Wyoming’s mineral industries have asked Gov. Mark Gordon to consider mining and drilling operations “essential” activities in anticipation of further potential business restrictions during the coronavirus pandemic.
The Petroleum Association of Wyoming, along with the Wyoming Mining Association, urged the governor in March to formally declare coal, uranium, oil and gas operations critical to the state’s economy and extend limited regulatory relief, according to letters provided to the Star-Tribune.
Oil and coal markets have been hammered by the decreased demand for the commodities, exacerbated in part by the rapid spread of the virus around the world. On top of that, Wyoming mineral industry supply chains have already been disrupted by out-of-state policies related to the coronavirus, like mandatory business closures, the groups noted.
“Respectfully, this is an urgent request as operations are now being impacted by the absence of our industries being declared as essential business and critical infrastructure,” a March 25 letter signed by the state’s mineral associations stated. “Vendors are no longer shipping necessary supplies and will only do so with a letter from you with the designation.”
A majority of states across the U.S. have implemented “stay-at-home” orders to limit the spread of the virus. But Gordon has not declared a statewide shelter-in-place order for Wyoming, as of press time Wednesday. He has ordered closed Wyoming schools and businesses where people tend to congregate, like bars, coffee shops and hair salons.
Gordon has not offered an official response to the industry letters, according to the governor’s spokesman.
Wyoming is the largest net energy supplier in the nation. Providing Wyoming workers in mineral industries with certain exemptions from a potential shelter-in-place order would protect the supply of power generation nationwide, the groups stated.
The Department of Homeland Security issued a memorandum Saturday advising states to designate “workers supporting the energy sector, regardless of the energy source” as essential. But Petroleum Association of Wyoming President Pete Obermueller said he wants the governor to officially designate energy workers an essential part of the workforce during the COVID-19 outbreak to avoid any confusion or ambiguity.
“We want to be ready,” he said.
In addition, the petroleum association has called on the state to consider temporarily pausing timelines on certain regulatory requirements, like oil and gas leasing, inspections and filings to ensure the safety of employees as many work remotely or stay at home.
“What we have asked for is a short-term pause and, to the maximum state of our ability, we will continue to do all of those (requirements), and we’ll do them electronically,” Obermueller told the Star-Tribune.
The association recommended that state regulators, like those in the Department of Environmental Quality, extend some flexibility on requirements like emissions inventories, stack tests and LDAR surveys to protect state and company employees. On the federal level, the group suggested implementing less frequent inspections along with flexibility in addressing citations, too. As for taxes owed to the state, the association also requested a degree of leniency, including allowing delayed filings and payments “in the near term.”
The group underlined repeatedly it was not their intent to avoid paying any taxes or fees, but rather receive additional time as they work to abide by public health guidelines during the pandemic.
“Importantly, PAW is not seeking waivers or forgiveness of any required fees, rental payments or reporting requirements,” the letter signed by Obermueller and Chairman Paul Ulrich stated. Instead, temporary delays for certain requirements would “facilitate accurate reporting and (preserve) capital and cash flow until recovery is possible,” according to the group.
The sharp shock to energy markets in recent weeks has hit Wyoming producers particularly hard. With oil prices at near-record lows, many have been left with little choice but to “shut in” wells or suspend new drilling activity. For every rig shut down, roughly 100 workers are displaced. The state’s active drilling rigs have fallen by nearly 50 percent since the fall of 2019, going from 36 to a mere 19, according to the state’s Economic Analysis Division.
The oil and gas industry employees over 18,200 people in Wyoming, as of the latest data available from 2018.
“Our production is slowing dramatically and existing wells are being shut in,” Obermueller said. “We will be producing a lot less in Wyoming.”
Critics of designating oil and gas workers “essential” have pointed to the glut in oil supply worldwide and paltry demand for fuel as reasons to require workers to stay at home.
But Obermueller said that doesn’t mean there isn’t still work to do in the industry. In order to avoid defaulting and keep some revenue trickling in, companies often need to finish projects on existing wells, he explained.
“Even if companies are not drilling, to the extent they are able, they are trying to produce what is existing in order to bring in some revenue to keep (up with) payroll and their obligations,” he said. “And I think as a Wyomingite who wants to keep my neighbors employed, that’s probably a good idea.”
Follow the latest on Wyoming’s energy industry at @camillereports
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