The June 2019 Director’s Cut was released last week, on August 15, 2019, by Director Lynn Helms, NDIC Department of Mineral Resources – a full copy of the June 2019 Director’s Cut can be found here. It contained some noteworthy info…
The June 2019 Director’s Cut reported
the following new all-time high production records in North Dakota:
June 2019 Oil Production was 1,424,625 barrels/day and originated primarily from the Bakken and Three Forks
June 2019 Gas Production was 2,876,689 MCF/day
In addition, the June 2019 Director’s Cut reported that the number of producing wells increased (based off of preliminary numbers at the release date of the June 2019 Director’s Cut) by approximately 38 wells, also reaching a new all-time high number.
While the statewide rig count for North Dakota is significantly lower than the monster rig count numbers reached back in 2012, as of August 15, 2019 the North Dakota rig count was 61 and the estimated number of wells waiting on completion from end of May to end of June was 983 wells, according to the June 2019 Director’s Cut.
Reaching these all-time high production records this summer is certainly noteworthy.
What is the TAKEAWAY here? North Dakota oil and gas production is sitting pretty and is currently bolstering not just the local economy, but it has been improving the economy of the United States as a whole as well.
Navajo Transitional Energy Company, a wholly-owned limited liability company of the Navajo Nation, is about to close a big deal that will substantially impact Wyoming, and potentially the country as a whole.
According to the Casper Star Tribune article entitled, Navajo Nation Coal Company Receives Approval to Purchase Cloud Peak Mines, Navajo Transitional Energy Company was the successful bidder and has received court approval to purchase Wyoming’s Antelope and Cordero Rojo mines, located in the Powder River Basin, out of bankruptcy. The Spring Creek mine located in Montana was also reportedly included in the sale to the Navajo Transitional Energy Company.
Why is this important?
This is a BIG deal. These coal mines are large – Wyoming’s Antelope and Cordero Rojo mines are the third and fifth largest coal mines in the country. According to the press release dated August 19, 2019 issued by the Navajo Transitional Energy Company entitled, NTEC Expands its Conscientious Energy Development Efforts by Acquiring Three Coal Mines in the Powder River Basin, which can be found here, the properties acquired include surface and mineral rights to approximately 90,000 acres of land.
The coal produced from these mines located in the Powder River Basin has a low sulfur content and is therefore considered cleaner.
These coal mines currently employ roughly 800 Wyoming miners.
Navajo Transitional Energy Company is already in the
coal business – according to its website, which can be found here, the company purchased
the Navajo Mine in 2013, which is located on the Navajo Nation, south of
Farmington, New Mexico. The Navajo Mine is operated on behalf of Navajo
Transitional Energy Company by Bisti Fuels Company, LLC, a subsidiary of North
American Coal Corporation.
According to Navajo Transitional Energy Company’s press
release, the assets were acquired free and clear of the debt burdens since
they were purchased through the bankruptcy process.
This sale is historic – it not only involves large coal mines but, according to Navajo Transitional Energy Company’s press release, “Indian tribes have long had a deep connection to the earth, and for the first time, a tribal company will now lead thoughtful and diligent energy development on a national level.”
Further, according to Navajo Transitional Energy Company’s press release, “[w]ith this purchase, NTEC [Navajo Transitional Energy Company] becomes the third largest coal producer in the United States.”
This historic sale is the high note of the week, as the economic benefits not only to Wyoming, but to the Navajo Nation and the United States as a whole, will be significant.
Wyoming is business friendly and has been taking efforts to streamline conflicts related to companies doing business in the Cowboy State.
On March 15, 2019, Governor Gordon signed into law an act of the 2019 Wyoming legislature, Senate File 104, which created a Chancery Court – check out the press release issued by the Wyoming Judicial Branch here.
What is the purpose of the Chancery Court?
The Chancery Court is a specialty court of limited jurisdiction which is intended to be a business court, where business-related conflicts are expedited through the judicial process. According to the Wyoming Judicial Branch’s press release, its “purpose is to provide a forum for streamlined resolution of commercial, business, and trust cases.”
What types of cases would go before the Chancery Court?
According to the Wyoming Judicial
Branch’s press release,
the court would have “jurisdiction to decide actions seeking declaratory or injunctive relief and actions seeking money
recovery over $50,000 that arise from claims including breach of contract,
breach of fiduciary duty, fraud, derivative actions, the Uniform Commercial
Code, and the Uniform Trust Code.”
When will the Chancery Court be established?
answer – the ball is starting to roll pretty quickly. The Wyoming Supreme Court
has reportedly been charged with
establishing the Chancery Court rules and regulations by January 1, 2020 and beginning
March 1, 2022, the Chancery Court judge position is to be filled through
Wyoming’s constitutional judicial selection process.
