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Energy
Powder River Basin inspires 10,000-permit drilling battle from oil and gas companies

In the coal-bed methane days, then-engineer Mark Watson would arrive at the Wyoming Oil and Gas Conservation Commission to find boxes stacked with drilling applications and a box of thank-you donuts from the operators.

But the volume of applications for permits to drill over the last year — about 10,000 — has eclipsed even the coal-bed methane days.

The agency can’t process that many permits even if it was the sole job of the 44 people working for the commission, and Watson doesn’t want to hire a slew of new engineers to do the job, he said. For one, there is a hiring freeze in the state. For another, the prospect of laying off state employees after the blaze dies down is not appealing. For Watson, now the supervisor of the state agency that regulates oil and gas development, this too shall pass.

What’s happening in Wyoming is that operators are jockeying for position, particularly in the Powder River Basin. The play started to attract this kind of activity in 2013 and 2014, but the bust in oil prices slowed down what was happening in the basin. With oil prices steadily improving, operators are back at it — not because they are all ready to drill, but because they want to get control.

Wyoming has a first-come, first-served approach to “drilling and spacing units.”

“We’ve always had the attitude in the state, whoever wants to drill, whether you have 5 percent or 95 percent (ownership), you should be able to drill,” Watson said.

That means the company that gets drilling permits first controls a drilling and spacing unit that may have a handful of other owners. That can allow a minority owner to subsidize his drilling plan with the majority owner’s money, simply because his application to drill a well was approved first.

“If you’re going to drill you want to be the king,” Watson said. “You are in control of how the well is drilled, how the well is completed, then send all your invoices to the non-operator working interest owners.”

Companies like EOG Resources are filing applications for permits to drill nearly everywhere they have a land interest, from the Colorado border to the Montana line, he said.

There are pros and cons to this system, and right now a con is that it’s flooded the Wyoming Oil and Gas Conservation Commission with thousands of permits, many for wells that no one is trying to drill.

The bottleneck inspired a new policy from Watson to bring those ready to start drilling to the front of the line for permits.

“You don’t want to spend all your time on what I call “fictitious permits,” he said. “Why do we have the engineers and the technical staff working on it if maybe it doesn’t get drilled?”

It’s a light-handed approach. The commission could seek to change its rules and control the land battle that’s taking place, but that would unfairly change the game for industry.

“All these companies have business plans based on the rules in Wyoming,” he said. “I knew I had to be careful to (write) a policy that was going to benefit the staff and not hurt industry.”

Oil and gas companies are not of one mind about the new policy from the OGCC, said Bruce Hinchey, president of the Petroleum Association of Wyoming.

The traditional way of jockeying for operatorship may not work quite as well with the priority list the OGCC is using.

“They’ll sit on it for two years, and if that well hasn’t been drilled then you have to reapply,” he said. “That’s another bunch of money you’ve got to expend.”

So the influx of applications to drill doesn’t mean 10,000 new wells are about to be drilled in the Powder River Basin, but it is a clue into what’s happening in that area.

The Powder is moving away from being a risky play to a known one.

Generally, a play starts out with more companies that are smaller, largely funded with private equity dollars. They take on the big risks and they go exploring. As they figure out the play — and in the Powder River Basin that involves stacks of oil-rich rocky layers —they improve drilling. In the last few years, companies big and small have realized not just how well horizontal drilling works in the Powder, but also how to apply it and how to frack those wells.

“The wells are getting better (in the Powder),” Watson said. “At some point it will get as good as it gets and then we’ll see consolidation.”

The smaller guys will either sell to majors or make a public offering.

For some the Powder is at a tipping point, for others somewhere on the upward curve, approaching a tipping point. In any case, the flood of permits, Watson hopes, will come to an end.

“I don’t see this fight for operatorship going on for years and years and years,” he said.


