The Biden administration will postpone Wyoming’s first-quarter oil and gas lease sale.
Originally scheduled for the week of March 15, the lease sale will take place at a later date, the Bureau of Land Management told the Star-Tribune on Friday. The agency had originally announced plans to offer 383 parcels across about 483,017 acres in Wyoming.
The delay will provide the new administration with time to “get up to speed” and “go over environmental reviews” related to the sale, a spokeswoman at the BLM Wyoming office explained.
The BLM holds lease sales four times a year in states across the West, auctioning off parcels of federal minerals to oil and gas companies for development.
But the practice has garnered significant attention in recent weeks, after President Joe Biden issued an executive order on Jan. 27 directing the Interior Department to stop issuing new leases to oil and gas firms.
The order threw Wyoming’s first-quarter sale into question and came on the heels of a separate secretarial order requiring senior officials to approve any new leases and permits.
Allies of oil and gas operators here have maintained the agency has a legal obligation to regularly offer authorized parcels in the competitive lease sale.
“Obviously, we believe lease sales need to go forward quarterly, as provided in statute and would hope that the BLM would honor those obligations,” said Ryan McConnaughey, communications director for the Petroleum Association of Wyoming. “Some of our small to mid-size operators don’t have luxury of applying for parcels of land and leases in great numbers, so this could really impact our smaller lease operators disproportionately if it does not allow them to access opportunities for drilling in Wyoming.”
The federal government manages 13,270 authorized leases in Wyoming, as of Jan. 28. These leases cover a total acreage of 8.8 million acres. The Interior Department has said drilling activity can continue on these existing leases.
This isn’t the first time an oil and gas lease auction has been postponed. The Trump administration delayed a June sale due to the COVID-19 pandemic. Some parcels nominated for the June sale were included in later sales.
Federal mineral extraction provides significant tax revenue to states like Wyoming, flowing from these lease sales, federal royalty payments, severance taxes and ad valorem taxes. In addition, oil and gas companies must pay property taxes, as well as sales and use taxes.
In the last four years, the BLM has collected over $438 million from lease sales in Wyoming. About half of that money has come back to the state. But leasing activity did slow last year when oil prices nosedived and the pandemic hit.
But the federal leasing program has faced scrutiny from taxpayer advocates and conservation groups. Some have called on the federal government to charge more money for leasing public lands, or place additional weight on the costs drilling poses to the climate before leasing.
“We are pleased the Biden administration announced the postponement of the upcoming oil and gas lease sales,” Autumn Hanna, vice president of Taxpayers for Common Sense, said in a statement. “Instead of adding more leases to the pile, this decision will give the administration time to ensure that our public lands policies are reformed to ensure a fair return for taxpayers. We applaud the administration’s commitment to stop the waste and look forward to concrete next steps to bring the federal leasing system into this century.”
In other news...
— Wyoming’s Coal Creek mine will begin closing soon, becoming the second Powder River Basin mine to start the process of shuttering this year. Owner Arch Resources Inc. announced on Tuesday morning it planned to wind down operations at the mine south of Gillette over the next two years and begin cleaning up the site, as part of its plan to transition away from thermal coal.
— At the same time, Arch will begin “laying the groundwork for systematically reducing the operational footprint at its Black Thunder mine,” according to the company.
— A tentative multimillion dollar settlement reached in a class-action lawsuit involving some 600 Wyoming coal miners will go before a judge for approval on March 3. Together, approximately 1,700 Blackjewel coal miners from across the country participated in the class-action lawsuit, alleging Blackjewel violated federal labor law.
— Executives of bankrupt coal firm Lighthouse Resources received over $702,000 in bonus payments in the year leading up to the company’s bankruptcy filing. This comes as the insolvent company asked a federal bankruptcy court last month to reject about $2.7 million in pensions for coal miners, asserting the company needs to cut costs to be able to afford cleanup at its mining site in Montana. Maintaining the pension program would require the company to make annual contributions of about $85,000, according to the company.
OIL & GAS
— Gov. Mark Gordon came out swinging against the Biden administration’s decision to pause federal leasing of minerals to oil and gas developers on Fox News, saying the move would have a devastating effect on Wyoming and several other energy-producing states across the country. President Joe Biden issued an executive order on Jan. 27 calling on the U.S. Interior Department to temporarily stop leasing federal lands to oil and gas companies, pending a review of the program.
— Sen. John Barrasso fired off a letter to the acting secretary of the Interior, decrying the federal oil and gas leasing pause and demanding answers to several questions. In the letter, Wyoming’s senior senator expressed particular concern that the federal agency was not following through on its promise to allow activity to continue on existing leases. Barrasso also accused the Interior Department on Friday of failing to offer enough specifics on the fate of Wyoming’s upcoming oil and gas lease sale, originally scheduled for the week of March 15. The Bureau of Land Management declined to provide additional details to the Star-Tribune on Wyoming’s first-quarter oil and gas lease sale. But a spokeswoman for the Wyoming field office emphasized the agency was continuing to “review and approve operations and permits for valid existing leases.”
— Oil prices have been on the road to recovery for several months after crashing last spring in response to the COVID-19 pandemic and a global price war. But consumers could start to feel pinched when buying gas soon.
— Texas-based Fleur de Lis Energy, LLC will pay $1.9 million for spilling crude oil and wastewater in Wyoming between 2016 and 2018, according to the U.S. Environmental Protection Agency. The biggest spill was about 300,000 gallons. The rest were 23,000 gallons or less.
WIND & SOLAR
— The wind energy sector in the U.S. shattered records in 2020, recording its biggest year yet in terms of new capacity added to the grid. Last year, 16,913 megawatts of new wind power capacity was installed in the U.S. — an 85% increase compared to 2019. That’s according to a new quarterly report compiled by the American Clean Power Association. In 2020, Wyoming installed 1,123 megawatts of wind power, nearly doubling its capacity.
PUBLIC LAND & CONSERVATION
— New Mexico Rep. Deb Haaland will likely face strong opposition from Wyoming’s senators during her upcoming confirmation hearing for Interior Department secretary. Sens. Cynthia Lummis and Barrasso said they would likely oppose an effort to seat Haaland.
The week in numbers
Oil and gas prices
West Texas Intermediate (WTI) $59.47, Western Canadian Select (WCS) $47.55, Brent (ICE) $62.43, as of Feb. 12
Henry Hub $2.91, as of Feb. 12
Baker Hughes rig count, as of Feb. 12
U.S 397 (+5), Wyoming 5 (+0)
Quote of the week
“This is probably the most complex bankruptcy in the history of bankruptcy court. It’s really complicated litigation.”
— Ned Pillersdorf, an attorney representing former coal miners in a class action lawsuit against bankrupt coal firm Blackjewel
Follow the latest on Wyoming’s energy industry and the environment at @camillereports