Another attempt by mineral owners to wrest drilling control in southeastern Wyoming from the large independent Anadarko Petroleum by opposing the company’s drilling permits failed last week to convince commissioners overseeing Wyoming’s oil and gas industry.
A group of locals from Laramie County, including a state representative, were protesting more than 100 applications for permits to drill filed by Anadarko on the grounds that the big company was simply securing its authority over drilling in the area but was not planning to drill — at least not right away.
And drilling is what the locals are looking for. They want to make money off the hydrocarbons under their property or the minerals they picked up as an investment. If Anadarko doesn’t develop its minerals, they argued, it is inhibiting development and people are losing money.
It’s not a new complaint. Other local land and mineral owners represented by the same lawyer — Kris Koski of Long, Reimer, Winegar, Beppler LLP — protested Anadarko permits last year. They too argued that the firm had effectively established a monopoly in the county by filing thousands of applications to drill in an area where the company already has significant mineral ownership.
Anadarko doesn’t appear to be in a rush to drill in the area. Koski stated in the hearing that the company hadn’t drilled a well there in at least six years.
Koski’s landowners lost that battle at the close of last year and again on Tuesday.
Landowners did not introduce any new facts, nor prove that Anadarko was wasting resources or interfering with the rights of other mineral owners — two points that would provide grounds for the commission to deny a permit to drill application.
“Oil in the ground is not waste,” argued Jim Mowry of Crowley Fleck, representing Anadarko, noting that this issue had been argued and decided already.
“He’s getting a second bite of the apple,” Mowry said of the landowners’ lawyer. “The only difference is the name of the landowners and the name of the wells.”
The Wyoming Oil and Gas Conservation Commission agreed. After allowing a few hours of comment on Tuesday from land and mineral owners, commissioners resoundingly denied the protests without debate.
In denying the landowners protest Tuesday, Commissioner Erin Campbell, the state geologist, noted that though nothing new had been raised to change the commission’s original decision, the APD issue was not being swept under the rug.
It has the attention of the Legislature, the governor’s office and the commission staff, she said.
Gov. Mark Gordon, who sits on the commission, also noted the challenge.
“The issue is very real and needs to be dealt with,” the governor said. “I make that point because this audience understands what that means.”
One lawmaker that had spurred the discussion of a change in policy was in the room, Rep. John Eklund, R-Cheyenne. Represented by Koski, Eklund was one of the land and mineral owners protesting Anadarko’s drilling permit applications.
Eklund argued that the way Wyoming’s rules work now amounts to theft, disparaging the idea that an approved application for permit to drill establishes control and noting frustration that the first-come, first-served approach can potentially prohibit development.
Mowry, representing Anadarko, asked the lawmaker if he was before the commission on his own behalf or that of his constituents.
“Both,” Eklund said.
Eklund took the drilling permit debate to the Legislature last month in a bill that would have imposed a dramatic increase to the drilling permit application fee — most of which would be refunded upon drilling — in hopes of deterring frivolous permit applications and depress the war over operatorship.
The bill didn’t make it far. Nor did a host of other bills, each wrestling with the sudden perceived crisis in the state’s oil and gas development rules. Groups like the Petroleum Association of Wyoming noted their desire to have more time to take a holistic look at changes to keep pace with industry’s technological and engineering advances.
Securing drilling permits before the competition carries benefits in Wyoming, but everything from drilling and spacing to optimal well density has become complicated in the modern drilling environment. What has challenged state officials, noted in previous interviews with the Star-Tribune, is that companies in the race for operatorship have played by the rules and made significant investments to do so. It’s difficult to unravel that now.
Nonetheless, Wyoming’s oil fields, particularly to the north of Laramie County, have inspired a rush to secure control. That’s led to a record number of applications for permits to drill being filed in the state. The number of applications awaiting consideration has passed 30,000, according to the commission.
The activity has stacked monthly hearing weeks. Tuesday’s meeting in Casper was a packed house, with a number of scheduled hearings punted to April, including a flaring request that was given a temporary approval in lieu of a full hearing.
Last Tuesday, Koski introduced some bold suggestions for the commissioners early on, such as effectively dispensing with the control aspect of first come, first served and simply allowing the driller that’s ready to drill proceed.
He argued that such a practice would not be unlike the current drilling schedule that the commission enacted to handle the rush of drilling permit applications.
Micah Christiansen, assistant attorney general, halted the hearing at that point noting that a policy debate veered out of the purview of the hearing as it had been publicly noticed.
Eric Easton, director of the attorney general’s office in Casper, added that attempting to change policy through the hearing would be an “extraordinary remedy.”
Lawmakers in the state have promised to address Wyoming’s oil and gas regulations in an intense interim series of meetings. The leaders of both the House and Senate minerals committees noted at the end of the Legislative session last month that modernization was necessary for the state.
Koski’s original landowner protest — denied by the commission — has been appealed to district court in Cheyenne.