The last active drilling rig in Wyoming was idled yesterday, leaving the state with no operating rigs for only the second time in its oil and gas history.
The AP reports that the gas rig was located near the border with Colorado and quotes the executive director of the state's Petroleum Association, Pete Obermueller, as saying, "It is historic, but not in a great way. There are so many jobs attached to these rigs, and now, people are painfully learning so much revenue is attached too. It's mind boggling and hard to capture the impact."
A year ago, there were 37 active drilling rigs in the Cowboy State, which is one of the oldest legacy oil-producing regions, if not one of the largest. For the whole of 2019, companies operating in Wyoming pumped 102.1 million barrels of crude, which was substantially higher than the 2018 output, which stood at 87.9 million barrels.
Now, with the crisis bringing drilling to zero, the state has plans to stimulate the industry with new tax incentives. The Wyoming legislature's Joint Minerals, Business and Economic Development Committee has sponsored a bill proposing tax relief for oil and gas companies in a bid to stimulate an increase in production.
The bill calls for a tax exemption once the price of West Texas Intermediate reaches $45 per barrel for light sweet crude and $38 per barrel for sour grades produced in the state.
The incentive, if approved, would only be in effect for 12 months after the benchmark oil price reaches the desired level, but according to the bill's sponsors, it could go a long way towards providing the local oil and gas industry with the motivation to bring back the drilling rigs.
"We're recognizing that if [the] price is too low, companies are not going to come back anyway. So, we're gonna set it at maybe a break-even to get a company over the hump to choose Wyoming over North Dakota, to choose Wyoming over New Mexico," the Petroleum Association's Obermueller said at the time in comments on the news.
By Irina Slav for Oilprice.com
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