The quickest relief to the Rocky Mountain oil glut - additional pipeline capacity - may be two to three years out, according to local experts.

That may seem like a lifetime for producers receiving $20 to $30 less per barrel than the current world price. But if industry stakeholders in the region don't muster up some money and start partnering on expansions now, Wyoming and others could watch their enhanced oil recovery efforts suffer a premature death.

That's a risk Wyoming's oil industry cannot afford, said Tad True.

"If nothing happens, the geographic market risk will stay as it is today … and a year from now crude oil in the Rocky Mountains will still be getting a discount. If I'm an investor I wouldn't want to invest in Wyoming, Montana or North Dakota," said True, who represents Belle Fourche Pipeline Co. and Bridger Pipeline LLC.

True testified before the Wyoming Pipeline Authority Tuesday during a special session to address pipeline, refinery and market constraints that have plagued oil producers in the region for the past four months.

A fire at a Denver oil refinery and several mandatory maintenance shutdowns helped set off the current price differential, but industry experts agree that years of underinvestment in refining and pipeline capacity have left the Rockies with a fragile infrastructure unable to keep stride with the national and world market whenever there's a disruption.

Also adding to the problem is additional production in the Rockies.

Various methods of carbon dioxide and water flooding have stopped decades-long production declines in several aging oil fields in the region. But the success of those efforts has pushed additional barrels of oil into a regional infrastructure that hasn't seen much investment but has been modified around the expectation of Canadian imports to fill refiners' needs.

Bryan Hassler, executive director of the Wyoming Pipeline Authority, said his agency is willing to use its $3 billion bonding authority to back a pipeline project that would give Wyoming crude a pathway to outside markets. But the quickest fix might come from a creative partnership with natural gas companies that have recently found success in doing just that.

Hassler said the natural gas industry recently penned a deal for a new pipeline spanning from Wyoming to Ohio to carry 1.8 billion cubic feet of gas per day. That anticipated additional capacity may allow for the conversion of some smaller natural gas pipelines to oil.

"The two industries need to get together on a unified project," Hassler said.

The region's $12-per-barrel shortfall is an estimated loss of $100 million each year to the state of Wyoming in taxes and royalties, and a loss of $700 million to Wyoming producers and the federal government, according to the Wyoming Pipeline Authority.

A large part of the problem Wyoming producers face is the quality of crude they produce.

Rob Garner of Kinder Morgan/Terasen Pipelines USA Inc. said it was fortunate that refineries in the Rockies were able to supplement the decline of domestic oil production over the past couple decades with growing imports from Canada. That way, the region didn't lose refinery capacity.

However, those refineries are now paying a premium price for that Canadian crude because they must respond to customer demands. Garner said Wyoming crude is refined for a variety of products, but the average Wyoming barrel contains about 8 percent "residual" which isn't of much use and is an expense to handle.

Tracy Diefenderfer of Teppco Crude GP LLC, an oil pipeline and marketing company, said there seems to be enough interest to expand or build additional pipeline capacity from the Rockies to outside markets. However, that takes time.

"The problem I see with all of that is I don't see any quick solutions," Diefenderfer said. "The government needs to help find a solution, and any new project should anticipate additional Canadian crude imports to this region."

Energy reporter Dustin Bleizeffer can be reached at (307) 682-3388 or dustin.bleizeffer@casperstartribune.net.