Legislators had lots of questions for oil company representatives at a special seminar convened Monday to discuss the recent oil price slide. Oil prices are down more than 60 percent since June. The State of Wyoming gets roughly 20 percent of its revenue from oil, so prices have been a hot topic in the halls of the Legislature.
Devon Energy representative Aaron Ketter said his company’s best-case scenario has oil prices rising in as little as 6 months. The worst-case scenario is for 24 months. But he cautioned, rising doesn’t mean returning to previous levels.
“It’s taken high prices to get to this point. Now the question becomes, what are high prices in the future?" Ketter asked. "I think from our standpoint, we believe that high prices will be necessary. The question is, instead of $100 a barrel, we might just have to reset our expectations.”
Wyoming's revenue-forecasting group is predicting in-state prices will average $50 a barrel in 2015, rising slowly to $65 by 2020.
Both company representatives dodged a question from Senator Hank Coe about expected job cuts in state. Anadarko Petroleum's Geoff Houlton said "we are not in the part of the year yet when we make those decisions." But many companies have already starting making cuts, including all three of the major servicing companies: Halliburton, Schlumberger and Baker Hughes. It's unclear how many, if any, of the positions cut will be in Wyoming.
Houlton spoke more readily to geopolitics, saying that it's clear the Saudis are trying to drive high-cost producers out of the market, but he added that one of the biggest unanswered questions at this point is whether oil production in the US really will drop off in response to lower prices.
“We continue to improve our efficiencies in the way we drill and extract resources and even with the reduction in rig count, will it take some time before we see a supply response?” he asked.
A similar situation has prevailed in the natural gas market, where supply hasn’t fallen off in recent years, despite sustained low prices.
Wyoming’s current rig count is 47, down from an October high of 63.
