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The Weekly News Source for Wyoming's Ranchers, Farmers and AgriBusiness Community

Natural Gas

by Wyoming Livestock Roundup

A couple of weeks ago you read in this column about how natural gas, or more importantly, the price of natural gas, affects all of us in Wyoming. When you look into natural gas and its pricing, it’s kind of like putting your arms around the health care issue – it really is complex.
    President Obama said in his State of the Union address that America has 100 years of natural gas left. From what I hear, that’s like hearing a politician give the unemployment figures – it’s always fudged a little to the positive side.  
    The report I read says, “The U.S. does not have 100 years of natural gas supply. There is a difference between resources and reserves that many outside the energy industry fail to grasp. A resource refers to the gas or oil in-place that can be produced, while a reserve must be commercially produced. The Potential Gas Committee (PGC) is the standard for resource assessments, and three categories of technically recoverable resources are identified: probable, possible and speculative. The President and others have taken the PGC total of all three categories and divided by the 2010 annual consumption, this results in 90 years, not 100 years of gas.”
    But even the 90-year estimate is wrong, states the report, because when you add the reserves and resources, and add some more because we’re always finding more, it actually comes out to around 23 to 25 years of natural gas that we have remaining. That not many years left, is it?  
    Supply and demand drive the natural gas prices, and in the last few years many large fields of shale natural gas have been discovered: Eagle Ford in Texas, Haynesville in Louisiana and Texas, Fayetteville in Arkansas, Antrim in Michigan, Indiana and Ohio, Barnett in Texas, Woodford in Oklahoma, Marcellus in Pennsylvania and West Virginia and, of course, our neighbor, the Bakken in North Dakota. The Haynesville shale play is the most responsible for the current oversupply, with its average well producing 3.3 million cubic feet per day. We do have some good gas fields here in Wyoming, but so far they are not as large as some of these.
        Natural gas is a very large revenue source for Wyoming, but for every dollar it drops, Wyoming loses around $120 million in revenue. So, nationally, and in Wyoming, when the price drops as it has in the last year, companies stop drilling for gas and look to $100 a barrel oil. Hopefully the drilling rigs will stay in Wyoming to stop an even bigger drain of dollars.  
    The warmer-than-usual weather the U.S. has experienced this winter hasn’t helped the oversupply, either. Reports show nationally that we have experienced close to 70 warmer-than-usual days so far this winter.
    Some say it will be two to five years before higher natural gas prices return, which is great for heating our offices, homes and schools and keeping fertilizer prices affordable, but the trade-off is hard on our state. Today’s Wyoming natural gas price of $2.47 is not expected to last – it is expected to drop even farther, so our elected officials will have to cut even more from the state budget. A leaner state government may be the good to come out of this issue.

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