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Energy Journal: Layoffs whip through Wyoming energy industry

Energy Journal: Layoffs whip through Wyoming energy industry

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Wold Drilling

Colby LeBlanc, works on dewatering mud in October at a Wold Energy Partners drill site outside of Rolling Hills. A wave of layoffs have hit oil and gas workers particularly hard this month as crude prices plummet.

Welcome to the Star-Tribune’s Energy Journal, a play-by-play of the past week in Wyoming’s wild world of energy. I’m your energy and natural resources reporter, Camille Erickson. Sign up for the newsletter here.

Job loss spreads along with COVID-19

The precautions taken to stem the spread of the coronavirus and survive the market downturn have already left some Wyoming communities in a financial pinch. Several workers and their families are wondering what comes next as cash-strapped energy firms reduce their workforce.

Buckskin Coal Mine located just outside Gillette laid off 60 workers last week in response to tough market conditions for coal. In addition to Buckskin coal miners, Manager of Gillette's Workforce Center Rick Mansheim saw several oil and gas workers file into his center. Many of them have applied for unemployment in recent weeks, he said.

“Oil fields have been laying off consistently,” he said. “The oil fields is what is getting hit. Coal, though, that’s a fairly gradual reduction. I don’t think it’s going to go back up for sure, but I can always hope.”

Though the exact numbers are not yet known, requests for unemployment insurance have inundated Wyoming Department of Workforce Services. 

Oil prices have plunged in response to the spread of COVID-19 and a global price war. And several major oil and gas companies have started trimming their workforces or reeling in expenses. 

Aethon Energy confirmed it laid off 12 Wyoming workers last month due to unrelentingly low oil and natural gas prices. The dozen employees received severance pay, according to Aethon Energy. For years, the company has had plans to expand an oil and gas project at Moneta Divide. Aethon applied to install 4,250 new wells on about 327,000 acres of land about 40 miles east of Riverton. 

"Aethon will continue to focus efforts to identify cost-effective solutions to develop the Moneta Divide asset considering regulatory constraints," Stefanie Scruggs, a spokeswoman for the company said. 

Other companies declined to provide the exact number of workers affected by layoffs, but several admitted reductions and cuts were likely on the horizon. 

International oil and gas company Occidental Petroleum Corp., which recently acquired Anadarko Petroleum this summer for over $38 billion, announced on March 10 it would slash 2020 capital spending to as low as $3.5 billion (down from over $5.2 billion).

"We are adhering to protocols to protect the health and safety of our workforce, and our teams are focused on the need to reduce operating costs and work efficiently and safely," Jennifer Brice, a company spokeswoman, told the Star-Tribune in a statement.

On March 16, ExxonMobile also announced in a news release it would enter a period of austerity. 

“Based on this unprecedented environment, we are evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term,” stated Darren Woods, chairman and chief executive officer of Exxon Mobil Corporation. 

Though larger, integrated oil and gas companies may be more poised to weather the downturn, smaller operators could be hit the hardest by the brutal price environment, said University of Wyoming economist Chuck Mason last week. Bankruptcies, buyouts and corporate consolidation could be around the corner.

"Pretty big players in the oil patch will be bundling up properties over the course of the next two to four weeks; that would be my guess," Mason said. "And they’ll be doing it at discount prices."

The state has several resources for those facing unemployment. Here's a guide to where you and those in your community can find some relief.

Coming soon: Energy Journal 2020

Keep an eye out for our first Energy Journal publication focused on innovations in Wyoming's leading industry, which arrives Sunday.

Last week's news roundup

COAL

  • Buckskin Coal Mine laid off 60 employees Wednesday in an effort to adjust to deteriorating market conditions for coal. The mine employed 206 workers in the final quarter of 2019, according to the U.S. Mining Safety and Health Administration. Though workers received official notice of the layoffs Wednesday, they will receive pay through April 2.
  • The Wyoming Department of Workforce Services, which handles claims for unemployment insurance in the state, has been inundated with calls this week amid coronavirus-related business closures, Star-Tribune staff writer Morgan Hughes reports.
  • Attorneys representing hundreds of coal miners in Wyoming reached a settlement in a class action lawsuit brought against bankrupt coal operator Blackjewel, pending final approval by a federal judge. The lawsuit alleged the coal operator violated federal labor law by failing to notify or compensate hundreds of workers before suddenly closing down its mines last summer.
  • Wyoming’s fight to build an export terminal on the West Coast hit another legal snag Tuesday when a Washington court  upheld the decision by state regulators there to block permits needed to construct the proposed export terminal.

OIL & GAS

  • Oil prices continued to plunge to record lows in decades last week in response to an escalation in tensions between major international oil suppliers and the expanding outbreak of the coronavirus worldwide.
  • The Federal Reserve’s emergency rate cut earlier this month did little to stop the free fall in oil prices Monday morning. A glut in oil supply worldwide, coupled with weak fuel demand has brewed what several analysts have called the “perfect storm.” 
  • Energy companies operating in Wyoming ramped up their response to the spread of the coronavirus, or COVID-19, on Monday, with some firms imposing self-quarantine protocols and travel restrictions. 
  • A pair of bills cleared Gov. Mark Gordon’s desk and became law this month, with the aim of improving Wyoming’s oil and gas regulations. The bills come on the heels of a recent rule change enacted by the state’s oil and gas commission. Together, the revisions promise to increase Wyoming’s competitive edge among its Western peers as an attractive place for energy development, according to several operators.

WIND & SOLAR

  • The novel coronavirus could also impact the development of solar energy by delaying supplies and depressing demand (via Utility Dive).

Last week in numbers

Friday oil prices:

  • West Texas Intermediate (WTI) $25.22, Brent (ICE) $28.47

Friday natural gas:

  • Henry Hub $1.63, Wyoming Pool $1.57, Opal $1.57

Baker Hughes rig count:

  • U.S 772 (-20), Wyoming 20 (0)

Quote of the week

“I was shocked ... they had to cut that many positions,” said JD Dietsche, 47, a coal miner at Buckskin who also worked at the neighboring Eagle Butte mine until it shut down and changed ownership last year. He wasn’t subject to Buckskin’s recent wave of layoffs but said the loss of so many workers at the mine would be a big adjustment.

Follow the latest on Wyoming’s energy industry @camillereports

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Energy and Natural Resources Reporter

Camille Erickson covers the state's energy industries. She received her master's degree at Northwestern University's Medill School of Journalism. Before moving to Casper in 2019, she reported on business and labor in Minneapolis, Chicago and Washington.

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