Reported by Staff

For the first time in more than a decade, natural gas production in the industry’s top producing state declined.

An economics professor at UW told AP that reduced demand made the difference in the sector for 2009; not surprising to anyone, of course, given the deep economic recession. Industrial demand for natural gas production is way down, according to Rob Godby, which, in turn has upped the number of unemployed workers in hard hit local communities in gas rich areas of the state.

Gas production in Wyoming has steadily increased from 1998 through 2008, which helped the state generate billion-dollar budget surpluses.

According to the Wyoming Oil and Gas Conservation Commission, the state produced about 2.1 trillion cubic feet of natural gas through September of 2009,  which would project out to a drop of 9 percent from 2008’s record 2.3 trillion cubic feet if the trend continues. The Wyoming Oil and Gas Conservation Commission has yet to release the full year’s final figures.

The industry-wide drop in gas pricing during the last 15 months has also contributed to the sector’s problem, from a high in 2008 when prices topped $8 per thousand cubic feet to $2 per mcf last year. Prices have since stabilized at approximately $5.25 per mcf. But with gas providing nearly 60 percent of severance taxes in a minerals-rich state, economists have had to keep revising their projections downward.

The Wyoming office of the U.S. Bureau of Land Management reports that it processed fewer drilling permit applications in 2009 — 2,162  last year, down from 3,681 in 2008 and the lowest number since 2003. For Wyoming communities that depend on O&G for much of their employment needs, the reduced drilling activity means fewer jobs, as well as tax revenue, as much as a 30 to 40 percent drop in some places.