US Powder River Basin Shale Market Size, Share & Trends Analysis and Forecast 2021-2025
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The Powder River Basin is predominantly located in the northeast of Wyoming and southeast Montana. In 2019, production from the shale reached almost 213 thousand barrels of oil per day (mbd) and 992 million cubic feet per day (mmcfd) of natural gas, which places Powder River in the Top 10 resource plays in the US by total production in 2019. Before the Covid-19 pandemic caused operators to reduce the spending as well as production, crude oil supply in the play was consistently holding an upward trend with 3% increase on a monthly basis. However, in 2020, as in other plays in the country, crude oil production plummeted by almost 30% in 2020, while natural gas supply fell in 2020, which is a 28% drop from the same year. However, the production somewhat recovered.
What are the market dynamics of the commodities produced in the Powder River Basin?
The outbreak of the COVID-19 disease in China and its rapid spread around the world in 2020 brought the worldwide movement of people and goods to a halt. This led to a crash in oil prices and thus, the drilling activity across the US shale plays slowed down. The uncertainty surrounding the crude demand recovery from the pandemic led operators in the Powder River Basin to scale back their capital investments and re-adjust the production output.
However, the Powder River basin was relatively less affected by the downturn when compared to other major plays. Indeed, there was a 30% drop in crude oil and natural gas output in Powder River Basin in May 2020, but production nearly rebounded a month later to pre-pandemic levels. Nevertheless, the growth rate observed during the period was slower compared to that of 2019.
What are the drilling activities taking place in the Powder River Basin?
During January 2019 – August 2021, there were approximately 1,336 new permits that were being issued cumulatively for wells in the Powder River Basin. Permit activity declined in 2020 owning to the COVID-19 outbreak. The oil price crash due to global lockdowns made shale drilling uneconomical. Thus, permit applications fell in H1 2020 by 29% annually with only 223 new permits issued to operators in the Basin. This trend continued during H2 2020, with new permit activity further dropping by 71% on an annual basis to 119 permits.
Despite the oil price recovery in 2021, permit activity in the Powder River Basin remained subdued in H1 2021 on an annual basis. New permit applications were down 19% over the same period last year. However, when compared with H2 2020, permit activity was up by 51%. This upward trend continued with the issuance of 88 new permits.
What are the recent merger and acquisitions in the Powder River Basin?
Merger and acquisition activity in the Powder River Basin is on a recovery path after the industry slowdown in 2020. The fall in demand and crude oil price crash left many operators in the Powder River Basin in distress. Hence, deal activity in the Basin is yet to gain momentum in terms of a number of transactions, as operators continue to observe capital discipline despite notable improvement in energy prices.
In 2020, Powder River Basin recorded four deals, of which three deals were announced after the COVID-19 induced downturn. as demand picked up during the second half of 2020, operators capitalized on the low valuations to acquire other drillers in the US Lower 48. Thus, some operators also acquired companies in the Powder River Basin to expand their positions. In November 2020, Contango Oil & Gas announced the acquisition of assets in Wyoming and Montana for US$58 million. In December 2020, Canadian Overseas Petroleum announced the acquisition of Atomic Oil & Gas for US$54 Million. Both the deals were completed in 2021.
What are the major counties producing gross crude and condensate in the Powder River Basin in 2020?
In 2020, Converse county in Wyoming was the largest producer of crude oil and condensates in the Powder River Basin, followed by Campbell, Natrona, Powder River, and Johnson. Converse county from Wyoming was the largest producer of natural gas, followed by Campbell, Johnson, and Powder River.
Major counties in Powder River Basin, by production of crude oil and condensate
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Who are the major players in the Powder River Basin with a prominent presence?
In 2021, Occidental Petroleum had the highest leasehold by net acres in the Powder River Basin, followed by EOG Resources, Devon Energy, Chesapeake Energy, and Vermilion Energy. EOG Resources is one of the largest producers of crude oil and natural gas from this play.
Occidental Petroleum led the market with a strong financial standing followed by EOG Resources Inc, Devon Energy Corp, Continental Resources Inc, and Vermilion Energy Inc. Most of the companies in the Powder River Basin had a profitable first quarter mainly due to a strong crude oil price level. The major leasehold of the company is situated in the Converse County of Wyoming state.
Major players in Powder River Basin, by net acreages
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Market report scope
Production Capacity of Crude Oil and Condensate Production (Year – 2020) |
179.2 mbd |
Production Capacity of Natural Gas Production (Year – 2020) | 906.4 mmcfd |
Growth Rate of Crude Oil | CAGR of >6% from 2021 to 2025 |
Base Year for Estimation | 2020 |
Market Commodities | Crude Oil and Natural Gas |
Forecast Period | 2021-2025 |
Key Players | Occidental Petroleum, Continental Resources, Vermilion Energy, Chesapeake Energy, Devon Energy and EOG Resources. |
Scope
The report analyses the crude oil and natural gas appraisal and production activities in the Powder River Basin in the US. The scope of the report includes:
- Comprehensive analysis of crude oil and natural gas historical production and outlook during 2018-25
- Detailed information on impact on well development, permits, and deals against the backdrop of the COVID-19 pandemic
- In-depth information of well productivity and well completion parameters across Powder River Basin in the US
- Analysis of top companies’ net acreage, planned capital expenditure in 2021, as well as crude oil and natural gas reserves and production stats as of 2020
- Up-to-date information on major mergers and acquisitions across the Powder River Basin between 2019 and 2021
Reasons to Buy
- Develop business strategies with the help of specific insights into the Powder River Basin in the US
- Plan your strategies based on economic viability and expected developments in the Powder River Basin
- Keep yourself informed of the latest M&A activity across the Powder River Basin
- Identify opportunities and challenges across the Powder River Basin
Table of Contents
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Frequently asked questions
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What is the production capacity of crude oil and condensate in the Powder River Basin, in 2020?
In 2020, the Powder River Basin produced 179.2 mbd of crude oil and condensate.
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What is the production capacity of natural gas in the Powder River Basin, in 2020?
In 2020, the Powder River Basin produced 906.4 mmcfd of natural gas.
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What is the growth rate of crude oil in the Powder River Basin during the forecast period?
The crude oil in the Powder River Basin is projected to grow at a CAGR of more than 6% during the period 2021-2025.
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Who are the major key players in the Powder River Basin by financial standing?
In 2021, Occidental Petroleum Corp led the market with a strong financial standing followed by EOG Resources Inc, Devon Energy Corp, Continental Resources Inc, and Vermilion Energy Inc.
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