New natural gas well lights up the bench

Posted 11/27/20

Shining in the night from the western edge of Polecat Bench, Capstar Drilling rig #311 could be seen from downtown Powell this week — drilling the first well on the bench in roughly a …

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New natural gas well lights up the bench

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Shining in the night from the western edge of Polecat Bench, Capstar Drilling rig #311 could be seen from downtown Powell this week — drilling the first well on the bench in roughly a decade.

The well, located within the Bearcat Field on private land, is being developed by Qualmay Development LLC, a subsidiary of First City Oil and Gas, of St. Augustine, Florida. They’re drilling down about 3,700-feet for natural gas and it’s one of the few wells — if not the only well — currently being drilled in Wyoming, said Bruce Tadewald, president of First City.

“We wanted to develop natural gas up here. Oil prices have been down, but gas prices are going up. We think it’s time to start,” Tadewald said while in Powell meeting investors.

The well was originally approved in late 2018, but no action was taken at the time. At the company’s request, the application for permit to drill (APD) was renewed by the Wyoming Oil and Gas Conservation Commission earlier this month and it was spudded on Saturday, according to commission data.

The company chooses to focus primarily on exploration through new project generation. While the company is headquartered in Florida, Tadewald is from Wyoming and owns and operates production in both Wyoming and Texas.

“St. Augustine is not exactly an oil town, but a great place to live and work,” he said. “If I find enough gas, I’ll live here in the summertime and there in the winter.”

Oil and gas commission records indicate that First City’s well is only the seventh to be spudded in Park County within the last two years; the others were in the southern part of the county, mostly in Oregon Basin. The records indicate there have been no new wells drilled in the Polecat Bench area since 2011, when two wells were completed in the Elk Basin Field and another two in the Silver Tip Field.

The oil and gas industry as a whole has been hit hard in 2020.

“When global demand for oil plummeted due to COVID, work stopped almost immediately in the oil and gas industry in Wyoming,” Gov. Mark Gordon said last week.

From April onward, oil and gas production has sunk from the levels seen in 2019, according to monthly reports from Wyoming Oil and Gas Conservation Commission Supervisor Mark Watson. That included a dramatic 40% drop in the number of barrels of oil produced in the state in May 2020 versus May 2019. In August, Watson said, oil production remained down 14% and gas down 7%.

In Park County, commission records show that, between January and September, companies have produced 17% less oil and 14% less natural gas than they produced in 2019 — and about 24% less than this point in 2018.

Ryan McConnaughey, communications director for the Petroleum Association of Wyoming, said drilling in the state has been slowly coming back after recently dropping to zero.

“It hasn’t been an explosion,” McConnaughey said, “but there’s definitely been some activity.”

“We’re starting to see it stabilize a little bit. We’re really optimistic on what’s going to happen in the next couple months,” he added. “Of course, it depends on what happens with the change in administrations.”

Democratic President-elect Joe Biden has said he’s “banning new oil and gas permitting on public lands and waters,” though it remains to be seen if and how he follows through on that pledge. A preliminary analysis by the Wyoming Energy Authority, submitted to state lawmakers last week, suggested that banning drilling on federal lands between 2020 and 2040 could cause the state to lose $21 billion in tax revenue and potentially lead to 26,700 fewer annual jobs in that same time period.

The oil and gas industry plays an integral role in the economy of Wyoming, and the rough times it’s recently experienced is a primary reason why state and local governments are finding themselves with tight budgets.

The industry has been exploring for oil and gas in Wyoming for more than 135 years.

McConnaughey said the petroleum association is seeing some signs of recovery in the state, but it will be slower than in places like North Dakota and Texas.

“The recovery is probably going to be a little bit farther out than other parts of the country because of market realities here in Wyoming,” he said, explaining that, because of access to markets and the amount of federal lands, prices must be higher for Wyoming’s minerals to be profitable.

The last couple of federal lease sales have been encouraging, he said, with positive auction prices and the majority of sales going above minimum bid.

“It’s a good sign,” McConnaughey said. “But we’ll just have to wait and see.”

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