February 21, 2005
Experts say energy boom could last
billingsgazette.com
Associated Press
CASPER, Wyo. - Strong prices for coal, oil and natural gas - and even the prospect for renewed uranium production - have experts wondering if, for once, boom times for Wyoming's mining and drilling industries might last awhile.
A similar boom peaked in the early 1980s and was followed by hard times.
But economists have begun suggesting that the yo-yo of Wyoming's commodities-driven economy might be at an end, and with the state left in a good spot. They point to how global demand for oil has increased 1.5 percent a year over the past five years, while production has trailed.
The imbalance caused last year's spike in oil prices to $50 per barrel.
"I'm a firm believer we are out of the severe boom and bust. We could still have minor ups and downs and market swings, but in my opinion we are never going to see oil below $35 a barrel at the wellhead in the next 20 years, or until we switch the way we travel to hybrid cars and alternative sources of energy," said Walter Werner, associate professor of finance at the University of Wyoming.
Werner said he predicted four years ago that oil would hit $50. He now has a new prediction: $80 per barrel sometime within the next 10 years.
Burgeoning worldwide demand for energy will put all of Wyoming's energy resources in high demand and create state budget surpluses of $1 billion-plus over the next five to 10 years, he said.
Such views are based in part on China's economic development. Last week, OPEC raised its forecast for rising global oil demand for 2005 from 2 percent to 2.11 percent in response to China's aggressive work to secure petroleum reserves.
China is now the world's second-largest oil consumer behind the United States.
"You couple that with the country of India, which I believe has slightly more than 1 billion people and is also beginning to be a large user of world energy, and there's just not going to be any slack," Werner said.
"What that means for Wyoming, in terms of money, in my opinion, is huge surpluses for at least a minimum of five years and possibly 10 years."
Natural gas is by far Wyoming's fastest-growing energy industry. Over the past decade, natural gas production in the state has tripled to nearly 2 trillion cubic feet annually, according to the Wyoming Oil and Gas Conservation Commission.
That's about a tenth of the nation's annual demand. And that demand is expected to increase about 35 percent over the next 20 years.
Meanwhile, Wyoming has more than 21.7 trillion cubic feet of proven natural gas reserves that have not been tapped.
A couple of possibilities could squelch Wyoming's boom. A natural gas pipeline from Alaska could dump enough gas into the lower 48 states to reduce prices. And liquid natural gas terminals allowing the importation of natural gas from overseas could do the same thing.
But those projects, if they are ever built, are still at least eight to 10 years off, and rising steel prices could push them back further, said Phillip Budzick, natural gas analyst for the Department of Energy's Energy Information Administration.
In the meantime, producers are drilling gas wells in a matter of days that pay off in a matter of months or a few years. |
