During a recent call with investors, one of Wyoming’s largest oil and gas developers extolled the Powder River Basin of Wyoming and announced its intention to push spending toward developing the Cowboy State.
The Powder River Basin was considered the next big play when oil prices were riding high in 2014. But investment and drilling fell off when oil prices dropped the following year. Companies focused on areas where they could get the highest returns and an unproven basin wasn't on top of the list.
As oil prices have risen over the last year, thousands of applications to drill spelled renewed attention in the Powder even as the promise of more well known plays in West Texas retained the bulk of investment dollars.
For EOG Resources, however, the time has come to focus on Wyoming.
“The Powder River Basin is now ready to become a meaningful contributor to EOG's future growth,” said Dave Trice, executive vice president for EOG’s exploration and production. “For 2019, we expect to increase our activity as we add infrastructure and prepare to bring the Powder into full development.”
EOG’s interest is significant. The Houston-based company, well known for its engineering and technology-focused approach, was the only large operator drilling in the Powder for a period of time during the sharp price downturn. The company is also credited for helping unlock drilling strategies to tap the Denver Basin in southeast Wyoming.
Now the firm is saying it’s figuring out the complex Powder as well.
“Like the Delaware Basin, the Powder River Basin is prolific, with almost a mile deep column of pay and multiple targets,” Trice said.
Over the next year and a half, the company intends to build out what is now somewhat limited infrastructure.
Similar promises of investment in the Powder River Basin came from Anadarko Petroleum and Noble Energy in recent statements. Anadarko and EOG are among five companies that asked the Bureau of Land management for a range-wide environmental analysis in the southern PRB.
The federal agency, which overseas both federally owned surface and federal minerals, recently considered the impact of up to 5,000 wells in the PRB over the next 10 years. A final decision is expected early next year.
Wyoming’s Powder River Basin is widely acknowledged for its potential. However, some are still holding out on optimism until more rigs are deployed.
Wyoming’s rig count hit 30 last week. The Eagle Ford in south Texas has 80 rigs operating. The Permian, in West Texas, has 480.
“We are still way down,” said Bruce Hinchey, of the Petroleum Association of Wyoming. “To see any kind of real increase is going to take a lot more rigs.”
Though fewer rigs can accomplish more than they used to, Wyoming likely needs higher numbers to experience a boost in production, and the accompanying revenue, that it needs post-downturn, he said.
“A lot more rigs mean a lot more activity,” Hinchey said “It’s steady, but it takes more than one company to do it.”