Wyoming oil production steady through July

2014-07-22T08:30:00Z Wyoming oil production steady through JulyBy BENJAMIN STORROW Casper Star-Tribune The Billings Gazette

CASPER, Wyo. — Wyoming oil’s slow and steady climb continued through the first half of 2014.

The state’s fleet of drilling rigs added to their ranks in recent months and their numbers are greater compared with the similar period last year. Oil and gas jobs increased over this time last year. And the number of wells drilled per rig continued to climb.

Much of the activity remains centered in the Powder River Basin, while the area around Cheyenne, long the subject of expansion rumors, has not recorded any discernible increase in rig activity.

“My sense from keeping tabs on things from afar is most of the patterns you see in this state mimic patterns you see in countries as a whole,” said Charles Mason, a professor of petroleum and natural gas economics at the University of Wyoming.

Rig productivity, or the number of wells drilled by a rig, is especially key for oil companies in the state today. Wells drilled in the tight formations being developed post large yields in the first years before dropping off.

Drilling new wells

The ability to drill new wells to offset production losses from older wells is key if companies are to succeed.

Government data suggest firms are doing just that.

Production from new wells in the Niobrara formation, which covers much of eastern Wyoming, northern Colorado and small parts of western Nebraska and Kansas, is expected to increase to 37,000 barrels a day in August, according to the U.S. Energy Information Agency.

Legacy production from older wells is anticipated to decline by 30,000 barrels a day, meaning overall production is projected to increase by 7,000 barrels a day next month, EIA reported.

Companies are likely honing their production techniques to improve efficiency, Mason said, noting, “The fact you get output levels ticking up could be an indication they are getting better over time.”

Baker Hughes, an oil field service company, reported an average July rig count of 52 for Wyoming. That number was up from the 2014 low of 46 recorded in May but equaled what the state saw in July of last year.

Overall, the year-to-date rig count is up 13 percent, from 45 last year to 51 this year.

The oil-and-gas industry employed 17,100 people as of May, according to quarterly report by the state Department of Administration and Information’s Economic Analysis Division. That was down from the 12-month high of 17,600 jobs reported in September but slightly above the 16,900 oil and gas jobs the state reported in May of 2013.

Production to date

Anadarko Petroleum is the state’s biggest producer thus far in 2014. The Woodlands, Texas, company reported production of around 3.2 million barrels, a figure which eclipsed Anadarko’s 2012 production in Wyoming.

Anadarko was followed by Marathon Oil (2.9 million barrels), Devon Energy (1.8 million barrels), Merit Energy (1.6 million barrels) and EOG Resources (1.5 million).

Statewide production through Monday was 28.3 million barrels, according to the Wyoming Oil and Gas Conservation Commission. Production reached 63.2 million barrels in 2013, the highest level recorded in 15 years.

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