In the week since President Joe Biden issued an executive order pausing new federal leases for oil and gas development, Wyoming’s energy sector has clamored to unpack what the decision could mean for a state so dependent on energy.
The University of Wyoming’s School of Energy Resources held a virtual roundtable Tuesday to weigh the possible consequences of the order, with three panelists admonishing the Biden administration for slowing new drilling on public lands.
In addition to generating uncertainty for the state’s energy sector, the executive actions could also compromise the state’s obstinate push to lead the nation in carbon capture and storage development, some panelists forecast.
On Tuesday, UW professors Timothy Considine and Kris Koski, alongside environmental lawyer Eric Waeckerlin, outlined how the recent federal actions to slow the rise of greenhouse gas emissions would hinder Wyoming’s energy economy. Some identified ways the state or companies might fight back. Yet potential ideas or solutions for how Wyoming could capitalize on the national effort to combat climate change remained largely absent from the conversation.
Here are three takeaways from the roundtable.
Drilling on private and state land in Wyoming could slow
The executive order issued on Jan. 27 directs the U.S. Interior Department to pause leasing federal lands and minerals to oil and natural gas companies, pending a comprehensive review of the program.
Biden made the leasing moratorium one part of a string of executive actions targeting the climate crisis. Together, the orders aim to place the U.S. on a path to eliminate carbon pollution from its power sector by 2035 and achieve a net-zero economy by 2050.
In Wyoming, energy activity has been integral to providing the state with revenue, jobs and economic activity. The extraction of federal oil, natural gas, coal and other minerals has showered the state with huge fiscal returns, to the tune of billions of dollars from royalties, taxes and other fees.
The federal government manages about half of Wyoming’s surface lands. That means drilling on lands leased by the Interior Department has made up a meaty portion of oil and gas production here. In Wyoming, energy firms produce some of the highest volume of natural gas from federal minerals in the country. The bulk of it is then exported out of the state.
That said, Biden’s order does not mean all drilling in Wyoming will come to a full stop. In fact, Biden’s order will still allow oil and gas development to continue on existing leases, the Interior Department confirmed.
“The targeted pause does not impact existing operations or permits for valid, existing leases, which are continuing to be reviewed and approved,” an Interior spokesman told the Star Tribune last week.
The U.S. Bureau of Land Management currently manages 13,270 authorized leases in Wyoming, encompassing a total acreage of 8.8 million acres, according to the BLM.
Yet, School of Energy Resources professor Kris Koski said, Wyoming’s checkerboard of private, state and federal lands and minerals in Wyoming could make drilling on non-federal land more difficult to accomplish during a federal leasing moratorium.
“Why this (executive order) is such a concern to Wyoming from a land perspective, is because when you look at the map of Wyoming, all of our major gas fields are in the west — the Green River Basin, Pinedale Anticline,” Koski said on Tuesday. “If you go to those gas basins, you really can’t put together any oil and gas project that is not going to involve federal minerals or lands. And that’s because the vast majority of the western part of the state is in fact federal lands or federally owned minerals.”
The same goes for minerals out east in the state’s oil-rich Powder River Basin, he noted. “When you are looking to put together an oil and gas drilling unit, it’s sometimes almost impossible to put together a drilling unit that doesn’t require federal minerals.”
“A leasing ban in that area is going to have absolutely devastating effects,” he added.
Carbon capture and storage projects could hit road bumps
In turn, expanding carbon capture and storage development, or enhanced oil recovery, could be tricky if the federal government declines to lease land or minerals for an extended period of time, Koski said.
Many energy scientists and political leaders here have championed investments in carbon capture technology. Some see it as a way for the state to continue producing oil, natural gas and coal without harmful emissions, though commercialization of carbon capture has yet to be successful.
Carbon capture involves trapping, reusing or storing carbon dioxide, a greenhouse gas and pollutant emitted when fossil fuels are burned.
Wyoming’s governor and other proponents of the technology hope to find a commercially viable method to eventually capture all carbon emissions coming from coal-fired power plants or other industrial facilities. The captured carbon could then be used for enhanced oil recovery, transformed into new products or sequestered underground.
“If you’re going to do any CO2, enhanced oil recovery (EOR), or even a storage project, you’re going to likely have federal minerals involved,” Koski said. “That’s likely going to require federal oil and gas leases. Perhaps these orders could have a very detrimental effect when it comes to our ability to pursue these CO2, EOR and storage projects.”
Any legal fights could take time
The Biden administration has already been sued over its approach to regulating oil and gas development.
The Western Energy Alliance, a group representing oil and gas companies in the region, filed suit in the U.S. District Court for the District of Wyoming over a separate Jan. 20 order issued by the Interior Department last week. The order shifted the authority to grant oil and gas leases or permits to top Interior officials.
Environmental attorney Eric Waeckerlin predicted more lawsuits opposing the pause in new leases are likely coming down the pike. But challenging Biden’s executive order to slow climate change could be difficult.
However, Waeckerlin and others have pointed to the federal government’s mandate to hold regular, quarterly lease auctions for oil and gas development.
“The fight is going to be about the controlling statutes — the Mineral Leasing Act and the Federal Land Policy and Management Act — and whether they mandate the BLM to hold quarterly sales for leases, for lands available for sale, or whether the BLM has sufficient discretion to put those (sales) on hold, pending the programmatic review indefinitely,” Waeckerlin said.
“I think the outcome is difficult to predict,” he added.
Meanwhile, the review of the Interior’s oil and gas leasing program will likely take time, Waeckerlin predicted, and operators have already run into trouble obtaining applications to drill or other necessary permissions, like right-of-ways for pipelines. What’s more, the Biden administration could increase the royalty rates levied on oil and gas operators to offset environmental costs tied to extraction.
To several conservation advocates, the need to reform how the Interior manages public lands and addresses climate climate is a process long overdue. But to Tuesday’s panelists, and numerous oil and gas operators, it signals the start of a dubious regulatory era.
“There’s a lot of uncertainty, unfortunately, out there,” Waeckerlin said.
Follow the latest on Wyoming’s energy industry and the environment at @camillereports