State-and-regional
Animal cruelty
Critics say Wyoming's animal protection laws are weak

On a weekday morning last month at the Pet Ring Foundation, a wrinkly-faced English bulldog ignored everyone else in the room as he tenaciously chased a tennis ball across the Casper shelter’s blue floors.

“Buddy loves his toys,” said the shelter’s director Preston Pilant, as he watched the sandy-colored dog bound around the room.

It seems like a harmless enough habit, but Buddy’s passion for playing almost got him killed last year. The pooch, who was walking alongside his owner Lucy at a park in north Casper, dropped a toy he was carrying and started to play with it on the street.

A nearby driver grew impatient as Lucy tried to pull the heavy canine out of the road. Pilant said the man intentionally ran over Buddy, then put his car into reverse and hit the dog again before leaving the scene.

Buddy panicked and ran off, but a group of Lucy’s friends — including Pilant — formed a search. Lucy eventually found her pet, who was taken for medical care and miraculously survived. But the director said it was still a horrific evening.

“Buddy is her close companion,” said Pilant, who sometimes watches the dog for Lucy. “It was hard for her to deal with [almost losing him].”

Multiple witnesses copied down the driver’s license plate and the man was later convicted of animal cruelty and sentenced to probation, said Pilant. Those who love Buddy considered the punishment a slap on the wrist.

Animal cruelty laws are “a joke” in Wyoming, said the director. Many residents consider pets to be family, he explained, yet the laws treat them as property.

“Our animal laws in general are just completely vague ... they need to be re-written,” Pilant said.

***

Pilant isn’t the only person who thinks the laws are lacking. Wyoming ranks near the bottom nationally in terms of animal rights, according to two national animal rights groups.

The Animal Legal Defense Fund, a national legal advocacy organization for animals, and the Humane Society of the United States both cited Wyoming as one of the worst five states for animal protections in 2017.

It’s difficult for an offender to be convicted of animal cruelty in Wyoming because the laws are ambiguous, explained Lisa Kauffman, the society’s Idaho director who’s temporarily filling in for Wyoming. Prosecutors don’t want to waste time pursuing a defendant when their attorney will likely find “wiggle room” and avoid a conviction.

Even those who aren’t concerned for animals should still pay attention to animal cruelty because its a red flag, according to Kauffman.

“People who become serial killers or who move into domestic violence or crimes against children — they usually start with animal cruelty,” she said, adding that the alleged school shooter in Parkland, Florida, had a history of abusing small animals.

This link has been noted by the FBI, which started keeping a database of those with animal cruelty convictions about two years ago, she added.

While Kauffman would like to see the state create clearer laws and stricter penalties, she also acknowledged that Wyoming is already struggling with overcrowded prisons and doesn’t need any more inmates. The Humane Society is therefore encouraging lawmakers to increases the fines and require mandatory counseling.

“Counseling can get that person the help they need,” she said.

The link between animal abuse and harming humans is also concerning to Rep. Eric Barlow, R-Gillette.

“Information I have heard from domestic violence prevention groups seem to indicate a significant correlation between those who abuse animals and go on to abuse people,” he said in an email sent to the Star-Tribune this week.

Barlow was among the legislators who recently supported a bill that would have raised the maximum fines for those convicted of an initial offense of animal cruelty to $2,500, and the maximum fine for a subsequent offense to $10,000. Cruelty to animals is now a misdemeanor punishable by a maximum fine of $750 for a first-time offense and $5,000 for subsequent convictions.

The bill was sponsored by Rep. Mike Gierau, D-Teton County, who said his constituents asked him to increase the fines last year after a local resident was filmed abusing a horse.

The bill failed during the last legislative session, but Gierau said he’s determined to try again next year.

Lisa Robertson, the co-founder of Wyoming Untrapped, was among those who asked the representative to work on strengthening penalties.

“The animals in our state suffer silently while we sit back and do nothing ... I want to see leadership take a step and acknowledge that there needs to be change,” she said.

Others think existing laws are already enough.

