BUFFALO — It is boom time for the Powder River Basin, according to an Oct. 1 Journal of Petroleum Technology article. But boom time still hasn’t hit Johnson County.
According to the Wyoming Oil and Gas Commission, production and sales of oil and gas in the county during 2018 was lower than in 2017. In fact, 2018 was something of a production low point for the county – oil production was at its lowest since 2012, while gas production was at its lowest since 2005.
Pete Obermuller, president of the Petroleum Association of Wyoming, said that the location of Johnson County’s resources might be hampering production.
“I think part of the issue is that most of the production in Johnson County is on federal lands, where it can be much more costly to produce because of regulatory restrictions,” Obermuller said. “In other parts of the state, a lot of the production is on private lands, where it is cheaper to produce. I imagine Johnson County might be one of the last counties to pick up production, but it will pick up once companies have exhausted private lands to produce on.”
The county’s production decline is in direct opposition to statewide production, which is seeing a nice bump this year, according to Obermuller. State gas production saw a minimal increase from 1.80 billion thousand cubic feet in 2017 to 1.81 billion thousand cubic feet in 2018. But state oil production saw a big bump from 75.65 million barrels produced in 2017 to 87.12 million barrels produced in 2018.
“Prices have ticked up a little bit over the last year, and that has led to a better environment for production,” Obermuller said. “Production needs to be economical for the producers, and as the price continues to rise, we will continue to see more production throughout the state.”
The average purchase price for oil in Wyoming for the first 11 months of 2018 was $61.29 per barrel, according to statistics from the U.S. Energy Information Administration. This is over $15 more than the average price in the first 11 months of 2017, which was $45.73 per barrel. The WEA does not have statistics from December 2018 at this time.
While oil is seeing an increase in purchase price, the purchase price for gas has declined from $3.84 per thousand cubic feet during the first 11 months of 2017 to $3.45 per thousand cubic feet during the first 11 months of 2018- according to the U.S. Energy Information Agency.
Purchase prices for oil and gas will need to continue to increase before the county will see a substantial production increase, Obermuller said. Even then, the county may run into issues because many of its wells have been simply tapped out.
“It could be something as basic as particular wells being on a production decline,” Obermuller said. “It could just be an accident of timing.”
In 2018, there were 1,222 idle (non-producing) wells in Johnson County, according to the oil and gas commission. The county had the second-highest number of idle wells in the state in 2018, behind Campbell County. In 2017, Johnson County had 1,200 idle wells.
Even though Johnson County did have a slower production year in 2018, there is still reason for hope, according to Commissioner Linda Greenough. With production and sales increasing across the state and a strong oil price, it is only a matter of time before the county bounces back.
“The boom in Converse County is slowly moving north,” Greenough said. “We might not see the benefits of this resurgence here for several years, but I am cautiously optimistic that 2019 is the year where production could start to turn around for us.”
Greenough said it was too soon to tell how the production decline in the county could affect the county’s budget. Oil and gas tax dollars always make up a significant portion of the county’s valuation, which the commissioners budget off of. In the current valuation of $414 million, $185 million comes from oil and gas companies, according to the county assessor’s office.
“My guess is that the increase in the oil prices should balance out the decline in production,” Greenough said. “I’m cautiously optimistic that we’ll have a valuation close to this year’s, but only time will tell.”