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Wyo drilling rig count triples during Biden leasing pause

File Photo; Trevor T Trujillo, Cap City

 Angus M. Thuermer Jr.WyoFile

The number of rotary rigs drilling for oil and gas in Wyoming tripled since President Joe Biden announced a pause on leasing federal minerals for development more than five months ago.

Oil and Gas companies were operating five rigs in Wyoming the week of Jan. 29 when Biden announced a pause to review oil and gas leasing policies and royalty rates. This week, drillers, roughnecks and tool pushers were staffing 15 rotary rigs, according to Baker Hughes, a leading energy technology company.https://14486f100d0cf0384cff8f4bc8ac8df1.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

During the ongoing pause, the Wyoming Oil and Gas Conservation Commission has granted 1,984 drilling permits to energy companies, according to commission records. That’s almost double the 1,059 issued during the same five months — February to June — in 2020.

The activity somewhat erodes fearful statements exclaimed by the energy industry, its supporters and communities reliant on extraction that followed Biden’s executive order in January.

The Bureau of Land Management stopped at least two scheduled lease sales in Wyoming this year, sales that historically have earned Wyoming millions of dollars earmarked for education and other services.

But the industry has ample federal leases to develop, according to a 41-page report by the Conservation Economics Institute. The Natural Resources Defense Council funded the study, which was endorsed by various conservation groups, including Wyoming’s Powder River Basin Resource Council.

The CEI report downplays the importance of federal land development, which it says accounts for only 6% to 8% of domestic oil and gas production respectively.

Further, of hundreds of counties in the Intermountain West, Wyoming has nine of the 15 with the highest number of federal leases sold in the last five years. Wyoming has enough untapped, leased federal property to sustain drilling for 67 years, the CEI report states.

“This is indicative that in the short term, change in federal leasing is not likely to have much of an impact on oil and gas employment,” said Evan Hjerpe, director of the research institute. “Wyoming has almost 5 million acres of non-producing federal leases, which allows for ample opportunity for future development.”

Delegation pushes development

Hjerpe’s report has failed to convince Wyoming’s federal delegation that all is fine in the oil patch. U.S. Sen. Cynthia Lummis this week called for her proposed prohibition on leasing moratoria to be included in Democrat’s $3.5 trillion reconciliation package.

Biden’s pause, since declared illegal by a judge, is “stifling Wyoming and America’s own domestic production of oil and gas and empowering OPEC,” Lummis wrote on Twitter. She called the pause a “ban,” saying it would increase reliance on energy from foreign entities, “particularly from Russia and the Middle East, where energy is produced without the environmental protections that the United States has in place.”

The Lander BLM office proposes to withdraw about 5,000 acres of public land from attempts to mine for gold, gypsum and other minerals, in order to protect the Johnny Behind the Rocks mountain biking recreation area. (courtesy of Bob Wicks/BLM)

U.S. Sen. John Barrasso and Gov. Mark Gordon have endorsed Lummis’s concept and U.S. Rep. Liz Cheney last month also pushed for development. At a gathering of House Republicans, she introduced Jonah Energy’s vice president for government and regulatory affairs, who said higher royalty rates that could result from Biden’s review would harm Wyoming.

“Any significant increase or change in royalty rates … could be devastating,” Paul Ulrich said. Operators like Jonah that drill on federal lands are at a competitive disadvantage because of time-consuming regulations, distance from markets and other factors, he said.

The oil and gas industry recently touted its own new analysis showing that Wyoming’s oil and gas industry supports 68,600 jobs in the state. Sponsored by the Petroleum Association of Wyoming and the American Petroleum Institute, the 134-page report outlines what’s at stake “if policymakers restrict access to affordable, reliable energy,” API president and CEO Mike Sommers said in a statement.

Industry employment amounts to between 14% and 17% of the jobs in Wyoming, API says. Oil and gas production generated $1.5 billion in labor income in 2019, according to the organization.

The political jousting over the leasing pause and potential reforms began before Biden even took office, with Wyoming legislators commissioning an analysis by University of Wyoming professor Tim Considine on potential Biden actions. Considine estimated Wyoming would see $2.3 billion in investment losses from 2021-2025 were a moratorium to extend across those.

CEI wrote that the professor’s conclusions “are not credible.” Considine did not respond to a request for an interview.

His work “is fraught with methodological issues that critically undermine the validity of the study,” CSI wrote. “[T]he Considine study is also lacking in methodological transparency, making it irreproducible,” CEI stated. Reproducibility is an essential element of scholarly work, the consultant said.

Considine’s work also has been undercut by Laura Zachary, an economic and policy analyst. She wrote that the professor’s findings “quickly unravel when we take a look at a number of highly flawed assumptions.” 

Wyoming’s nine counties

In the five years from 2016 to 2020, nine Wyoming counties — Campbell, Johnson, Big Horn, Niobrara, Converse, Natrona, Fremont, Sublette and Sweetwater — ranked among the 15 counties in the Intermountain West where the federal government auctioned the most leases, according to CEI.

“More than 2,500 leases were sold in Wyoming over the last five years,” Hjerpe said. They cover more than 5 million acres, an area larger than Connecticut and spanning more ground than leases in four other Intermountain West states combined, he said.

Borne on two flatbed rail cars each, wind turbine blades pass through the historic coal mining town of Rock Springs in March, 2019. (Andrew Graham/WyoFile)

The leasing pause may not affect counties with numerous federal leases, Hjerpe said. “Wyoming has almost 5 million acres of non-producing federal leases, which allows for ample opportunity for future development.”

Conservationists don’t see a loss coming from any potential curtailment of oil and gas leasing, according to the CEI report and a press call. Some rural communities are shifting from dependence on oil and gas to instead accommodate higher-end service sectors like financial consultants, the report states.

Environmental values are key to the lifestyle of such professionals, CEI states, but large amounts of leasing and development can be a drag on any transition a community might be making.

The institute found an inverse relationship between “amenity migration” and oil and gas leasing. Census data from 1980 to 2010 show that “the same areas that are leasing the most federal lands are also struggling to retain residents,” Hjerpe said.

“Oil-and-gas-dependent counties repel migrants over the long term,” Hjerpe said. “With oil and gas production … we have boom and bust cycles, and that really leaves … rural communities, worse off, socially and economically in the long run.

“The profits are leaked out of the region,” to large, private companies, he said, and transient workforces are a hallmark of industry-dependent communities. 

Migrants are not looking to move to where there’s a large reliance on extractive industries, he said. “Research has also indicated that oil and gas can exclude other development options — limit your recreation opportunities.”

A one-year leasing pause would keep 1.4 million acres nationwide from being leased and developed, the report says.

“The resulting improvement in societal welfare, or public willingness-to-pay for conservation …  is estimated to be at least $3 billion using benefit transfer methods,” the report says.


This article was originally published by WyoFile and is republished here with permission. WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.


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