BIG PINEY - Last month, Larry Cordova and his fellow rig hands were preparing to move their company's drilling rig from Vernal, Utah, to the Pinedale Anticline natural gas field when they heard the bad news.

The recession and falling gas prices were causing energy firms in southwest Wyoming to curtail some of their planned work in the region.

"We were supposed to head back to the Mesa to work this month … but me and a lot of other guys got laid off instead and put on the inactive list," said Cordova, a Green River native with more than a decade of experience working in the gas fields in southwest Wyoming.

"With the way the national economy has been going, most of us figured something like this might be coming, but I didn't think it would come this quick, or maybe even this year," Cordova said. "Just three or four years ago, we were working on the Mesa, and there was the most rigs I've ever seen in the Anticline going.

"My company is saying we'll be back (in southwest) Wyoming within a few months, but I'm not so sure. I'm not really planning on it anytime soon."

The national economic downturn, it seems, may finally be reaching Wyoming's lucrative Jonah and Pinedale Anticline fields, and the surrounding communities including Pinedale and Big Piney that have prospered in recent years from oil and gas activity.

But how much of a slowdown and how long it might last remain to be seen, officials say.

Communities like Big Piney- which experienced 5 percent population growth from 2007 to 2008 - are certainly feeling the effects of the state's natural gas slowdown, said Phillip Smith, who has served as the town's mayor for the past six years.

"I personally think the boom is done," said Smith, a Big Piney native who runs a contracting business.

Many of the approximately 475 residents of Big Piney in Sublette County work in the gas fields, or for companies that service and rely upon the energy industry for much of their business, he said.

"We have definitely seen a slowdown here recently … we've seen layoffs and companies asking employees to take reductions in pay, but at the same time, things are still moving here," he said.

"The people are still here, and they're all pretty much still working and they're still buying stuff, but it's just not quite like it was a year ago," Smith said.

"The boom might come back, but in the long run, a slowdown might be better for us community-wise because maybe we won't have such a transient work force," he said. "Maybe it will be more stable around here, and maybe we can get people more involved in helping out the community instead of just passing through and picking up a paycheck."

Perfect bad storm

According to the Wyoming Oil and Gas Conservation Commission, the number of active oil and gas drilling rigs in Wyoming is down by nearly 50 percent since November. The number of oil and gas rigs operating nationwide has dropped by 39 percent since August, according to federal figures.

In Wyoming, drilling permits issued by the commission for the first two months of the year are down by 35 percent.

Interim Oil and Gas Conservation Commission Supervisor Bob King said the state issued 372 drilling permits in February. The commission issued 634 permits in February 2008.

King said there were 80 conventional drilling rigs operating in Wyoming in November, compared with just 49 rigs operating in February.

"We are starting to see some ripples from the national economy … there's very little doubt about that," King said.

Wyoming producers generated about 1.6 trillion cubic feet of natural gas in 2008. The majority of the production came from the lucrative coal-bed methane fields in the Powder River Basin in northeast Wyoming and the Jonah and Pinedale Anticline fields in southwest Wyoming.

Wyoming has seen at least two large companies, EnCana Corp. and Questar Corp., curtail some of their drilling operations in southwest Wyoming in recent months, in part because of the low natural gas prices and the larger meltdown of the financial markets.

Gas prices have fallen dramatically. Last December, gas sold for $4.52 per thousand cubic feet at the Opal price hub. By early March, it was down to $2.69.

"We are experiencing some slowdown as a result," said Randy Teeuwen, community relations adviser for EnCana Oil and Gas (USA) Inc.

"We have shifted about 30 percent of our capital budgets for this year for our drilling rigs out of Wyoming for a variety of reasons," Teeuwen said in a phone interview.

"The overall malaise in the economy has been a big factor, which for us means access to capital … Drilling wells is very expensive and requires a lot of access to money, and since the banking industry is in a slump, access to that money is difficult," he said.

"The price of gas is way down, and supply is way up, and the reservoirs are full … and we're coming into the season where natural gas use is going down," he said.

"Plus, getting gas out of Wyoming is a real challenge because the pipelines are full," Teeuwen said. "There are a lot of factors working, and it's just not one thing causing the slowdown. There's been a lot of things combined for a sort of perfect bad storm. It's going to be a challenging next couple of quarters for us."

Last one leaving

Teeuwen said EnCana has worked to stabilize its drilling fleet in recent years and to spread out development in order to create a more consistent local work force.

"In the Pinedale and Big Piney area and Sublette County where we have such a big influence, we wanted to create some stability so that there weren't those wild swings in employment and in housing and in services and in all of those things that the communities plan on," he said.

"But this is an example of no matter how well we try to plan for things, there are certainly forces out there larger than we are having an effect," he added.

Mayor Smith said he remains optimistic that things will pick up again.

He noted that some operators have employed year-round drilling in areas like the Pinedale Anticline that have helped local economies during winter, a traditional drilling down time due to winter wildlife restrictions on access.

"The permits are out there, and the companies are on a timeline to drill them, so I look for it to pick up again maybe next year," he said.

"I remember back in 1983, when that boom was really dying down, someone put a sign up just outside of town … that said, 'Would the last person leaving Big Piney please turn out the lights?'" Smith said with a laugh. "I don't think it will get that bad this time around."

Southwest Wyoming bureau reporter Jeff Gearino can be reached at 307-875-5359 or at gearino@tribcsp.com.

Free inside

Today's new issue of the Wyoming Energy Journal checks on how the state's oil, natural gas, uranium and wind power industries are weathering the economic downturn.

In the Powder River Basin

Things are especially bleak for coal-bed methane gas producers in northeast Wyoming, where producers typically receive about $1 per thousand cubic feet less than natural gas producers across the rest of the state.

In addition to shrinking natural gas prices, the industry has moved onto more federal acres in recent years, which means more federal regulations. Several seasonal wildlife restrictions come into play this time of year, driving down the number of rigs even when prices are strong.

"The bird (stipulations) have stopped work for some divisions," said Luke Pennington, human resources manager for Hettinger LLC in Gillette.

Pennington said a large number of employees were laid off upon completion of projects in the Big Piney and Rock Springs area. Others have been shifted to work projects in North Dakota.

"We are staying busy in Gillette with the Dry Fork Station and Anadarko work that was already planned," Pennington said. But the "outlook from there is pretty bleak."

- Dustin Bleizeffer