Representative Roy Edwards, R-Campbell County, told the Star-Tribune that he voted against the bill because he does not believe that animals are equal to humans.

“There are already enough penalties … God left [animals] on this earth for us to take care of, not for them to dominate us.”

***

Gierau said he plans to work with those on both sides of the issue throughout the next year. Some ranchers and farmers have recently reached out to the representative and explained they’re worried that strengthening animal protections will harm their businesses.

“People get defensive because they feel that their livelihood is being attacked,” he said, adding that he understands and wants to work together on a solution.

Ken Hamilton, the executive vice president of the Wyoming Farm Bureau Federation — the state’s largest organization of farmers and ranchers — said he doesn’t necessarily object to strengthening penalties for animal abusers.

“We want to make sure that it’s narrowly enough written that it doesn’t have an impact on the agricultural community,” he said.

Hamilton recalled that some of his members were told they’re cruel to animals because they keep livestock outside in the winter.

“Sheep have three inches of wool so they don’t get cold like a person ... People do have a tendency to sometimes anthropomorphize animals and I think you have to be careful that you don’t do that,” he explained.

But Hamilton said he thinks a middle ground can be reached.

Gierau told the Star-Tribune that he wasn’t discouraged by his bill’s defeat this past session. Meaningful legislation takes time and he considered this a strong first step.

“I hoped it would open up a discussion — and it has.”


Washington
AP
Pompeo: US must give Kim security

WASHINGTON — Secretary of State Mike Pompeo said Sunday that the United States will need to “provide security assurances” to North Korea’s Kim Jong Un if the adversaries are to reach a nuclear deal, describing the stakes of President Donald Trump’s upcoming summit with Kim.

Pompeo met with Kim last week in North Korea, helping set the stage for Trump’s historic summit with the North Korean leader in Singapore on June 12.

Trump’s goal is for North Korea to get rid of its nuclear weapons in a permanent and verifiable way. In return, the U.S. is willing to help the impoverished nation strengthen its economy.

Pompeo was asked on “Fox News Sunday” whether the U.S. was in effect telling Kim he could stay in power if he met the U.S. demands. Pompeo said: “We will have to provide security assurances, to be sure.”

The top U.S. diplomat did not elaborate, but his comment could refer to the type of assurances North Korea has sought in the past. A statement issued during international negotiations with North Korea in 2005 over its nuclear weapons development said the “United States affirmed that it has no nuclear weapons on the Korean Peninsula and has no intention to attack or invade (North Korea) with nuclear or conventional weapons.”

The North has said it needs nuclear weapons to counter what it believes is a U.S. effort to strangle its economy and overthrow the Kim government.

“Make no mistake about it, America’s interest here is preventing the risk that North Korea will launch a nuclear weapon into L.A. or Denver or to the very place we’re sitting here this morning,” Pompeo said from Washington. “That’s our objective, that’s the end state the president has laid out and that’s the mission that he sent me on this past week, to put us on the trajectory to go achieve that.”

Pressed in a separate interview on whether the U.S. would seek regime change, Pompeo said “only time will tell how these negotiations will proceed.”

“The president uses language that says ‘we’ll see,’” Pompeo told CBS’s “Face the Nation.” ‘’The American leadership under President Trump has its eyes wide open.”

North Korea said Saturday that all of the tunnels at the country’s northeastern nuclear test site will be destroyed by explosion in less than two weeks, ahead of Kim’s summit with Trump. Observation and research facilities and ground-based guard units will also be removed, the North said. Pompeo praised it as “one step along the way.”

John Bolton, the president’s national security adviser, described the types of steps that North Korea would need to take as part of a denuclearization process, including the potential involvement of a processing center in Tennessee.

“The implementation of the decision means getting rid of all the nuclear weapons, dismantling them, taking them to Oak Ridge, Tennessee,” Bolton said in an interview with ABC’s “This Week.” ‘’It means getting rid of the uranium enrichment and plutonium reprocessing capabilities,” adding the process would also need to address North Korea’s ballistic missiles.