What does this mean for your Wyoming business?
TAKEWAY: Among the other favorable aspects of doing business in the Cowboy State, Wyoming has established a specialty business court for commercial/business disputes in excess of $50,000 that will have the expertise to streamline disputes that occur in Wyoming involving business entities.
For more information, check out
the following articles:
At yesterday’s hearings, the Wyoming Oil and Gas Conservation Commission (“WOGCC”) released a proposed rule aimed at addressing the increased volume of drilling permits filed in the Cowboy State. The formal bulletin entitled, “WOGCC Proposes Rule to Address Volume of Drilling Permits,” can be found here.
If approved, the proposed rule, released in accordance with Wyoming’s rulemaking guidelines, will change several aspects concerning the filing of Applications for Permits to Drill (“APDs”), according to the bulletin:
Going forward, Wyoming will remain a “first to
file state” for a two-year period
After the expiration of the initial two-year
period, other working interest owners within a drilling and spacing unit
(“DSU”) will be able to file APDs with a time limit placed on the operator to
drill the well
A new checklist will be provided for information
to be included in and submitted with an APD from (i) the operator who is not
the current operator of the DSU and (ii) the operator of the DSU who holds the
oldest pending APD or producing well
To review the
proposed rule, click
here. Prior to the comment
period, a public meeting will be held to explain the rule and answer any
questions. Written public comments will be collected and reviewed during the
45-day comment period.
Stay tuned as we
will be monitoring how this proposed rule develops! This is a big proposed
change that could have many potential consequences for operators.
As I drove from Denver to Sheridan, Wyoming this weekend, two things caught my eye from the highway:
1. Coal: I passed not one, but two trains pulling railcars filled to the brim with coal. It has been awhile since I have seen a full coal train on the move, let alone two within hours of each other!
2. Oil: More derricks are springing up.
Actually, I should say three things caught my eye – the third is that Wyoming is greener than I have seen in many years. The grasses are lush and vibrant, transforming the prairies and hills.
Many may not be aware that Wyoming has been the nation’s leading coal producer since 1986. For more excellent information about Wyoming’s coal production, check out the Wyoming Mining Association’s website, which can be found here.
The coal in the Powder is truly a one of a kind commodity. Wyoming’s Powder River Basin, located in the northeast corner of the state, is known not only for the large size of its mines, but the unique features of its primary commodity. Because thick coal seams lay relatively close to the surface, the Powder lends to cost effective coal recovery operations, keeping costs lower. Further, the coal from the geologic formation there is lower in sulfur, making it cleaner when burned.
Of the roughly 5,500 employees reportedly working in the coal industry across Wyoming, more than 4,500 of them work in the Powder. Coal has always been a big part of Wyoming’ economy, and the commodity’s future is very volatile at this point.
Oil production is on the rise in the Cowboy state. In fact, according to a recent article published by Wyoming Public Media, which can be found here, oil production in Wyoming has risen to its highest level in 25 years.
In short, increases in the energy sector are visually apparent in Wyoming – only time can tell what the future is for Powder River coal and what lies ahead for the oil produced in the Cowboy State. Stay tuned!
While oil prices have increased slightly today, they are still lower than many would like to see. As of this post, WTI Crude is at $52.25 per barrel and Brent Crude is at $61.36 per barrel, according to Bloomberg Energy. Of significant impact on oil prices is the fundamental nature of supply and demand – stockpiles are reportedly high (ish) and demand is currently low (ish), and may be going lower.
Oil & Gas 360 released an
article entitled, Goldman
Sees Hard Path to OPEC+ Extension that discusses these supply and demand
issues in the context of the upcoming OPEC meeting in detail. The bottom line is that we may be going into
the OPEC meeting with many uncertainties as to whether production cuts will be
extended. According to the Oil
& Gas 360 article, stockpiles are currently at their highest level
since mid-2017 and this oversupply is present “amid slower demand growth.”
Annual U.S. crude oil
production reached a record 11.0 million b/d in 2018.
EIA forecasts that U.S. production will
increase by 1.4 million b/d in 2019 and by 0.9 million b/d in 2020, with
2020 production averaging 13.3 million b/d. Despite EIA’s expectation for
slowing growth, the 2019 forecast would
be the second-largest annual growth on record (following 1.6 million b/d in
2018), and the 2020 forecast would be the fifth-largest growth on record.
The takeaway from this is easily
summed up by a recent CNBC article entitled, Oil
Steadies as OPEC Supply Cuts Counter Growth Concerns as follows: “While the talk of
prolonged supply restraint is supporting prices, concern about slowing demand
and economic growth has had a bigger impact on sentiment.”
oversupplied? Is there too much oil in
inventories? How much will global oil demand drop?
