WexPro addresses gas pricing strategy and drilling plans amid market volatility

In a recent Technical Conference held on February 14, 2025, in Utah, discussions centered on the future of natural gas drilling programs and their implications for local residents. The meeting highlighted the challenges posed by volatile natural gas prices and the potential impact on service costs for consumers.

One of the key topics was whether Wexborough could maintain its drilling program to provide gas at or below the five-year forward price curve. The company acknowledged that while current market conditions, with prices around $3.85, allow for more inventory, the reduced allowed rate of return has significantly influenced their operations. This adjustment, stemming from a previous stipulation, has raised concerns about the sustainability of providing cost-effective gas to residents.

Another important point raised was the management of operational costs. Wexborough confirmed that there would be no increase in headcount or incremental man hours associated with their drilling activities. This decision is expected to help control costs, as the company will continue to rely on existing partnerships for operational support, ensuring that production levels can be maintained without additional financial strain on the workforce.

The conference also addressed the risks associated with drilling, particularly regarding dry holes. Each party involved in the drilling operations bears the risk proportionately, which could affect future investments and operational decisions. The discussions emphasized the importance of collaboration and transparency among stakeholders, particularly with the hydrocarbon monitor, which reviews and advises on drilling plans.

Looking ahead, Wexborough faces critical decisions about its pricing strategy. The company indicated that if the cost of service exceeds market prices, particularly after 2038, it may need to reconsider its approach to gas sales. This could have significant implications for ratepayers, who may find themselves paying more for gas than the prevailing market rates.

As the community navigates these developments, the outcomes of this conference will be closely watched. Residents are encouraged to stay informed about how these decisions will affect their energy costs and the overall economic landscape in Utah. The ongoing dialogue between Wexborough and regulatory bodies will be crucial in shaping a sustainable energy future for the region.