DOUGLAS — Wyoming’s rig count skyrocketed by the end of last week, with four rigs operating — a significant turnaround from not so long ago when the count hit zero, but still a far cry from the height of the most recent boom last year.
The four rigs are in four counties — Converse, Campbell, Natrona and Sublette — Wyoming Oil & Gas Conservation Commission Supervisor Mark Watson confirmed Monday. While this is quadruple the number of rigs that were active a month ago, it’s still a small number, indicative of an economy hit hard by the coronavirus pandemic and by a Saudi-saturated oil market at a low of $25 per barrel.
It’s still not good news for his county, said Converse County Commission Chairman Robert Short, who has been involved in the energy industry for decades.
“It’s terrible news for us ... $25 barrels,” said Short. “Imagine at $45 a barrel for oil, it’s not anything there’s being parties thrown over, but it’s enough income for companies to continue doing a little development. At $60 a barrel, companies are confident, happy, standing up and getting busy.
“At $25 a barrel, it’s a ghost town,” he continued. “There’s going to be little to nothing done. No new development going on, as companies look to consolidate costs, unload assets to service their debt. It’s bad news for us. For the Saudis, it’s not. They spend $8 to $10 a barrel to get it out of the ground. We are nowhere near those kinds of costs. If we truly see world market prices down in the $20s for oil, we will see the gradual diminishing of product in our county as companies flow off their wells. Companies won’t put any additional effort in to enhance the output; there’s no return on that kind of barrel pricing.
“It’s a recipe for disaster for oil producers for our county and our state,” Short concluded.
Compared to the mid-to-late 80s, this isn’t the worst energy bust Converse County has experienced, and many people seem to have a wait-and-see attitude, willing to ride it out at this point and see if the money-making aspect of the cycle comes back around.
Short said the price of oil on the world market will drive decision-making regarding standing up more wells in Converse County.
Contrary to Watson’s official report, Short said there are two rigs standing up in Converse County as of this week, with rumors going around of two more rigs being erected by year’s end.
In his report, Watson said that 278 applications for permits to drill were received in August, which is an increase of 127 over the previous month.
The rig count this time last year was 36, according to energy technology company Baker Hughes — not overly high, but far from the low it’s at now. Wyoming oil production for June came in at 6,701,595 barrels, an increase of approximately 30% from the previous month, but a decrease in production of about 17% from this time last year.
The Cowboy State’s gas production for June was at 117,314,893 MCF, a decrease of 3% from the previous month and a decrease of 12% from the same time last year, according to Watson.
However, prices are slowly going up, according to industry reports.
Industry watchdog Oil and Energy Insider reported oil prices Monday coming in at $37.25 per barrel for West Texas Intermediate crude oil and $39.59 per barrel for brent.
Oil prices climbed just slightly Sept. 11 after steep losses earlier in the week and producers are cautiously hopeful, but without prices stabilizing at or close to $50 per barrel, will it be enough to bring on an upswing in Converse County’s energy economy?
Likely it’s too soon to expect the boom to return home, officials speculate.
Rig counts are not much better across the nation, either.
Baker Hughes confirmed Sept. 11 that the number of oil rigs in the United States fell by 1 to 180, according to Oil and Energy Insider website data.
Meanwhile, another energy sector in Wyoming is making headway. Cedar Springs Wind Farm Phases I, II and III are still on schedule to be finished by the end of this year, so wind power appears to be the main energy industry supporting Converse County at the moment.