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Federal oil production reached record levels in Wyoming last fiscal year, increasing nearly 35% over FY 2014 levels. Gas production also increased but remained largely consistent with historic levels over the past decade.
Source: BLM FY 2015 Idle Well Report (IM No.2012-181)
Nearly three-quarters of federal wells in Wyoming are gas wells. As a result, trends in federal leasing, permitting and drilling tend to closely reflect gas prices.
In 2008, when prices averaged $8.85/MMBtu, industry nominated more than 1.5 million acres for lease in Wyoming, but, in every year since, gas has been below $5/MMBtu, and nominations have totaled less than 1 million acres.
There’s a large surplus of existing, unused federal leases in Wyoming. At the end of FY 2015, of the 10.2 million acres of federal lands under lease, 6.2 million acres, or 60% of all active leases, were non-producing.
Federal leasing remained sluggish in Wyoming last year amid low gas prices and a surplus of existing unused leases, permits and wells. As of February 2016, operators had voluntarily “shut in” nearly 4,000 federal gas wells in the state.
From 2006 to 2015, state and federal permitting both declined in Wyoming, as gas prices fell from $7/MMBtu to less than $3/MMBtu. Even though fewer permits were issued, there is still a large surplus of existing, unused federal drilling permits in the state—at the end of FY 2015, operators held more than 2,000 unused permits.