The headlines are all talking about supply and demand; specifically, oil supply and its impact on the price of oil. As of the posting of this, WTI Crude is sitting at $58.07 per barrel and Brent crude is at $67.85 per barrel, according to Bloomberg Energy, and it has folks wondering where oil prices will go from here in light of oil inventories rising. In fact, Oil & Gas 360 just released an article yesterday entitled, Rough Day for Oil: Crude Plunge Approaches 6% discussing the plunge in oil prices in detail.
By way of a reminder, at the end
of last year, a “glut” is reported to have helped contribute to the fact that
oil prices took a significant tumble to that $45 per barrel mark, that we all
would like to forget happened.
So is another “glut” on the horizon?
Let’s focus on North Dakota for now:
The North Dakota Industrial
Commission (“NDIC”) released its most recent Director’s Cut on May 15, 2019,
which can be found here. North Dakota oil production reportedly
bounced up approximately 54,500 barrels of oil per day from February 2019 to
March 2019. In addition, the number of
producing wells reportedly
increased by nearly 200 wells from February 2019 to March 2019, edging close to
the all-time high number of producing wells which was 15,409 in January 2019.
However, the North Dakota rig
count is reportedly
down 70% from the high; the rig count as of May 15, 2019 was 65 and the
all-time rig count was 218 from 5/29/2012.
Cut also reports that drilling permit activity has returned to normal,
operators continue to maintain a permit inventory that will accommodate varying
oil prices for the next 12 months.
Now let’s look at big picture data:
According to the U.S. Energy
Information Administration (“EIA”), crude oil inventories have risen –
according to EIA data highlights, which can be found here, crude oil inventories as of May 17, 2019
are at 476.8 million barrels, an increase of 4.7 million barrels from a week
earlier, and an increase of 38.6 million barrels from one year earlier. This
increase was reportedly larger than expected, according to the article
Extends Slide to Weekly Lows Near $61 After EIA Report.
It is no secret that supply has increased, so the question remains as to whether supply has increased to the extent that it will cause a glut. The upcoming OPEC meeting in June and many other factors may help us in determining where we sit on the supply front. Stay tuned!
“Energy and persistence conquer all things.” – Benjamin Franklin
Discussing topics in the energy sector gives one a certain, well, energy. A charge or *spark* – a bolt of anticipatory excitement and the promise of potential comes from being “in the know.” I just received such a spark …
The U.S. Energy Information Administration (“EIA”) released a new portal this week that will change the way that we analyze state-level energy data in the United States. To be honest, I am very excited about it, in the only way that a true nerd in the energy sector who writes an energy-focused blog can be.
It is called the State Energy Portal and can be found here.
I was instantly pulled to focus on the Rockies, and one clear conclusion was apparent – states in the Rockies, namely, North Dakota, Wyoming and Colorado, produce more energy than they consume. The Rockies are producers. Check out the EIA states overview map here.
Yes, there are obviously other states in the same boat that are producing more energy than they consume (check out Texas, Pennsylvania, New Mexico, Oklahoma and Alaska, for example). However, there is not an entire producing region like the Rockies anywhere else in the United States. States in the Rockies are synonymous with energy production – the Rockies are giants in energy production.
Benjamin Franklin said, “Energy and persistence conquer all things.” That could not be more true for the Rockies, an area of the country built by persistence, grit and tenacity – and also by the energy sector.
The Cowboy State via the State Energy Portal
The state-by-state analysis in
the State Energy Portal is amazingly
instructive. As a native of the Cowboy
State, I was first drawn to the analysis on Wyoming, which can be found here.
produces 15 times more energy than it consumes, which makes it the biggest net
energy supplier among the states.”
Folks from Wyoming are taught from a very young age the importance of producing. Work hard, imagine big, create, labor and focus your effort – produce something valuable with your time. It makes sense that Wyoming is THE giant in energy production.
What is also important, though, is that
the State has a variety of sources to tap for energy production. According to
the State Energy Portal Wyoming analysis, and the internal sources cited within the same:
Coal: 7 of the 10 largest U.S. coal mines are located in Wyoming’s Powder River Basin.
Petroleum: Wyoming is the 6th largest crude oil producer in the U.S.
Oil Production: Wyoming’s monthly oil production is on the rise and in August 2018 reached its highest level in more than 25 years. Most of the state’s oil production increase has come from two primary regions in eastern Wyoming: the Niobrara Shale (due north of the Colorado border) and the Powder River Basin (due south of the Montana border).
Natural Gas: Wyoming ranks among the top 5 states with the most natural gas reserves.
