The Powder River Basin | October 2021

Field Overview

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- 15 (-3)
Total Rigs in United States – 550 (+22)
Total U.S. Rigs 83% YTD

State Permitting Data
Permits Approved – 31

Powder River Top Producer

Top Producer by BOE – EOG

Basin Highlights

Exxon Restarts Wyoming Carbon Capture Project After 2-Year Delay

Exxon Mobil Corp. has restarted development on a planned 1 million-ton-per-year carbon capture project in Wyoming, stating that operations might begin as early as 2025, two years later than originally intended. The cost of the LaBarge extension is estimated to be around $400 million. Exxon will begin soliciting bids for engineering, procurement, and construction in the next months, with a final investment decision expected in 2022. Exxon’s decision comes as the company faces investor pressure to rethink its climate approach. Exxon has focused on shorter-term aims, while competitors BP and Shell have set long-term targets to reach net zero carbon emissions and invested in renewable energy.

Power River Basin has Large Positive Production Outlook

In 2019, this shale produced over 213 mbd of oil and 992 mmcfd of natural gas. However, the COVID-19 outbreak in 2020 resulted in a 30% decline in crude oil production and a 28% drop in natural gas production from March to May of that year. However, output of crude oil and natural gas recovered slightly in June 2020, reaching 182 mbd and 957 mmcfd, respectively, but has since been dropping at a monthly rate of 1%. When compared to other key plays, the Powder River basin was less affected by the downturn. By the end of 2022, both commodities are predicted to exceed their 2020 levels, and by 2025, they are expected to increase at a higher rate than in 2019.

US coal use jumps as power generators switch from natural gas

According to the US Energy Information Administration, the amount of coal pumped into US power plants this year would increase by about 20% to 521 million short tons, making coal the second-largest source of electricity in the US behind natural gas. Coal’s resurgence is due in part to changes in US natural gas production, which plummeted last year as shale producers were forced to idle rigs and cut projected drilling spending due to falling oil prices. Natural gas prices have risen as a result of the scarcity of gas, which has coincided with a recovery in the global economy and energy demand. This has lured power generators to burn more cheap coal. Coal sold from Wyoming’s prolific Powder River Basin was selling for just $0.75/mBtu last month, according to the EIA.

Operators With Most Permits in WY

Top Producers Oil

Change	Rank	Company	mmbbls Production (9/21)
–	1	EOG	8.47
+2	2	Devon	6.22
-1	3	Chesapeake	3.81
+2	4	Anschutz	3.00
+1	5	FDL Oper.	2.86

Top Producers Gas

Change	Rank	Company	Bcf Production (9/21)
–	1	EOG	44.97
+1	2	Carbon Creek	42.02
-1	3	Chesapeake	25.89
–	4	Devon	9.58
+1	5	Anschutz	5.25

Rig Count

Wyoming Oil Production

Wyoming Gas Production

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The information contained in this newsletter is provided by RARE
PETRO Engineering, PLLC via the following sources unless otherwise
noted:

www.eia.gov
www.drillinginfo.com
www.bhge.com
RARE Petro Analytics