CHEYENNE — Facing opposition from the oil and gas industry, a legislator who is also a paid lobbyist for a methane farming firm has withdrawn a bill that would have benefited his company.
Senate File 51, introduced last week by state Sen. Kit Jennings, R-Casper, would have created a moratorium on the plugging of coal-bed methane wells in the state in order to promote a cutting-edge technique that creates natural gas by stimulating microbes in the coal.
At the same time, Jennings has been lobbying in Washington, D.C., on behalf of Ciris Energy Inc., one of two firms that are developing the microbial process in Wyoming.
It’s unclear whether it’s illegal for a Wyoming state legislator to introduce legislation that would benefit a company he or she works for.
Jennings himself fervently maintained that he introduced the bill only to help an industry that may bring a significant amount of jobs and tax revenue into the state.
He wouldn’t have personally benefited from the legislation, he said, and if the bill came to the Senate floor he planned to disclose his connections to Ciris and would have abstained from any vote.
Even so, Jennings said, he “wrestled” with the decision to bring the bill forward and only filed it after he couldn’t find another lawmaker to sponsor it.
A new hope for CBM
Jennings long advocated the microbial conversion process, in which nutrients are pumped underground into coal beds to feed naturally occurring microbes that eat the coal and produce natural gas. Last year, he successfully introduced legislation creating the system by which microbial conversion is regulated in the state.
Supporters hope the process could provide a new source of natural gas and unlock millions of cubic feet of gas from old or abandoned coal-bed methane wells.
Ciris Energy and Luca Technologies, the two companies that are exploring microbial conversion, are both applying to launch pilot projects in the Powder River Basin to test whether the process can succeed on a commercial scale.
Luca’s business plan exploits existing CBM wells, while Ciris looks to drill new wells.
And as natural gas prices have plummeted, an increasing number of CBM wells have stopped production. If they remain open, Jennings said, they can potentially be used for microbial conversion.
The new bill would have made low-volume “stripper gas” wells that start production before 2013 exempt from state severance taxes until 2022, after which they’d be charged 50 percent of the normal severance tax rate.
“All I’m saying is let’s just slow down a little bit. Let’s give the market and the technology a couple years, three years, to catch up,” Jennings said earlier this week. “And if they do, great. Because we can make a lot of revenue off of gas sales.”
Starting last year, Jennings was hired by Ciris as a consultant in Washington, D.C., to clear federal impediments to the new technology. Earlier this month, he filed paperwork as a registered federal lobbyist for the company. At no time was Jennings an employee of Ciris, according to Rebecca Watson, an attorney retained by Ciris, in a letter to the Casper Star-Tribune.
Jennings said he’s been working to convince federal lawmakers of the potential for microbial conversion.
In addition, Jennings has started to convince the Department of Interior to allow microbial conversion projects on federal land, according to Brian Ault, project manager at Ciris. Currently, only pilot projects are allowed on federal land.
Conflict of interest?
Prior to the consulting job, Jennings received a memo from the state’s Legislative Service Office stating that Wyoming law doesn’t specifically prohibit a legislator from lobbying the federal government.
The LSO memo did not address whether it was a conflict of interest for a legislator to introduce legislation to benefit a company he or she is working for.
Attorney General Greg Phillips said this week that he was unsure about the issue, saying his office would have to research case law and other sources.
But a number of conservation and public interest groups, as well as a number of Capitol lobbyists in private, said they were uneasy with the situation.
“People need to err on the side of protecting the image of integrity that the Legislature has,” said Dan Neal, executive director of the Equality State Policy Center. “And so I don’t think it looks good if somebody seems to be doing something that benefits a business that pays them directly.”
A number of Capitol lobbyists have also found the bill distasteful, though none of them wanted to speak about it on the record for fear of losing their job or other repercussions.
“I think everybody who’s noticed that [bill] raises eyebrows,” said one lobbyist. “You want to avoid any appearance to folks that somebody’s on the take, whether that’s going on here or not. You shouldn’t have to ask the question.”
However, Jennings withdrew the bill late this week, saying energy industry officials told him they opposed the plan to offer severance tax cuts to low-volume gas wells. Energy officials here are also Wyoming residents, Jennings said, and they said they didn’t want to shut off a source of tax income at a time when Wyoming’s revenue projections have dropped — thanks in large part to declining natural gas prices.
Oil companies, which have enjoyed high crude prices, are especially lukewarm about natural gas subsidies, according to one official in the energy industry.
Bruce Hinchey, executive director of the Petroleum Association of Wyoming, said energy producers opposed a similar plan last year to cut severance taxes.
“The state and the industry — neither one is in very good shape when it comes to revenues from oil and gas,” Hinchey said “It didn’t make a lot of sense with the numbers that they had on that [Jennings’ bill].”
Hinchey said many companies were also not in support of a moratorium on plugging unproductive wells.
“I can understand the concept that he’s got for not wanting to plug it,” Hinchey said. “But someone needs come in and bond for it to do the plugging, and I didn’t see where that was covered in the legislation either.”