Oil companies that operate in Wyoming report that they are holding off on hydraulic fracturing and are waiting to complete newly drilled oil wells to save money during low oil prices.
Oil prices are down around $50 a barrel, or roughly half the price a year ago. The hydraulic fracturing process of pumping pressurized water, sand and chemicals into wells to crack open deposits can add significantly to the cost of developing a deep oil well.
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EOG Resources, headquartered in Houston, announced that it plans to delay fracking 285 wells. Chesapeake Energy, based in Oklahoma City, likewise plans to wait until 2016 to complete about 100 wells, while Devon Energy, also based in Oklahoma City, is cutting back on fracking crews in Texas, the Casper Star-Tribune reports (http://bit.ly/1AC5Gig ).
Oil wells often hit peak production soon after they are drilled. It makes sense for companies to wait to complete wells after oil prices are higher, said analyst James Williams with WRTG Economics in London, Arkansas.
"Would you rather complete a 1,000-barrel-a-day well and get $50 a barrel or would you rather wait a couple months and get $70 a barrel?" Williams said. "That's basically what these guys are doing."
The trend has important implications in Wyoming, where about 75 percent of oilfield employment is in services such as fracking.
Oil service giants Baker Hughes, Halliburton and Schlumberger also have announced significant cutbacks in their respective payrolls in recent months.
"It appears they're trying to hold their costs down at this point," said Mike Colling, a Converse County commissioner and owner of an oilfield service firm, IBC Construction. "Things have slowed down considerably."
Information from: Casper (Wyo.) Star-Tribune, http://www.trib.com