CHEYENNE — Shell Oil Co. is stopping new work in the energy-rich Pinedale Anticline, and that’s a big concern for Sublette County Commissioner Joel Bousman.

Amid slumping sales prices for natural gas, the company decided not to complete more wells in the Pinedale Anticline and will remove two drilling rigs from the area, Bousman said a Shell representative told him in a recent phone call.

“They’re going to be leaving and going somewhere else to drill for oil,” he said Tuesday.

That’s a problem for Sublette County and the rest of Wyoming, which uses taxes garnered from mineral production values to largely pay for schools.

While production climbed from the state’s mineral resources last year, state revenue forecasts show a significant drop this year — fueled predominately by the low sales price of natural gas.

The state’s mineral valuation was $16 billion in 2011, up 4.5 percent from 2010. The 2011 total was less than the decade’s peak of $20.4 billion in 2008 yet considerably higher than 2002, when the total was

$5.6 billion.

Those values, based on the worth of produced mineral resources such as natural gas, oil and coal, are used to calculate state severance and property taxes in each of the state’s 23 counties. Most of the property tax supports schools.

The production totals always lag because of timing. Last year’s numbers weren’t all reported until April 25 of this year, according to Ed Schmidt, director of the Wyoming Department of Revenue. Falling natural gas prices don’t paint a rosy picture for 2012.

“The whole story” won’t come out until 2012 production figures are totaled next spring, Schmidt said.

But following the price of natural gas over the past year tells some of the story.

The average price of natural gas was $3.85 per thousand cubic feet, or mcf, in 2011. Through May 23 this year, the average price has been $2.27 per mcf at the Opal hub, Jim Robinson, senior economist with the state’s Economic Analysis Division, said.

The price of natural gas has been rebounding gradually from the under-

$2-per-mcf low, Robinson said.

The New York Mercantile Exchange Market natural gas futures, he said, estimated the Henry Hub price at $2.70 to $2.80 for July, August and September.

Natural gas valuation in Sublette County; home of Jonah Field and the Pinedale Anticline, was down $200.7 million, or 5.56 percent, in 2011. Positive oil production valuation held the county’s total mineral valuation loss to 2.85 percent.

Bruce Hinchey is the director of the Petroleum Association of Wyoming. He expects the price of natural gas to stay in the $2.20 per mcf range.

Hinchey said that while he would like to see $4 per mcf gas, that isn’t likely to happen because of the current “bubble” of excess stored gas.

Meanwhile, oil production is doing well. Oil valuation for 2011 was $4.1 billion, up nearly 26 percent from 2010.

Surface coal valuation increased by 4.7 percent to $4.2 billion.

Underground coal was down $14 million, or nearly 16 percent, in Sweetwater County, the only county with underground mine production.

Campbell County, home to many of the state’s coal mines, remained the state’s top mineral producer with $4.8 billion, up 8.2 percent.

Sublette County was second with $3.9 billion, down 21.8 percent, followed by Sweetwater County at

$2 billion, up 17 percent.

Contact Joan Barron at 307-632-1244 or joan.barron@trib.com

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.