Oil continued to rise, natural gas continued decline in 2023
January 18, 2024
Via Wyoming News Exchange
GILLETTE - While coal is still king in Campbell County, oil and gas are still the second and third largest contributors to the county's economy, as far as taxable value goes.
Across the state, natural gas production has been on a steady decline since 2009, while oil production has been more up and down.
According to a report put out by the Wyoming State Geological Survey this month, the state's oil production has not yet surpassed its 2019 high, while nationwide oil production has surpassed pre-pandemic levels.
More than 95 million barrels of oil are expected to be produced in Wyoming in 2023, which is about 3 million more barrels than in 2022. The drilling of new oil wells has helped greatly.
In the first half of 2023, a total of 110 newly drilled oil wells were completed, most of them in the Powder River Basin. This is in line with the first half of 2022, when 118 oil wells were completed.
Oil prices in 2023 were less than 2022's $100-plus highs, but they still trended upward, helped out by international conflicts and production cuts in other countries.
"However, high U.S. interest rates and increasing crude oil inventories pushed prices lower in November and December," the report reads.
Natural gas, on the other hand, has been declining because not many new wells are being completed. As wells age, their production slows down. In 2022, only 48 new gas wells were drilled, and in the first half of 2023, only 18 new wells were finished.
"The low number of new gas wells appears to be an issue for the foreseeable future, as only 3 of the currently active 13 rigs in Wyoming are targeting gas reservoirs, and associated gas produced from oil wells has not contributed enough to offset the overall downward gas-production trend," the report reads.
The report noted that there appears to be more interest from the operator side, with 119 applications to drill gas wells submitted to the Wyoming Oil and Gas Conservation and Commission in 2023, up by 40 compared to 2022.
Given its geological advantages and well-established oil, gas and carbon dioxide infrastructure, Wyoming has "considerable geologic potential for CO2 storage."
Carbon dioxide is generated from power plants, industrial processes, direct air capture technologies, and the extraction of naturally occurring CO2 from natural gas fields.
After being separated and removed from the air or gas processing streams, carbon dioxide can be transported by pipeline, either to be used to help in further hydrocarbon production or to be stored permanently underground.
The state has "considerable geologic potential for CO2 storage," the report reads. Wyoming's basins "are replete with expansive saline sandstone and limestone reservoirs featuring high porosity and permeability. These reservoirs are often overlain by continuous layers of low-permeability rocks, such as shales, which serve as barriers to vertical fluid or gas migration."
Additionally, many of these reservoirs also are within optimal pressure and depth conditions, aiding both the injection and sustained sequestration of carbon dioxide.
The legislative framework is there as well. In 2008, the state Legislature passed the first two laws in the nation that established underground storage rights and a carbon storage regulation framework. Wyoming also is one of two states to have enforcement authority over its injection wells.
This underground storage is being researched across the state, with the federal government and the state investing heavily into carbon storage projects, including at Dry Fork Station.
The Dry Fork Station, Sweetwater Carbon Storage Hub, and Echo Springs projects all are Department of Energy-funded CarbonSAFE initiatives administered in cooperation with the University of Wyoming's School of Energy Resources.