CASPER, Wyoming—Wyoming’s Powder River oil play faces unique challenges, but Wyoming Gov. Mark Gordon sees growth on the horizon.
The Powder River Basin is a higher-cost basin to develop than the mighty Permian Basin or other Rockies plays like the Bakken Shale and Denver-Julesburg Basin.
But the remaining runway is immense in the Powder River Basin’s oily stacked pay, where delineation of the play’s Niobrara and Mowry shales is in the early innings.
With oil production expected to plateau and decline in maturing U.S. shale plays, experts believe Wyoming will attract additional investment and drilling activity in the future. Many predict that over the next five to 10 years, Powder River Basin activity will ramp up as producers seek new drilling locations in emerging plays.
“It’s exciting that we have people coming in and saying, ‘We see a future in the Powder River Basin,” Gordon told Hart Energy in an exclusive interview.
But the Powder does face challenges. Power and water availability are scarce across the basin’s massive and remote land mass. Operators will need to invest significantly in the buildout of water recycling infrastructure.
Oilfield services in the Powder River Basin can also be harder to access and more expensive to deliver. Compelling returns in other basins, like the Permian, can also be a distraction for Powder E&Ps.
Most of the basin’s leasehold is locked up by multi-basin operators like EOG Resources, Occidental Petroleum, Devon Energy and Continental Resources. Privately held Anschutz Exploration Corp., operating three rigs across the basin, is the region’s most active E&P and the closest to a true Powder pure play.
While there are currently 15 rigs operating across the Powder River Basin, that figure is a far cry from the levels seen just a few years ago.
“You compare that to pre-COVID levels of 33; it’s a little daunting,” Gordon said. “But I think we’re coming back. We’re starting to see new rigs come in.”
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State, federal support needed
Wyoming oil and gas producers have the full-throated support of the state government, Gordon reiterated. The state is taking several steps to encourage new investment by oil companies big and small.
Wyoming established a new bonding framework allowing oil and gas operators to voluntarily join a pooled bonding program as an alternative to traditional surety bonds, providing financial assurance for plugging wells and site reclamation.
The Biden administration implemented changes last year aimed at significantly increasing bonding requirements for oil and gas companies operating on federal lands.
“This gives an opportunity for the producers to be able to bring a little bit more protection,” Gordon said.
The state also offers matching funds for innovative new energy projects sited within Wyoming, including for carbon capture, utilization and storage and CO2 transportation.
Gordon said he is also hopeful that holdups with the U.S. Bureau of Land Management (BLM) will be thawed under the Trump administration.
A controversial BLM land-use plan covering millions of acres in southwestern Wyoming is still on hold.
A Biden-era provision would have taken roughly half of the 3.6 million-acre opportunity off the table due to “critical” environmental concerns. Secretary of the Interior Doug Burgum signed an order in February to review the provision.
Gordon said he wants the administration’s momentum to continue.
“I’m enthusiastic about what this administration is doing on the energy landscape and the natural resource landscape,” he said. “I think there’s finally an understanding that we can do both: produce energy and protect the environment.”
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Go west
Operators and Wyoming stakeholders are excited about the future of Powder River oil. Of course, discovering oil in the Powder River Basin is nothing new.
Centuries ago, Native Americans and fur trappers would make medicines and paints from the black ooze bubbling up from the ground.
Later in Wyoming’s history, westward travelers would grease their wagon axles with a mixture of oil and flour.
Wyoming oil production would boom after the discovery of several key fields, including the Salt Creek field. Oil was produced and hauled by wagon around 40 miles south to the state’s first refinery complex in Casper.
Wyoming’s oil output peaked in the 1970s as conventional fields matured and producers shifted their focus to natural gas. Production then declined for decades, eventually settling at a low of around 141,000 bbl/d in 2008, according to state data.
But horizontal drilling, fracking and the “shale revolution” have breathed new life into Wyoming.
Operators continue to target the Powder River Basin’s sandstone benches—the Turner, Parkman, Sussex, Shannon, Teapot and other zones—but with horizontal laterals instead of vertical wells.
Wells landed in these semiconventional zones have demonstrated strong productivity, though the zones themselves are discontinuous and only sporadically present across the basin.
Occidental, for example, is reporting compelling results from the Turner bench from its acreage in Converse County, Wyoming—output that rivals or exceeds Permian wells.