WyoFile Energy Report

When it was announced that the Keystone XL tar-sands pipeline would be delayed for further review, rumors began to swirl of a possible alternative route through Wyoming. But on Monday TransCanada officials indicated that an alternative route to avoid the Sandhills area of eastern Nebraska would likely require only 30 to 40 additional miles and remain within the Cornhusker State.

Dustin Bleizeffer

So what’s Wyoming’s stake in the Canada-to-Gulf oil pipeline? If built, it could ease access for Wyoming-produced oil because some Bakken oil from North Dakota and Montana now flows through Wyoming via the Belle Fourche and Bridger pipelines.

Brian Jeffries, executive director of the Wyoming Pipeline Authority, said those are the two main routes to market for crude produced in the eastern portion of the state. For now, it doesn’t appear that Bakken-produced oil is clogging the pipelines to the point of restricting market access. But Wyoming producers would likely welcome the Keystone XL — or any other major new Canada-to-Gulf connection — because it would ease overall pipeline capacity for all producers.

“It might leave more room for us,” Jeffries told WyoFile. “We want their (Montana and North Dakota’s) barrels off our highway.”

Click here for an interactive map of Wyoming pipelines.

Oil pipeline capacity is a challenge that Wyoming officials wish to have as they look across the Colorado border with a bit of rig-envy at momentum building in Colorado’s Niobrara shale oil play. As reported in the Colorado Independent, Houston-based Anadarko Petroluem now says it may be sitting on nearly 1 billion barrels of shale oil along the Colorado Front Range.

But for now, the pace of Niobrara shale oil production in Wyoming is considerably slower. A look at the Baker Hughes rig count iPhone app this morning indicates that rigs are clustered in Colorado’s Weld County, compared to one rig drilling for oil in southeast Wyoming. However, in the southern Powder River Basin there are about 13 rigs drilling for oil and four drilling for natural gas.

In fact, a look at horizontal well permits issued by the Wyoming Oil and Gas Conservation Commission year-to-date indicates that producers are focusing more on the Niobrara, Turner, Sussex, Frontier and Parkman formations in the southern Powder River Basin than the Niobrara in the southeast corner of the state. The OGCC issued a total 457 horizontal well permits in Johnson, Campbell and Converse counties. That compares to a total 247 horizontal well permits in Goshen, Laramie and Platte counties.

If successful, those new wells in the Powder River Basin will have relative access to an old network of oil gathering lines and to the Belle Fourche and Bridger pipelines, which converge near Guernsey and take crude east.

— Dustin Bleizeffer, WyoFile editor-in-chief, has covered Wyoming’s energy industry for 13 years. He can be reached at 307-577-6069 or dustin@wyofile.com.

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Published on November 15, 2011

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