A cluster of land and mineral owners in Laramie County have had enough.
Last week, over two dozen dissatisfied owners filed a lawsuit in the U.S. District Court for Wyoming against one of the largest oil companies operating in the Equality State. Plaintiffs in the suit accuse the international firm of squelching competition in oil and gas plays in the county by hoarding thousands of drilling permits.
Occidental Petroleum Corp. is an independent oil and gas producer that shook the energy industry when it acquired Anadarko Petroleum this summer for over $38 billion. The ownership transfer shifted over land — initially acquired from Union Pacific Resources in 2000 — to Occidental. The land is replete with minerals thanks to the Niobrara and Codell formation plays. (Anadarko remains a wholly owned subsidiary of Occidental due to an outstanding appeal over the sale).
But the minerals have remained largely untouched. And that has irked many of the county’s residents, some of who own both surface and mineral rights for land east of Cheyenne.
The company’s inactivity has been a point of contention for residents hoping to churn a profit from the commodities resting beneath the soil. Despite its grip on the land, the company has not produced oil and gas in Laramie County since 2013, according to the plaintiffs.
“(Anadarko) possess(es) a monopoly on the market for exploration and production of oil and gas,” the Nov. 25 complaint stated.
To the mineral owners, the company has applied for thousands of permits to drill, laying claim to key acres in the county and forcing smaller mineral owners and other competitors out of the market. Mineral owners eager to tap into lucrative parcels are at a loss.
According to data collected by the Wyoming Oil and Gas Conservation Commission, Anadarko has 2,213 approved or pending permits in Laramie County and has spud three wells since 2013.
A checkerboard of private and public land parcels across the county makes obtaining a contiguous parcel challenging, according to the lawsuit. What’s more, the company’s dominance in the area makes the region unattractive to other operators. Weak competition depresses the financial return for owners wanting to lease minerals to operators, the suit alleges.
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Occidental disputes the allegations in the lawsuit.
“We believe the litigation is without merit and intend to vigorously defend it,” Melissa Schoeb, a spokeswoman with Occidental, told the Star-Tribune in a statement. “We do not expect that the litigation will have any impact on the timing or outcome of our pending sale process.”
Debate over the firm’s presence in eastern Wyoming isn’t new.
In March, residents protested about 100 permit applications submitted by Anadarko at an Oil and Gas Conservation Commission hearing. The commission ultimately denied the protest, but assured the group of Laramie County locals that the state’s oil and gas permitting rules needed attention. In the past three years, the commission has received just under 66,000 drilling permit applications from oil and gas operators.
But an overhaul to Wyoming’s drilling regulation could be coming soon enough.
In July, Mark Watson, supervisor of Wyoming’s Oil and Gas Conservation Commission, proposed amendments to the permitting rule to quell the flood of applications and ultimately “level the playing field” between operators and mineral owners.
Under the proposed rules, if a permit’s two-year lifespan comes to an end and the operator has not advanced drilling activity, other working interest owners — neighboring companies or mineral owners sharing the drilling spacing unit with the reigning operator — have a window of time to apply for a permit.
The change would give owners eager to work the land an opportunity to elbow into the field.
Watson expects the new guidelines will take effect early next year.