Natural Gas Production: Most of Wyoming’s natural gas has come from fields in the Green River Basin located in the southwest corner of the Cowboy State. Notably, more than half of the state’s natural gas is produced on leased federal land – recently in 2018, the federal government approved a large natural gas project in the basin, which calls for the drilling of 3,500 wells over 10 years.
Uranium: Wyoming has significant uranium reserves and is home to the largest uranium mining operations in the U.S.
Wind: Wyoming has some of the largest wind reserves in the nation and big wind-generating electricity projects are in the works in the State.
Hydroelectric Power: Many people may not know that Wyoming is home to 21 hydropower dams and hydroelectric power is the 3rd largest source of Wyoming’s power generation.
TAKEAWAY: Wyoming is an energy production giant. It provides a variety of sources for energy production, which clearly causes energy-related industries to dominate the Cowboy State. While Wyoming is my personal place to refuel and recharge, it also is a major energy producer for the nation.
As a resident of Weld County, I
can tell you that there are sometimes stark contrasts between Weld and Boulder Counties. Although neighbors, the two counties have
very different views – and I do not mean of the mountains.
One of the ramifications of S.B.
181 is increased local control, allowing Colorado cities and counties more
control over drilling operations through local zoning ordinances and land use
regulations. Hence, a line in the sand
is beginning to be drawn between Boulder and Weld Counties…
On May 1, 2019, the Weld County
Board of Commissioners (“Weld County Commissioners”) issued a press release
entitled, “Local Control Focus of Board Action,” which can be found here. During the hearing that same day, the Weld
County Commissioners reportedly
started the process to give the Weld County government control over oil and gas
permitting by “formally designat[ing] all of unincorporated Weld County as
being under the purview of county government as it relates to mineral resources
– particularly oil and gas.”
The press release follows the
“Open Letter from the County Commissioners” from April 16, 2019, the same day
that S.B. 181 was signed by Governor Polis, expressing Weld County’s
understanding of the value of Colorado’s oil and gas industry, which can be
The proposed designation is set
for public hearing on June 10, 2019, during which time the Weld County
Commissioners will act on the same. Per
release, public comment and participation is encouraged at the
It is clear that lines are being
drawn…stay tuned as more develops!
It is no secret that Wyoming’s economy is heavily reliant on the energy and natural resources sector. In fact, the primary forces behind the economy of the Cowboy State are mineral extraction, in the form of coal, oil, natural gas and trona, and agriculture.
Wyoming is an attractive place to do business due to state incentives like no income tax and low sales and property taxes; however, Wyoming may become even more of a hot opportunity state in light of the passage of Senate Bill 181 by its neighbor to the south, Colorado.
Colorado has recently taken
serious steps to increase oil and gas regulation and revamp the make-up of the Colorado
Oil and Gas Conservation Commission. As
Governor Jared Polis signed SB 181 into law yesterday, April 16, 2019, many are
trying to anticipate the impact that the bill will have on the oil and gas
industry in Colorado. The future of oil
and gas is uncertain, due in part to the significant reforms mandated by SB
181. For a full discussion of the
sweeping impacts of the bill, check out our prior post here.
I have heard several folks referring to Colorado’s SB 181 as “Wyoming’s Economic Stimulus Package.” The comment has been said in jest, but it got me thinking…
Will the oil and gas industry shift more of its focus to the Cowboy State in the wake of SB 181?
There are several factors that support the theory that Wyoming will greatly benefit from Colorado passing SB 181, including:
Rural Nature of Wyoming – Wyoming is one of the least populated states in the country. In addition, the population of the state is spread out – meaning the population density is very opposite to that of Colorado. As a result, the friction that Colorado has faced with the oil and gas industry as its towns and communities have rapidly expanded into producing areas will be practically a non-issue for rural Wyoming. In fact, the New York Times wrote an article last summer commenting on this issue of the increase of production in Weld County coupled with Colorado’s population boom entitled, “In Colorado, A Fracking Boom and a Population Explosion Collide.” Wyoming is a much more attractive environment for operations than Colorado, given Wyoming’s lower population.
Attitude – Wyoming residents are, in general, supportive of responsible oil and gas development in the state. Talk in Wyoming is positive and hopeful of the boom to come, and folks are making what preparations they can in the hopes of a boom in the oil and gas sector again – welcoming it with open arms. Wyoming residents recognize the value of the revenue that oil and gas operations bring to the state.
Workers with Grit – Wyoming is known for its quality of worker; Wyoming folks work hard and with grit, as working outdoors in all weather conditions requires.
Wyoming presents a favorable opportunity for the energy and natural resources sector to grow, but will the oil and gas industry shift its focus to the Cowboy State in the wake of SB 181?
It is likely that Wyoming will benefit from the passage of SB 181 in Colorado, but only time will tell if SB 181 will be Wyoming’s new economic stimulus package…stay tuned!