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.
Keep an eye out for the first annual Energy Journal publication focused on innovations in Wyoming's leading industry, coming out March 29.
'These things happen'
Plunging oil prices and a hefty loss of energy shares made for a bruising Monday last week for those involved in the nation's shale business. But many in Wyoming also chalked up the volatility to just another week in the crude world.
West Texas Intermediate, the U.S. benchmark, plummeted by over one-third to $27.34 a barrel on the evening of March 8 — that's half of what it was at the beginning of the year.
On Tuesday, still reeling from a tumultuous day, dozens of operators, expert witnesses and attorneys filed into the Oil and Gas Conservation Commission for the monthly hearing. As the meeting commenced at 9 a.m., Supervisor Mark Watson immediately addressed the elephant in the room.
“For all the young people out there: These things happen,” Watson said in reference to the plummeting oil prices. “... The sun comes up and we go on. So, don’t worry too much."
Not long ago, in February 2016, West Texas Intermediate fell below $28 per barrel. In other words: Last week was seen by some as business as usual. When it comes to the commission's monthly hearings, business as usual means show cause hearings, flaring requests and contested case hearings.
"There is price volatility, but it always calms itself down," said Howard Cooper, president of Three Crown Petroleum LLC. "Prices will be coming back, they always recover and in the long run everything looks fine."
According to some analysts, it will take time to recover, but market recovery will happen, with oil prices likely inching up again over the course of several weeks. (West Texas Intermediate hovered around $31.50 a barrel on Friday, crawling ever-so-slightly up throughout the day).
In other news, the oil and gas regulatory body welcomed a new commissioner, professional geologist Jimmy Goolsby of Goolsby Finley & Associates LLC, at its Tuesday hearing. He comes to the position with over four decades of experience contributing to Wyoming's oil and gas sector.
“We are more than excited to have Jimmy serve as a Commissioner,” Watson said in a statement. “His understanding and depth of knowledge will serve the state and the citizens of Wyoming well. We are fortunate to have this level of expertise in a Commissioner.”
Former commissioner professional geologist Mark Doelger of Barlow and Haun served in the role for over seven years, the longest oil and gas commissioner to serve in Wyoming's history, according to Watson.
"I remember first meeting Mark and having an enormous amount of respect for Mark," Gov. Mark Gordon said during February's commission hearing. "Just his sound wisdom and his calm manner of dealing with things."
Last week's news roundup:
- Buckskin Coal Mine located just outside Gillette will reduce its workforce in response to tough market conditions for coal, the owner of the mine confirmed Thursday.
- Kiewit Corp, the owner of Buckskin Coal Mine, has yet to determine how many workers it will lay off. The company plans to finalize the details over the course of the next month. But a Buckskin worker reported Wednesday that the company said about 50 employees could be impacted, according to County 17 news in Campbell County.
- Navajo Transitional Energy Company, or NTEC, reached an agreement with Montana regulators last week, electing to waive its sovereign immunity. The limited waiver allows state regulators to enforce environmental and mining laws at NTEC’s coal mine in Montana, just north of Sheridan.
- Montana Consumer Counsel, a group representing consumers, demanded NorthWestern Energy provide additional information on its plan to buy 25 percent more of Colstrip Unit 4, given concerns the move could increase customer rates, Tom Lutey reports (via Billings Gazette).
OIL & GAS
- Oil prices plunged to levels not seen in decades last week in response to an escalation in tensions between major international oil suppliers and the expanding outbreak of the coronavirus worldwide.
- A bill to reduce severance tax obligations from 6 to 4 percent for oil and gas operators passed the House and Senate. Operators would be eligible for the tax reduction if oil drops below $50 a barrel or natural gas falls below $2.95 per thousand cubic feet at the time production commences Gov. Mark Gordon will now consider the bill.
- The sharp shock to energy markets could hit U.S. shale producers particularly hard, and many in Wyoming have already braced for the fallout.
- Several refineries transforming crude into fuel in Wyoming apply for annual exemptions from renewable energy standards, which often prove economically prohibitive. But that option for relief is now on the line. In January, a panel of judges in the 10th U.S. Circuit Court of Appeals determined the federal government was overextending relief. The ruling, if upheld, would effectively invalidate exemptions from renewable energy standards for small refineries going forward.
- Energy company Meritage Midstream has announced the completion of a new natural gas processing plant in Converse County capable of processing 200 million cubic feet of gas per day.
- TC Energy has started preliminary work along the route of the proposed Keystone XL oil sands pipeline in anticipation of starting construction next month, as opponents await a judge’s ruling on a request to block any work, Matthew Brown reports. (via Associated Press).
WIND & SOLAR
- Wyoming's governor signed Senate File 36 into law Friday. The legislation requires large-scale solar and wind energy projects to obtain permits with the state's Industrial Siting Council. Along the way, the House Corporations, Elections and Political Committee approved an amendment, which allows the council to deny a company a wind or solar permit if constructing the facility would interfere with another "economically developable mineral resource," like trona mining.
- Salt Lake City has turned to building developers to mitigate greenhouse gas emissions. The key is to use all-electric technology for heating and cooling, according to the city's partner, Building Electrification Initiative (via Salt Lake Tribune).
- A sage grouse technical team in Wyoming is debating if it needs to import sage grouse into the state to boost population numbers (via Jackson Hole News&Guide).
Last week in numbers
Friday oil prices:
- West Texas Intermediate (WTI) $31.50, Brent (ICE) $33.22
Friday natural gas:
- Henry Hub $1.83, Wyoming Pool $1.67, Opal $1.83
Baker Hughes rig count:
- U.S 792 (-1), Wyoming 20 (-1)
Quote of the week
“Everybody has their knickers in a knot. For a couple of days to maybe a week or so, I think there is little doubt prices will stay in the $30 range because there is all this panic swirling around.”
— University of Wyoming professor Charles Mason said in response to last week's oil price drop.
Follow the latest on Wyoming’s energy industry @camillereports
Be the first to know
Get local news delivered to your inbox!