Wyoming’s oil producers are feeling the pressure.

The world wants more oil. It wants that oil now. And local companies want to help supply it.

Even in the best of times, though, upping output takes a while.

“You can’t just go and open a valve and start producing more oil,” said John Fanto, manager of True Oil LLC, a larger private company based in Casper.

These are not the best of times for the U.S. oil industry.

It’s been two years since COVID-19 lockdowns flattened oil demand and sent prices tumbling below zero. The oil companies that survived the crash cut way back on production. Prices recovered along with demand, but the return of production proved much more gradual.

Until the Russian invasion of Ukraine in late February caused oil prices — and interest in drilling — to skyrocket.

Wyoming’s operators are actively trying to secure the equipment and crews to drill on already permitted sites and are seeking out new prospects for future years.

But “it’s not the robust activity that we saw in the past, before COVID,” said Steve Degenfelder, land manager for Kirkwood Oil and Gas, a small private company based in Casper.

Last February, a year before the invasion, U.S. oil prices had newly rebounded to above $60 per barrel — about what they were before the pandemic. The number of drilling rigs being used in Wyoming to bore new wells, an indicator of industry activity, still sat at a disappointing four.

By year’s end, oil cost upwards of $75 per barrel. The state’s rig count had risen to 15 — still less than half of what it was a few years earlier.

This week, oil averaged about $100 per barrel, down from a peak above $120 per barrel right after the invasion. The rig count has only gone up by one.

“Obviously, companies want to drill more wells, but the service side of the business has been very decimated,” Degenfelder said. “It is recovering, but it will not recover overnight.”

The same supply chain troubles impeding imports of everything from car microchips to matzo also created obstacles for oil producers. Components made of certain materials, like steel, are more expensive and can take months longer to arrive.

“If there’s a disruption in the timeline, of course, it throws everything off,” Fanto said.

For True Oil, the wait for casing — the steel pipes used to stabilize wells — has quadrupled. Instead of ordering the pipes a month or two in advance, “we’re hoping that they’ll get here in time to start to work six months from now,” Fanto said.

Layoffs during the downturn, meanwhile, left companies competing and paying more to hire a smaller number of qualified workers to operate drilling rigs, which are themselves unusually hard to come by.

Every new well is a multi-million-dollar investment, and those extra costs have the potential to flip the economics of a project from favorable to not. It’s an especially risky gamble for small companies with limited financial reserves.

“In this pricing environment, companies are able to get their return on their investment so much faster,” Degenfelder said, that they can justify paying more to drill right now.

Because new wells still take months to complete (and starting from scratch can take years), companies also have to be confident oil prices will stay high enough for long enough.

Chuck Mason, an economics professor at the University of Wyoming, said many of the state’s wells “tend to produce the bulk of the resource within the first many months, certainly the first year,” and that for wells coming online in the near future, “the chances of them having really low prices are basically zero.”

Wyoming’s companies are doing their best to bring new production online before prices go down.

True Oil hopes to drill up to 13 wells this year — a solid number for the company. Fanto expects the first wells to start producing by mid-summer at the earliest. Others won’t be complete until at least fall.

To Americans already losing patience with high gas prices, fall feels unacceptably far away. But the companies actively trying to increase production feel like they’re being blamed for problems that are beyond their control. The tensions have given rise to partisan finger pointing: The Biden administration has accused companies of prioritizing profits over the public interest, while the oil industry insists that the administration is trying to make it as hard to drill as possible.

Experts aren’t sold.

“There’s a lot of overreaction here, probably on both sides,” Mason said.

At the crux of the debate sits the conspicuous absence of quarterly federal oil and gas lease sales under the Biden administration. Federal officials want the industry to start drilling on some of its more than 9,000 unused but permitted federal leases. According to an analysis by Taxpayers for Common Sense, a government advocacy nonprofit, over 2,000 of those unused drilling permits are located in Wyoming, while about 5,100 of the state’s federal leases — 41% of its total leases — sit idle.

But companies say that’s not the deal they signed up for.

The Wyoming Oil and Gas Conservation Commission divides drillable parts of the state into 640- and 1,280-acre chunks of land called drilling and spacing units. These units often extend across multiple properties, and companies must hold approval from all mineral owners before they can drill, though it’s possible for the state to authorize the extraction of minerals owned by nonparticipating private individuals through a process called pooling.

It’s illegal in the federal government to pool.

Many companies, including Kirkwood Oil and Gas, factor the expectation of more federal lease sales into their planning process, piecing future well sites together one leased parcel at a time. If those lands can’t be leased, Degenfelder said, “it really destroys the value of any projects that we were putting together.”

Companies usually prefer having more space to drill, not less. If an unleased part of a drilling and spacing unit owned by the federal government is not made available, it leaves the rest of the leases less economically attractive and more challenging for a company to permit.

“That’s a big challenge for us right now,” Fanto said. “A lot of our projects involve federal leases, because Wyoming has a lot of federal land.”

Fanto isn’t thrilled about the heightened uncertainty of drilling on federal lands, but uncertainty alone isn’t enough to dissuade True Oil from pursuing the state’s best reserves.

“We will have to evaluate them each individually,” Fanto said. “And likely, if it’s a good enough prospect, we will try to lease those federal minerals, because we have no other option. We have to lease them to be able to do the project.”

Degenfelder feels similarly. In Wyoming, where half of the land and even more of the minerals are managed by the federal government, federal leases are hard to avoid.

But Howard Cooper, president and CEO of Three Crown Petroleum, a small private company that’s based in Colorado but also operates in Wyoming, isn’t taking any chances — at least under the current administration.

“I’m not drilling where there is federal land,” he said.

To him, no resource is worth the risk.

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