Welcome to the Star-Tribune’s Energy Journal, a play-by-play of the past week in Wyoming’s world of energy. I’m your energy and natural resources reporter, Camille Erickson. Sign up for the newsletter at trib.com/energyjournal
Last week in numbers
Friday oil prices: West Texas Intermediate (WTI) $56.49, Brent (ICE) $62.74
Friday natural gas: Henry Hub $2.51, Wyoming Pool $2.18, Opal $2.19
Baker Hughes rig count: U.S 868 (-18), Wyoming 35 (-1)
Quote of the week
"It’s really critical for people to understand that the market does not have to buy renewable energy in Wyoming. We tell them why they should and say, here are all the wonderful attributes associated with Wyoming renewable resources, but there’s no mandate to choose Wyoming.”
— Kara Choquette, communications director at Power Company of Wyoming
About half of Saudi Arabia’s oil infrastructure was crippled when drones hit the country's largest processing plant and oil field on Sept. 14. The attack slashed roughly 5.7 million barrels of oil a day from the market.
Crude prices shot up in response. Fears of a global oil shortage mounted.
Brent crude, a global marker for oil, momentarily reached $71.00 a barrel. It ended the day after the attack at $60.22. West Texas Intermediate, a benchmark for U.S. oil prices, hit $63. The week before, WTI had averaged $56 a barrel.
The attack hit consumers too, at least for a bit. Average retail gasoline prices spiked to levels not witnessed since Hurricane Harvey, according to the Energy Information Administration.
But two weeks later, markets seem to have already settled down.
Absent another attack on a key oil mecca, prices and production will likely return to normal, that is, if they haven't already, said Chuck Mason, a University of Wyoming economics professor studying petroleum and natural gas.
“The volume of oil that was at risk wasn’t enough to rationalize the price spikes I think ... it didn’t take that long for participants to realize that the (disruption) was a temporary one-off and, in fact, everything would be back to normal," he said.
The international market is awash in so much crude that obliterating 5 percent of supply from the international market didn't even wreak that much havoc, at least not for long.
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“I would be very surprised to see prices persistently high in, let's say, about a month,” Mason added.
Long-term global crude prices and rig counts typically shift at a snail's pace. And the same can be said for oil indicators in Wyoming.
Wyoming's production makes up a relatively small portion of oil supply compared to hot spots like the Permian Basin, which stretches across Texas and New Mexico, or the Bakken Formation in North Dakota. The state contributes just 2 percent to the nation’s crude oil supply. In comparison, Texas supplies 37 percent, according to the EIA.
A report released by the state's Department of Administration and Information Friday revealed the attacks didn't throw off monthly crude averages all that much, either.
“We had already seen the return to normal within two days," said Jim Robinson, principal economist for the state’s Economic Analysis Division.
"There has always been a level of uncertainty in the oil market," he said. In other words, the disruption didn't even come as too much of a surprise to him.
In other news...
An inspection report obtained by the Star-Tribune through a public records request said a small crew on both Blackjewel coal mines sent out approximately “one train of coal per day," contrary to comments made by the company in bankruptcy court. This comes as the U.S. Department of Labor extended federal aid to out-of-work Blackjewel miners in need of health care resources and career support.
- A shuttered Utah coal mine will come back to life again, with hopes of shipping the high quality coal abroad (via Salt Lake Tribune).
The U.S. Department of Energy awarded multiple Wyoming-based research initiatives $5 million to advance alternative uses for coal beyond energy generation.
WIND & SOLAR
- The Legislature’s Joint Revenue Committee revived the recurrent call to solve the energy-dependent state’s impending financial woes and enact a state tax — this time on electricity generation.
- The Legislature's Joint Corporations, Elections and Political Subdivisions Committee considered changing the state’s net-metering laws, a move that could affect small electricity generators who tap into solar power (via WyoFile).
OIL & GAS
Wyoming’s economic report for the second quarter released Wednesday found over 13 percent growth sales tax in the mining and oil and gas sector, especially in Converse County, as construction associated with mining activity revved up.
The Bureau of Land Management's decision to move half its staff in charge of environmental reviews out West could slow the pace of oil and gas permit applications (via POLITICO).
- This year, Wyoming Department of Health declared 16 bodies of water contain toxic levels of algae bloom in the state (via Wyoming Public Media).