Once market conditions align to pull the oil and natural gas industry out of its slump, Wyoming will be in position to take a national role in the industry, according to the Wyoming State Geological Survey.
“When supply, demand and price factors align, Wyoming’s oil and gas industry is well positioned to rebound,” said the survey’s report on the industry. “Overall, Wyoming is in a position to remain a major player on the national oil and gas stage for years to come.”
The report, written by Erin Campbell, the WSGS director and state geologist, said Wyoming was on track early last year to produce oil in quantities not seen since 1991.
“Within months, however, a perfect storm of dynamic national and international market conditions and a global pandemic drastically changed the trajectory of Wyoming’s production, especially of oil,” it said.
The report said surpluses of both oil and gas have contributed to market declines, as did declining demands for fossil fuels caused in part by fuel economy gains, increased energy efficiency and above-average winter temperatures.
“When the COVID-19 pandemic lockdowns abruptly slowed most of the economy, the combination of an oversupplied market and severely diminished demand worsened the supply-demand imbalance and briefly forced April oil prices in to the negative,” the report said.
The global oil and gas industry is now in what the WSGS described as a “holding pattern,” with oil prices recovering slightly.
Looking to the future, the WSGS said a number of factors must improve before the industry will see significant gains.
“The timing of Wyoming’s oil and gas industry recovery will depend on demand for oil and gas returning to levels that will draw down and balance supplies, future OPEC decisions, and prices returning to a value at which production from Wyoming reservoirs is profitable,” the report said.
However, it added that once conditions do improve, Wyoming’s oil and gas industry is in a good position to take advantage of the situation.
“Unconventional reservoirs in the Powder River and Denver basins contain substantial oil and associated gas reserves,” it said. “In the Greater Green River Basin, horizontal drilling has greatly increased the production potential of Wyoming’s large gas fields. Recent investment in pipeline infrastructure ensures the continued distribution of the state’s resources.”