Drilling rig

Roy Merrill, an engineer at a Wold Energy drilling site near Rolling Hills, points out various parts of the rig during a 2017 tour of the well. Lawmakers will be considering the rules that governor the state's oil and gas industry during the legislative interim period.

Oil and gas regulations aren’t usually an attractive topic of conversation, but they certainly got a few Wyoming lawmakers fired up in recent months.

Wyoming oil and gas firms’ fight for drilling control in the Powder River Basin and Denver Basin caught the attention of some lawmakers this year who felt like current statutes fell short of fairly regulating a modern oil and gas sector. Agencies and the governor’s office have also noted that they are looking at the challenges of the drilling war.

Though bills to change one thing or another failed to make it through the Legislative session, plans to take a holistic approach to oil and gas statutes did not.

In the months ahead, Wyoming legislators from the House and Senate minerals committees will likely be considering the laws that govern the state’s biggest industry — laws that could trickle down to rules and policies at agencies like the Wyoming Oil and Gas Conservation Commission and the Department of Environmental Quality.

Sen. Jim Anderson, R-Casper, and chairman of the Senate minerals committee recently answered a few questions about why this is happening and what to expect.

A lot of different ideas popped up this session in regard to oil and gas, with some lawmakers clearly trying to control what’s happening in the oil patch today, including a rush for operatorship that’s led to record drilling applications for wells that may not be drilled. What exactly are you trying to address?

We’re trying to address it all.

It’s all a different game. Instead of a vertical well, it’s a horizontal well that involves two or three mineral owners. So what we’re looking for is, “OK how do we do this and how do we do it best for the producer, the landowner, the mineral owner?”

One thing I think we are going to look at is how we get these (companies) to drill. They apply for an [drilling permit] and just don’t do anything with it.

What we’ve got to be careful with is if they are getting a [drilling permit], their intent is to drill and to drill within a certain amount of time. And that is something we don’t have now.

We are going to ask the producers, the landowner, everyone involved, the agencies, everyone, what do we need to do to fix this problem?

There’s been some concern about changing the rules to the game mid-play. Firms like Anadarko are locking up acreage, but that’s the game right now. They are playing according to the rules. How do you balance fair play and achieving the outcome you want to see on the ground?

Probably everything before point A, where we set it up, is going to be grandfathered in. We can’t go back. They put up money, did everything right, did everything according to the rules but now we need to change the rules.

That’s the reason it’s urgent. If we don’t get going on this list, it’s going to be five years before we get the rules changed.

Why is this happening now? The technology and the rules today aren’t new. Why have oil and gas statutes suddenly gripped the attention of some lawmakers?

I think there are certain landowners that think they got wronged with the one oil company taking away their ability to sell their leases. And the horizontal well thing has been a subject for a few years.

This year we had two or three bills that tried to fix one thing or another … we were all talking and saying, “we’ve got to get in there and do this right.” This isn’t a one-bill-to-fix-this-thing. There are two or three areas that really need to be changed and maybe more than that that we don’t even know about.

Oil and gas is the biggest breadwinner in the state. Do lawmakers capitulate to industry? Should they?

I don’t think a lot of the legislators give them any quarter whatsoever. We’ve got a lot of new legislators every year and some of them have no experience or knowledge of the oil and gas industry and how it pays the bills. They come in and get an education on that when they come in and see the budget.

I don’t think there is any exception to them whatsoever, maybe even the other way around, they get ignored a bit.

Why would that be the case, is oil and gas underrepresented in the Legislature?

Some of the producers and the estate owners don’t want to give the oil and gas any quarter they want to make sure they don’t get any benefits.

It’s one of those deals where you think your field of knowledge is the same as everybody else’s and when you get to talking to them about oil and gas they just have no comprehension and they really don’t care. I had an ag guy tell me that they paid most of the taxes.

I had to get him some information on that.

Current discussions about oil and gas rules and regulations are about competition for resources, development, landowner concerns. What doesn’t seem to be coming up too much is environmental concerns. Will your work this interim ponders issues like water utilization and disposal, which appear to be a big challenge for operators both in terms of getting water to drill and getting rid of it afterwards?

That is going to be a big one that comes up. If you are out in the desert in Wyoming, water is your lifeblood. Here’s all these guys going to drill wells and suck up every bit of water around. Oh yeah, sure it’s going to come up.

[Water] didn’t come up as an issue with those bills they were trying to do — [those bills were] just a ‘Whose pocket is going to get lined?’ — That’s why we were saying “That’s one of the questions, ‘Who is going to get a fair offer?’ but we’ve got other issues.”

So yeah, water and surface damages, all of those things, we intend on looking at. That’s why we are saying we’re going to take a couple extra days to look at this subject.

Answers have been edited for brevity and clarity.

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Follow energy reporter Heather Richards on Twitter @hroxaner


Energy Reporter

Heather Richards writes about energy and the environment. A native of the Blue Ridge Mountains in Virginia, she moved to Wyoming in 2015 to cover natural resources and government in Buffalo. Heather joined the Star Tribune later that year.

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