Have an event, trend or general energy happening you’d like to see in the Energy Journal newsletter? Send it to Star-Tribune energy reporter Heather Richards at firstname.lastname@example.org. Sign up for the newsletter at www.trib.com/energyjournal.
Last week in numbers
Friday oil prices: West Texas Intermediate (WTI) $70.51 Brent (ICE) $77.08
Natural gas weekly averages: Henry Hub $2.71, Wyoming Pool $1.77, Opal $1.83
Baker Hughes rig count: U.S. 1,045, Wyoming 26
Quote of the Week
“You don’t react overnight to this type of price volatility."
-- Bill Miller, senior vice president of energy and land resources at the Anschutz Corporation, on oil and gas operator's immediate reaction to the U.S. pulling out of Iran nuclear deal.
Iran: what's in it for us
Judging how effective renewed sanctions against Iran will be is about as easy as finding your future in a crystal ball, but right now operators appear more interested in what they can do with $70 oil than what Middle Eastern shakeups promise for oil prices. Wyoming only has 26 rigs drilling, but interest and apds are high.
Bank of America says the price could pop to $100 a barrel if the cards fall along certain expectations. So far Brent seems more volatile than WTI. And overall the rising price of oil may not be able to budge current operations far in the short term.
Elsewhere in the Powder
Is the Powder the next big play for oil and gas? A lot of folks say so, and there are about 10,000 applications for permits to drill in the hands of the Wyoming Oil and Gas Conservation Commission as companies fight for operatorship in DSUs across the basin. Mark Watson, supervisor for the agency, says he expects the rush of apds will slow down eventually, as the Powder River Basin is de-risked and fewer players consolidate well ownership. For now, however, there are still a lot of companies out there and some of them are putting in applications to drill everywhere they can in a bid to control drilling down the line.
Wyoming to Asia?
Cloud Peak could finally get Wyoming coal to Asia ... maybe. The company is revising its permit for the idle Youngs Creek mine site near the Montana border and could have a modest amount of coal coming out of the mine by next year. It could be the first time in decades that Sheridan County contributes to the coal sector. Of course Asian markets could be a proper boon for Wyoming, but economics still appear to stand in the way. The tons going to Asia now are coming out of Spring Creek across the Montana border. Cloud Peak is billing Youngs Creek as part of its Spring Creek mining complex. The PRB at large has a number of problems, not least of which is over capacity. While Asia may be a long-term goal for Cloud Peak, Wyoming coal probably needs to see operations idle somewhere to ease pressure.
The Energy Information Administration expects coal's contribution to the electricity mix to fall to 29 percent this year, while natural gas' share grows. In contrast to the last four years, natural gas will dominate new capacity additions as wind and solar slows down.
It wouldn't hurt to have a path to Asia right now, which is why Wyoming stepped into the battle over the Millennium Bulk Terminals in Longview, Washington. Wyoming and a handful of other states filed an amicus brief in support of the terminal. Wyoming argues that Washington's decision to block the terminal hurts Wyoming's economy.
Gov. Matt Mead, delegates from Japan and the finalists in the XPRIZE contest are gathering in Gillette on Wednesday for the official opening of the Wyoming Integrated Test Center, another avenue by which Wyoming is trying to help its coal industry survive in the new normal for coal.
Don't mess with the bird
The governor got testy with an oil and gas firm over sage grouse at the May 8 Wyoming Oil and Gas Conservation Commission meeting. Ballard Petroleum Holdings has a long history of compliance in Wyoming, but early this year it continued operations for eight days past a cutoff on drilling near the bird during the spring. Sage grouse management is a tense issue these days and there is a lot riding on Wyoming's conservation plans, as Gov. Matt Mead pointed out to a penitent operations manager from Ballard.
In other news...
The Wyoming Oil and Gas Conservation Commission approved 149 applications for permits to drill in April of 976 received. Of course the month before the commission received 1,869, so it was an easy month compared to the new norm this year. Commission staff also plugged just one orphan well, in Sweetwater County, of 3,636 yet to be dealt with. It was a deep well though, 12,368 feet. The commission has seven more of those deep wells to plug. Other details from the Supervisor's monthly report here.
The Wyoming Public Service Commission's deputy chair Kara Fornstrom has been appointed to the National Association of Regulatory Utility Commissioners Subcommittee on Pipeline Safety. (Say that five times fast.) The subcommittee does some interesting work though, representing state interests before federal regulators.
The Environmental Defense Fund is suing the Interior Department over the BLM Waste Prevention rule. It's hard to keep track of all the lawsuits going on as regulations are rolled back under this administration. But, this lawsuit is more about transparency than industry rules. EDF argues that Interior isn't giving up public documents requested via the Freedom of Information Act.
PacifiCorp is getting a lot of pressure from Washington utility regulators over its coal fleet. The Washington State Utilities and Transportation Commission has asked the utility to count the cost of carbon pollution in its resource plans. It also has stated concern over the coal power in general and how it relates to West Coast states. Here is a letter from regulators with some worrying words to coal states like Wyoming. Here's a sample:
"We are deeply concerned with the direct costs of continued operation of its coal-fueled resources and the magnitude of economic risk of continued investment in those units. Pacific Power’s IRP does not explicitly identify or discuss the risks faced by the utility and its ratepayers, including the costs of risks associated with the coal plants’ fuel source, projected capital investments, and ongoing operational expenses, or cost shifts to Washington customers when the Company must remove coal generation expense from Oregon rates."