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What a Biden presidency could mean for oil, gas and coal in Wyoming
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What a Biden presidency could mean for oil, gas and coal in Wyoming

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In the final days leading up to the general election, Wyoming's oil and gas industry is nervous, said Nathan McLeland, who runs the Gillette-based M&K Oil Company LLC.

"Everything in 2020 is unprecedented and has been tough in a lot of ways," McLeland said.

Now, he and his fellow oil and gas workers have the presidential race to worry about too.

Democratic presidential nominee Joe Biden's proposed plan to combat climate change has left Wyoming's energy industries apprehensive. The candidate's vision to transition to clean energy sources could severely undercut the coal, oil and natural gas production the state still deeply depends on, according to industry leaders.

These fears weren't assuaged during the final presidential debate in late October, when Biden declared he would "transition away from the oil industry" in favor of more renewable energy sources.

President Donald Trump has repeatedly claimed Biden aims to end fracking for oil and gas, though Biden's campaign maintains it has proposed no such plans. Biden also scrambled to clarify his stance on oil after the debate, telling reporters: "We're getting rid of the subsidies for fossil fuels, but we're not getting rid of fossil fuels for a long time." 

"Certainly a Democratic administration might present some new challenges we will have to face," McLeland said. "But we're continuing to find ways to grow. We're trying to find ways to expand our business and we'll keep doing that.”

But with the general election days away and several polls showing Biden eking out a lead over Trump in battleground states, it's important to ask: What could a new presidential administration mean for Wyoming's central energy sectors?

The fuss about fracking

Hydraulic fracturing, or fracking, is the now-ubiquitous practice of injecting water, sand and chemicals into the ground to extract oil and gas. Put simply, injecting these ingredients at high pressure can split apart tight shale formations, freeing once-inaccessible oil and gas from inside the bedrock. The technique is often paired with horizontal drilling, which allows operators to drill at more angles and situate several wells on just one vertical wellbore to minimize surface disturbance.

The relative cost-effectiveness and efficiency of unconventional drilling methods, like fracking, have allowed operators to access more oil and gas underground. The practice unlocked a shale revolution over the last two decades and catapulted the U.S. to becoming the world's top producer of oil.

Industry groups defend the innovative practice, saying strict environmental standards and a maze of regulations prevent or limit environmental damage. Proponents also point to the "energy independence" the dramatic boost in domestic oil and gas production has afforded the U.S. It's a goal the Trump administration has used to push through a plethora of regulatory rollbacks welcomed by the oil and gas industry.

Yet, opponents of fracking often point to the risks of groundwater contamination, methane emissions and excessive water use, among other environmental concerns associated with the process.

The widespread use of hydraulic fracturing and horizontal drilling has delivered huge financial returns for Wyoming. Last year alone, oil and gas producers here provided $1.67 billion to state and local governments, according to the Petroleum Association of Wyoming. That breaks down to about $2,882 in government services going to every resident. But this year the oil and gas sector took a turn for the worse. A global oil price war led to a glut in fuel and collapse in prices. Shortly after, the pandemic caused demand for fuel to crater. American shale producers shut in wells, laid off workers and put off plans for drilling.

Nonetheless, in good times, a lot of drilling happens on federal land here, leaving energy policies made in Washington particularly potent for Wyoming operators.

Nationwide, only about 10% of oil and gas production — conventional and unconventional — occurs on federal land. But in Wyoming, that share increases: 51% of oil here is drilled on public land, along with an overwhelming 92% of natural gas. 

In other words, Wyoming produces more oil and gas on federal land than almost any other state in the country, contributing 38% of the natural gas produced on federal land nationwide, along with 16% of oil production.

When it comes to future energy policy around fossil fuel production, a lot is at stake for Wyoming.

For engineer Joe Corbett, half of his energy company’s oil and gas wells are located on federal land. His company would take a hit if Biden decided to restrict fracking, he said.

Corbett has been involved in the oil and gas business for close to four decades. He serves as an engineer at Wyoming Energy Consultants, a small oil and gas firm in Casper. But he also works with Chipcore LLC, a production company started alongside the late petroleum engineer Scott Chipperfield.

“If Biden followed through on (banning) fracking on federal land, that really doesn't make sense,” Corbett said. “I would think that the federal government would want us to develop their minerals. It's a great source of revenue. Banning fracking on federal land is just really shortsighted. It just doesn't make sense to only exclude federal land.”

