil for all types of chemicals (and) compounds which can’t be made without oil. We’re not going to see it disappear, but if we move to electric cars we may see less of it consumed. We’re still going to need it.”
Meanwhile, Converse County and state officials are anxiously awaiting the Bureau of Land Management’s pending record of decision on the 5,000 oil and gas well proposal.
The final comment period ended in August, and the BLM has a 90-day window in which to issue the decision on whether to move forward with all, part or none of the huge drilling effort here proposed by five energy companies. That decision could come any day, or the BLM could delay it and miss its own 90-day deadline, although Wyoming’s congressional delegation has called upon the federal agency to rule quickly.
The final environmental impact statement on the companies’ effort was issued in July, with a preferred alternative of allowing the project in full and providing a variance to rules prohibiting drilling during certain times of the year.
On the flip side, oil and gas aren’t the only energy sources bringing big revenues into Converse County.
There’s wind – something Wyoming is known for – and NextEra Energy Resources is capitalizing on that with their Cedar Springs Windfarm outside of Douglas and Glenrock between WYO 59 and WYO 93.
The $600 million, 400 megawatts investment into Cedar Springs Wind Farm will see 192 turbines erected by Dec. 31.
The recent rise in Converse’s countywide sales tax revenues for the second straight month – from $3.5 million in June to $6 million in July and $9.2 million in August – is credited to the Cedar Springs Windfarm, according to Converse County Treasurer Joel Schell.
NextEra Energy Resources Project Manager Ryan Fitzpatrick agrees his company has invested heavily in the county.
“The Cedar Springs project represents an investment in Converse County of over $600 million. The project has employed approximately 400 people during construction, including about 50 oil and gas workers displaced due to the unfortunate recent downturn in the oil industry,” he said.
The project’s total construction workforce has consistently maintained approximately 400 workers for several months.
Fitzpatrick said NextEra has been able to hire more county and Wyoming workers and contractors than what they typically see on wind projects, based on the availability of companies who service the oil field, and some of the synergies between oil field contractors and wind farm construction.
“When looking to build a wind project, we look for areas with great wind resources and in close proximity to ideal transmission interconnection points. Converse County has that and it’s been such a great host for the Cedar Springs projects. Everyone has been very welcoming and supportive,” Fitzpatrick said.
Thus far, the company has erected 132 of 192 wind turbine towers. Although still and silent for now, he said they are on schedule to be operational by the end of the year.
The spate of cold winter weather has not inhibited the project for the most part.
“There is work we can do out there during almost any type of weather, but we do need pretty low to moderate wind speeds to build the top sections of the wind turbines. The crews are able to move quickly if we get breaks from the wind, and sometimes we’ll utilize a 24-hour work schedule to erect turbines if overnight winds are forecast to be a little less breezy,” Fitzpatrick said.
Once the project is completed, the company expects to employ 20 full-time employees “who will live in the area and become part of the local community.”
Fitzpatrick expects they’ll be a good fit, as the county has been a great host to the Cedar Springs’ crews.
“It’s been our pleasure to support the local economy during these difficult times. That support is going to continue with the property and generation taxes the project will generate through its operational life,” he said.
“We’re fortunate in Converse County to have gas. We have a terrible uncertainty in oil. As to Cedar Springs, I am happy to see the continuing development. We should not be prejudiced either way as the development is good for our state and the people in our state. If we can harness natural resources which are renewable it allows for economic opportunities for everyone,” Short said.
As to the diminishing market for coal, Short said it is completely associated with investors losing interest in it.
“We can deny it all we want to, but (coal investors) are telling us the marketplace is no longer favorable to thermal coal. Do we want to hide our heads in the sand or revamp our economy to take advantage of those investors and where they want to put their dollars?” he said.