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Wyoming producers getting low prices Combination of short-term refining capacity, lack of pipelines and oil coming in from Canada reduce value of crude in Rockies Dan Lewerenz Associated Press Writer
High prices for Wyoming’s coal and natural gas are bringing billions of dollars into the state’s coffers, but Wyoming oil producers aren’t getting as much for their product as producers elsewhere in the country, Gov. Dave Freudenthal was told March 27 at a meeting of the Wyoming Pipeline Authority.
Low prices have plagued Wyoming’s natural gas industry for years, mostly because the state lacks pipeline capacity to move the gas. That’s one of the reasons Wyoming is so aggressively pursuing new gas pipeline projects.
But in a telephone interview with The Associated Press, Freudenthal said a combination of short-term and long-term factors were affecting the price of Wyoming oil.
“It appears to be more complex than the natural gas differential that we’ve been working with,” he said, citing seasonal refining changes and increased imports of Canadian oil in addition to the usual shortage of pipeline capacity.
Wyoming crude at 32% discount In a news release, Freudenthal’s office said Wyoming sweet crude was selling for $38.75 per barrel on March 1, 32 percent below the $57 per barrel that South Texas oil sold at. Prices also were lower for sour crude.
Bryan Hassler, executive director of the pipeline authority, said in a telephone interview that the easiest problem to identify — and the one that would go away quickest — was a temporary shortage of refining capacity. Several area refineries schedule maintenance for this time of year, before the big summer driving season, he said.
“As you get refining capacity coming back on, additional barrels will move through those refineries, and the law of supply and demand will dictate that prices improve,” Hassler said. “I think the most immediate effect is getting your refineries in the region back on line and at full capacity.”
Glut in Rockies But while developers are finding new ways to breathe life into Wyoming’s old oil fields, increased imports from Canada and the shortage of pipeline capacity are creating a glut in the Rocky Mountain region and driving down prices. Those issues will require longer-term solutions, Hassler said.
“The state would like to encourage additional projects like you see Anadarko doing,” he said, citing Anadarko Petroleum Corp.’s efforts to use carbon dioxide to force deep pockets of oil closer to the surface. “There are other reservoirs in the state that would most likely respond favorably to enhanced oil recovery. So what are you going to do long term as you increase production?”
In northern Wyoming, he said, one company already is working to expand a pipeline that will carry oil through Montana and North Dakota. Other new pipelines and expansions are in the works.
“We didn’t find any silver bullets,” Freudenthal said after the March 27 meeting. “Just the pipeline authority will work on it and will continue to work on it.”
Hassler said an April 25 pipeline authority meeting in Casper would focus on the crude oil situation in the Rockies.
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