“I’m going to be glad when the election is over,” he added.

On Monday, Sen. Eli Bebout, R-Riverton, told Wyoming's Joint Appropriations Committee the state needs to diversify its tax base to buffer from the decline in fossil fuels' fortunes down the road.

"Regardless of your party affiliation, there are those out there (who) think we should eliminate and not have anything to do with fossil fuels," Bebout said. "I'm not one of those people obviously. But if that should happen, what an impact (that would have) on the great state of Wyoming."

"(This) tells us that we really need to continue the efforts we made years ago now to try to diversify our economy and our tax base, which is very difficult to do in a trying time," he added.

Oil and gas under Biden

If a new presidential administration enters the White House come January, any overhauls to the nation's energy policies will take time to trickle down to oil and gas, according to Chuck Mason, University of Wyoming economist and associate dean for research in the College of Business. In the short term, business will likely go on as usual in Wyoming's oil and gas sector.

“Nobody changes where they send a drilling rig because of a presidential tweet or a poll or the outcome of the presidential election,” Mason said. “They care about money available right now.”

That said, over time Mason predicts the Biden administration will lease public lands more restrictively.

“So there is a possibility that you might see less new development, but that is probably a year away,” he said.

But Wyoming could feel a painful punch from anti-fossil fuel regulatory changes in Washington more than its oil-rich neighbors. For one, it’s often more expensive to drill in the southern Powder River Basin than it is in the Bakken in North Dakota or the Permian Basin in West Texas and New Mexico.  

The Petroleum Association of Wyoming called Biden's plan to transition from oil "reckless and irresponsible."

"We have to take Vice President Biden at his word that he is willing to sacrifice public lands states like Wyoming for the sake of political expediency," Pete Obermueller, president of the Petroleum Association of Wyoming, said Oct. 23 in a written statement. 

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"Banning fracking and leasing in Wyoming does nothing to reduce U.S. emissions as production will simply shift to private lands states like North Dakota and Texas," Obermueller continued. "According to the former Vice President, fracking is fine in Pennsylvania and Ohio because he needs their votes, but it's not okay in Wyoming."

According to an industry study published in September by the American Petroleum Institute, a ban on leasing federal land for fracking could result in the loss of 33,000 jobs in Wyoming alone and compromise roughly $640 million in revenue for the state.

In addition to the loss of 8% of jobs and a one-third decline in oil and gas production in Wyoming alone, the ban could have severe ramifications nationwide, the study found.

With a decline in domestic oil and gas production, the study predicts the U.S. would need to import a significant amount of energy, to the tune of two million barrels a day by 2030 at a cost of $500 billion, if a ban on public land drilling was adopted. 

Continental Resources founder and Executive Chairman Harold Hamm told the Star-Tribune on Monday a Biden presidency would be a disaster for drilling in the state.

"As we all know, Wyoming has a lot of federal land," Hamm said in a phone interview. "(A ban on federal leasing) would be a huge hit to Wyoming." 

"If you have Biden get rid of energy independence, you'll depend on rogue nations again, and you'll be fighting over oil," Hamm added. "You're swapping hard hats in our industry for helmets if Biden wins. It's not a good situation at all."

Then, there's climate change

Environmental groups based in Wyoming have long supported some level of pollution controls for oil and gas, not to mention more limited leasing of federal land for drilling or mining to protect wildlife and the environment. 

According to a U.S. Geological Survey report, between 2005 and 2014, fossil fuel extraction (including coal) from federal land contributed to 23.7% of national carbon dioxide emissions, 7.3% of methane and 1.5% of nitrous oxide. A vast majority of scientists agree the world doesn't have much time left if it wants to stop temperatures from rising 2 degrees Celsius above pre-industrial levels and prevent irreversible consequences.

Biden's climate plan would set into motion a 30-year transition to net-zero emissions by pivoting away from burning fossil fuels. A growing segment of the Democratic party has called on the presidential nominee to take more aggressive action to tackle climate change. It's a trend that terrifies some Wyoming residents who for generations have been keeping the country's fossil fuel sectors running.

The Center for Biological Diversity thinks Biden's plan takes the country in the right direction. 

