The Powder River Basin | June 2022
The Powder River Basin, known for its coal deposits, is located in Southeast Montana and Northeast Wyoming. The basin is named so because it is drained by the Powder River. Major cities in the area include Gillete and Sheridan, Wyoming and Miles City, Montana. There is a recent resurgence in oil and gas production as a result of horizontal drilling and hydraulic fracturing. This resurgence is occurring mainly in the Wyoming part of the basin, which is historically known as the source of the basin’s oil.
State Drilling Statistics
Total Rigs in Wyoming- 20 (+1)
Total Rigs in United States – 762 (+6)
Total U.S. Rigs 52% YTD
State Permitting Data
Permits Approved – 30
Powder River Top Producer
Top Producer by Oil – EOG
Top Producer by Gas – EOG
The first onshore oil and gas lease sales since Biden took office have finally happened. Over $22 million was bid for 110 square miles of leases in several western states, most of which were in Wyoming. Production on the new leases will be taxed at the newly increased royalty rate of 18.75%, the first increase since the 1920s. Biden faced pressure from republicans to resume leases in order to increase domestic oil production. He also faced pressure from democrats to help in the fight against climate change by limiting fossil fuel emissions. Ultimately, his hands were tied when the courts overruled his decisions to pause the leases back when he first took office.
One would expect the oil and gas producing state of Wyoming to have some of the lower gas prices in the country, however, it too has been struggling to help its residents at the pumps. At a recent state panel, industry leaders warned of even higher prices should there be any issues such as refinery shutdowns. Such high gas prices would mean not only trouble for consumers, but also for the state. Much of Wyoming’s revenue comes from oil and gas production, over half in fact, so higher priced gas means fewer people are willing to fill up and ultimately less revenue for the state. There are a few ways the state is trying to combat this such as a relief payment for the elderly and disabled, among others.
Higher gas prices aren’t terrible for everyone, it is a sign of high oil prices which works in favor of those selling the oil, namely producers in the the state of Wyoming where 20 rigs were added in June. The state is also winning, it has collected an extra $34.2 million in June compared to the amount collected the year prior, up 75.6%. More production means more workers – over 700 jobs were added in the last year in the oil and gas industry alone. While it may cost extra to fill up our vehicles, it has been a profitable last few months for the industry and the state.
Carbon credits and carbon tax systems have been put in place in several states across the country, however, most of the major oil and gas producing states have yet to do so. Wyoming could be next, but not before legislators fight back, going so far as to say “We’re seeing the Communism of the Chinese Communist party, with their social credit score system, creep into the United States.” One bill in particular that was proposed to the committee and points in the opposite direction would forbid banks from turning away clients based on environmental, social justice and governance performance (ESG) metrics.
Operators With Most Permits in WY
Top Producers Oil
|mmBBL Production (Jan-Aug/22)
Top Producers Gas
|MMcf Production (Jan-Aug/22)
Wyoming Oil Production
Wyoming Gas Production
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