“I don’t think anybody believes you’re going to sign the complete ending of the nuclear program in one day. But we are also very much interested in operationalizing the commitment as quickly as possible,” Bolton said.

Bolton said in an interview with CNN’s “State of the Union” that North Korea should not “look for economic aid from us. I think what the prospect for North Korea is to become a normal nation, to behave and interact with the rest of the world the way South Korea does.”

“The prospect for North Korea is unbelievably strong if they’ll commit to denuclearization. That’s what the president is going to say,” he said.

Pompeo said private-sector Americans could help rebuild North Korea’s energy grid and develop the country’s infrastructure. He described the possibility of American agriculture being used to “support North Korea so they can eat meat and have healthy lives.”

South Korea has said Kim has shown an interest in dealing away his nuclear weapons in return for economic benefits. But it remains unclear if Kim would ever fully relinquish the weapons he probably views as his only guarantee of survival.

North Korea for decades has been pushing a concept of “denuclearization” that bears no resemblance to the American definition. The North has vowed to pursue nuclear development unless Washington removes its 28,500 troops from South Korea and the nuclear umbrella defending South Korea and Japan.

The White House has said withdrawal of thousands of U.S. troops from South Korea is “not on the table.”


Amr Nabil 

Pompeo


Education
Natrona County School District receives OK to move forward with sale, demolition of four buildings

The Natrona County School District has received the state’s OK to move forward with selling or disposing of a handful of buildings, including Grant and Mills elementary schools.

The School Facilities Commission approved the district’s request at its meeting last week, said spokesman Anthony Hughes. In addition to Grant and Mills, the district plans to dispose of North Casper Elementary and its special education building, the staff at which have been relocated to the main district building in west Casper.

The minutes from the meeting are not available yet, and a message left for district officials was not returned Friday.

Per district policy, each building will be appraised twice, and those assessments will be averaged.

Dennis Bay, the district’s executive director of business services, previously said that only Grant Elementary has been appraised. The average was roughly $350,000, he said. Similarly, Grant has received “quite a bunch of interest” from prospective buyers, he said.

Casper City Councilman Dallas Laird confirmed that he had approached district officials to inquire about the building. He told the Star-Tribune he was interested in buying it and donating it so the building, which is off of 15th Street near the YMCA and Casper College, could be used as a homeless shelter.

Grant and Mills elementary schools both closed last June. North Casper had previously closed but was used as a swing space for Midwest students in May and June 2016. The board voted to close and dispose of the special education building in October.

Mills Elementary has found itself in a tug of war between the school district and the town for which it was named. Mills Mayor Seth Coleman previously said that Mills residents near the school had rejected district attempts to purchase a street and have the area rezoned. The street belongs to the town, while the building belongs to the district.

After the district’s board voted in October to close Mountain View — the last school near Mills — the town filed a lawsuit against the district. Among other things, the suit alleged the district had failed to hold a public hearing about the sale or disposal of the buildings. The suit was dismissed in April.

The district did eventually hold a public hearing about the disposal of the buildings, though officials there have maintained that it had nothing to do with the lawsuit. At that meeting, Mills Mayor Seth Coleman accused former board chairman Kevin Christopherson of trying to bribe the town by asking them to buy Mills Elementary in exchange for the speedy reopening of Mountain View, should circumstances in the district change.

Christopherson acknowledged sending the email but said it was an attempt to make a deal, not a bribe.

In any case, the future of Mills Elementary appears to be in limbo. There had previously been rumors about the school’s next use, including becoming a day care or a new Boys and Girls Club.

Last year, the district sold the Fairgrounds Center and the old Roosevelt High School building. District officials have acknowledged that they likely didn’t hold a hearing on those sales, either, and it’s unclear if the School Facilities Commission approved their disposal. In the commission’s agenda and meeting minutes, there’s no mention of the buildings or the district seeking approval to dispose of them in the months before or after their January 2017 sales.