"Like everyplace else in the world, Wyoming is feeling the effects of climate change, with record heat, drought and wildfires," said Randi Spivak, public lands political director with the Center for Biological Diversity Action Fund. "Unchecked fossil fuel development is hurting Wyoming's people and wildlife and industrializing public lands. If climate change is not urgently addressed, it will also dramatically reduce the state's water supplies."

Spivak, along with other environmental groups, have pointed to the job growth potential if the country made the ambitious shift to a clean energy economy.

Recent studies demonstrate the clean energy sector could generate a diverse array of new employment opportunities as the nation recovers from the pandemic. A 2020 report by E2, a nonpartisan group of business leaders and investors focused on the environment, found over 3.3 million workers were already employed in clean energy jobs last year, with the median hourly wage, $23.89, higher than the national average. Those jobs included modernizing the power grid, building sustainable infrastructure, deploying electric cars or constructing renewable energy projects.

Though the clean energy sector has seen its workforce slashed during the pandemic, supporters of Biden's climate platform believe it will bounce back with a rigorous federal plan to combat rising greenhouse gas emissions.

"Biden will create millions of new jobs by making the U.S. a leader in renewable energy," Spivak said. "He understands that there's no other way to ensure a livable planet for future generations. Trump has been an unmitigated disaster for people, wildlife and our beautiful wild places."

The Wyoming Outdoor Council is prohibited from offering a direct endorsement or critique of the candidates’ positions, given its nonprofit status. However, the conservation group said it would continue working to protect Wyoming’s public lands — regardless of the federal administration — by promoting responsible siting of any and all energy development.

“Overall, we think a transition to renewable energy sources needs to happen to protect future quality of life on our planet,” Alan Rogers, communications director for the Wyoming Outdoor Council, said in a written comment. “Those wheels are already in motion."

Though supportive of addressing climate change, the group urged caution when it came to an all-out investment in renewable energy.

"However, we do not promote development of industrial scale wind and solar on public lands in Wyoming," Rogers continued. "Simply allowing an alternate type of energy development to dominate our wide open spaces is not the right approach. There are situations where development can be done responsibly but, just like with oil and gas, renewables shouldn't come at the expense of wildlife, viewsheds, cultural properties, or other values.”

What about coal?

Four years of the most pro-coal president in recent memory has done little to change coal’s misfortunes. 

"The long-term outlook for coal is dire," said Rob Godby, University of Wyoming economist and associate dean of the Haub School of Environment and Natural Resources.

The COVID-19 pandemic can take some of the blame for coal companies’ decision to shed workers and contract production this year. But the downturn in coal stretches back to before the virus, as the nation shifts how it uses power. It's simply cheaper to make electricity from natural gas than it is coal. The better natural gas does, the tougher time coal has holding its own in electricity markets. Notably, it has been nearly a decade since the last coal-fired power plant has been built and existing coal units continue to shutter one by one.

The Energy Information Administration, an impartial data center for U.S. energy, forecasts nationwide coal production could plummet to levels 26% below last year.

In the short term, a Biden presidency could lend Wyoming's coal industry a very temporary boost by making it a little bit more competitive against natural gas. 

That is, if a Biden administration enacts executive orders early on to slow the development of oil and natural gas on federal land, Godby said.

Odds are, one of the most immediate ways a new president could enact change would be through executive orders, Godby explained.

"If (Biden is) elected, I think what you would see is very similar to the flurry of activity that occurred shortly after Trump took office," Godby said.

Biden's executive orders could take any number of forms, leaving much to speculation. But orders could range in scope from reinstating pollution controls and imposing national setbacks for drilling to banning fossil fuel energy development on some public land, Godby suggested. 

"Coal's biggest problem is natural gas, still," Godby said. Higher natural gas prices bode well for thermal coal, because both commodities are used to produce electricity.

But any immediate relief for coal, Wyoming's once-domineering industry, would be short lived. Regardless of who is inaugurated come January, coal's structural decline will more than likely persist.

"The impacts of a Biden presidency immediately are probably far higher on the oil and gas industry through bans on leasing or technology than they are on the coal industry," Godby said.

Follow the latest on Wyoming's energy industry and the environment at @camillereports

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Energy and Natural Resources Reporter

Camille Erickson covers the state's energy industries. She received her master's degree at Northwestern University's Medill School of Journalism. Before moving to Casper in 2019, she reported on business and labor in Minneapolis, Chicago and Washington.

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