Local rig counts down from last year

by Stephen Crane

As spring brings warmer temperatures to Sublette County, the energy companies are gearing up for another busy season.

For some, the spring and summer seasons mean an increase in production efforts. For most, however, the economy is keeping those efforts at a steady level.

Last year, the state of Wyoming had 69 drill rigs operating throughout the state. As of April 17, there were 37, and Sublette County accounted for 24 of those.

When compared to last year, however, these numbers are a dramatic decrease, as companies have scaled back their operations in light of the economic downturn.

“We’re like most industries right now — banking, finance, auto industry, real estate,” said Randy Teeuwen, spokesman for EnCana. “All the economic sectors are experiencing some downturn, and are sort of at the mercy of the national economy and the local economy, in some respects.”

A number of factors have led to this local reduction, which has found most companies maintaining a holding pattern until things improve.

As the national economy took a nosedive in late fall, the price of natural gas followed close behind, despite record prices last summer. Coupled with that fact is the lack of pipeline infrastructure in Wyoming, which makes product transportation difficult and exacerbates the problem.

“The Rockies Express (Pipeline) is supposed to open up some more gas distribution some time later this year, which should help,” explained Teeuwen. “But in Wyoming, there’s a price differential than elsewhere in the country, and sometimes, it’s a substantial difference.”

The effect on local energy companies has been mixed. Some are holding tight until the situation improves, while others still plan to increase their drilling efforts.

“We have nine right now,” said Emily Kelley, communications specialist for Questar Market Resources. “And we don’t have any plans to change that.”

For Ultra Resources, new Patterson fit-for-purpose rigs should start arriving in early summer, which will increase the number of rigs the company has operating out in the Pinedale Anticline Project Area (PAPA).

“We’re down to five until our new rigs start coming in,” said Belinda Salinas, Ultra’s manager of environmental, safety and regulatory affairs. “They’re going to start coming in every month or every other month starting in June.”

This time last year, however, Ultra had 12, “if not close to 15,” rigs operating in the PAPA, making this year’s projection a marked decrease overall.

Salinas anticipates “between five and nine” rigs by the end of the year.

Shell currently has four rigs operating in the PAPA, which is a dramatic decrease from a year ago, though Shell was unavailable for comment due to a company-wide hold on public commentary leading up to its April 29 annual report.

EnCana’s rig counts are also down from 11 rigs last year to seven rigs currently.

“We’re not going to add any in the foreseeable future at least,” said Teeuwen. “Like a lot of others, we’re planning our drilling based on the economy.

“But what we’re trying to achieve is some stability — as much stability in uncertain times as we can.”

The loss in rigs hasn’t affected the direct employees for the energy companies, but their contracted workforce, which mans the rigs, has dropped along with the rigs.

“We run pretty lean anyway,” said Salinas. “So who knows how long this will last, but we don’t expect any (layoffs).”

Ultra has also started construction on the new Liquid Gathering System (LGS), which is required by the Record of Decision issued last September. This will translate into an increased need for construction personnel associated with its construction.

For EnCana, which has lost four rigs in the past year, the contracted employees are still under EnCana’s workforce umbrella, making their departure difficult.

“Some of the people that are going with those rigs are people we’ve worked with for years,” said Teeuwen. “We think of them as part of our workforce, and they’re people we care about, so it’s difficult to lose some of those people.”

But these departures are simply a part of the business, which has always ridden the rollercoaster of the market, as well as that of the larger economy.

“The oil and gas business goes through up and down cycles and has for many years,” said Teeuwen. “So we’re in one of those cycles right now, where we’re not as busy.

“But we believe that energy in Wyoming has a bright future. We know that the resource is there, and it’ll be produced for many years.”