Powder River Basin: Development in the Crosshairs
The Powder River Basin (PRB) has seen a significant increase in activity over the past few years, transitioning from coalbed methane (CBM) development to unconventional oil and gas extraction. With its stacked pay zones, the basin has attracted operators eager to maximize recovery through modern drilling techniques. However, a recent federal court ruling has introduced uncertainty, potentially jeopardizing future growth.
Recent Development Trends
Since 2011, horizontal drilling has dominated PRB operations, with a growing focus on extending lateral lengths and optimizing completion designs. Key formations, including the Niobrara, Parkman, and Mowry, have become focal points for operators such as EOG Resources, Devon Energy, Continental Resources, and Anschutz Corporation. In 2023, the PRB achieved record unconventional wells and footage drilled.
Oil production in the PRB has also surged, rising from approximately 113,000 barrels per day (b/d) in 2018 to 182,000 b/d by the end of 2023. Recent figures from early 2024 place production at 199,000 b/d, with private operators contributing 69% of this total. Anschutz Exploration, a key player in the basin, increased its production by 38% in less than a year, reaching 44,000 b/d in February 2024.
Drilling activity remains robust, with 110 newly drilled oil wells completed in the first half of 2023, nearly matching the previous year’s totals. Projections for 2024 suggest continued production growth, although drilling activity looks to end below 2023’s levels. The outlook for 2025, however, is somewhat murky, however.
Regulatory Challenges
The recent ruling by U.S. District Judge Tanya Chutkan has brought development in the PRB to a temporary standstill. The court halted new drilling permits for the Converse County Oil and Gas Project, which covers 1.5 million acres and plans for up to 5,000 wells. This decision was driven by a critical miscalculation in the Bureau of Land Management’s (BLM) environmental assessment, which underestimated the project’s impact on groundwater resources.
Environmental groups also raised concerns about air pollution, wildlife disruption, and the significant water usage associated with hydraulic fracturing. These issues, compounded by the federal government’s stricter regulatory framework for projects on public lands, have introduced additional hurdles for operators.
Industry Reaction and Implications
The ruling has drawn criticism from industry leaders and state officials, who view the decision as an overreaction to a correctable error. The project was expected to create thousands of jobs and billions of dollars in revenue, making it a cornerstone of Wyoming’s energy strategy. The halt on permits, however, creates uncertainty for operators planning long-term investments in the region. Companies may reconsider their positions in the PRB in favor of areas with more predictable regulatory environments.
Despite these setbacks, the basin’s established operators continue to drill existing permits. Devon Energy, for example, is running a rig in the area to assess its broader portfolio, while Anschutz Corporation remains focused on maximizing efficiencies in its current wells. However, any prolonged delays in new permitting could slow the momentum gained in recent years.
Sources and Further Reading