Natural gas spike spells mixed short-term forecast for Wyoming economy

These fluctuations are nothing new to Wyomingites, who are accustomed to the “boom and bust” cycle of the energy industry. This time is slightly novel because higher prices don’t necessarily forecast more revenue for the state or more opportunities for the state’s workforce.

Petroleum Association of Wyoming Communications Director Ryan McConnaugey said a variety of factors are contributing to the projected jump in natural gas prices.

“A perfect storm of low supply, quickly rebounding demand as people started returning to life from the pandemic, natural gas’s attractiveness as a reliable fuel choice around the world, and forecasted cold winter has led to the increase in prices we are experiencing today,” he said.

The U.S. Energy Information Administration forecasts natural gas bills will be 30% higher than last year, based on an estimation of market prices and anticipated consumption. Forty-eight percent of homes are heated by natural gas, and the average household is anticipated to spend $746 heating their homes this season, a $172 jump from last winter.

The EIA also cites low natural gas inventories in the U.S. and Europe, as well as seasonal demand, to cause natural gas prices to remain volatile in the upcoming months.

Just because supply is low doesn’t automatically mean there will be an influx in development, but cautious optimism is reasonable.

“Wyoming producers are looking at a myriad of factors in determining their investment in more drilling as prices increase, including whether they are confident prices will remain elevated, the regulatory challenges coming from the Biden Administration in regards to drilling on federal lands, and their own budgetary decisions,” McConnaugey said. “Each company will look at their own situations and determine what investments they will make in drilling over the near term.”

Certified Professional Landman Edward H. Green III wrote in the most recent edition of Landman Magazine that work is picking up little by little as prices recover.

“Natural gas has seen a nice rise that would warrant future increased activities as long as there is takeaway capacity,” he said. “Operators still have pressure to stay within cash flow, so we all shouldn’t expect a dramatic rise in rig count and activity.”

“Williams owns and operates extensive natural gas and natural gas liquids infrastructure in Wyoming and is committed to supporting the future of the state’s energy industry,” the company said in a statement to WBR when asked whether there are any immediate plans to ramp up production. “In July 2021, we announced a joint venture with operating partner Crowheart to stimulate development activity, drive volumes and position our midstream and downstream assets for growth.”

The statement went on to say the company is also working to expand a diverse portfolio of clean energy generation, including wind, solar and hydrogen development.

According to PAW, there were 19,416 Wyomingites working in the oil and gas industry earning an average wage of $57,495 in 2019. Oil and gas produced in the state contributes $1.67 billion to the state’s operational budget.