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Wyoming oil and gas lease revenue increases by 800 percent in 2017

Revenue from leasing land to oil and gas companies in Wyoming jumped by more than 800 percent from 2016 to 2017.

It’s no secret that the industry stalled when crude prices fell into the $30 range. The number of oil rigs operating in the state dropped to single digits and companies big and small laid off workers.

Lease buying, when operators stake land claims for future development, also slowed.

But the price of oil now hovers around $60 a barrel, a generally low price, but better than the bottom of the downturn. A new presidential administration has embraced energy development and loosened environmental regulations. The combination has resulted in an online bidding war for state and federal leasing agencies.

“I’m hopeful that we are looking at a trend: that the market is stabilizing in the state of Wyoming,” said Jason Crowder, assistant director for the Office of State Lands and Investments, Trust Land Management Division.

Even though Wyoming has had its boom years, this year’s lease sales stand out, officials say.

During the downturn of 2016, revenue from the Bureau of Land Management lease sales and the Office of State Lands auctions combined added up to about $16 million. This year, Wyoming netted a combined $146 million, leasing about a half million acres of federal and state land.

Crowder said it’s unclear what exactly made the revenue shoot up so dramatically, other than the state’s decision to switch to an online auctioning system which allows out of state companies to easily bid on Wyoming land.

“That’s the only thing we can point to,” he said. The state was accustomed to bringing in between $5 million and $7 million from leasing state land, even in the boom years. In 2017, the State Lands brought in $60 million.

A spokeswoman for the Bureau of Land Management said there have been a combination of factors, from the location of the land parcels nominated for leases to the BLM’s “planning efforts” that could contribute to the increase.

A lease sale in 2016 was deferred, with those parcels offered at a later auction.

Operators in Wyoming report that the regulatory environment may have improved with a new presidential administration, one more favorable to energy development on public lands.

“Certainly that helps people want to go out and drill again,” said Bruce Hinchey, president of the Petroleum Association of Wyoming.

Wyoming also represents a good deal for operators compared to some other regions of the country. In the Permian Basin of West Texas, prices for oil field services have risen throughout the year. Wyoming is still a bargain.

“They see this as a known area for oil and gas,” said Hinchey, referencing the Powder River Basin, where the highest bids per acre came in this year.

How many of the parcels leased this year will be drilled isn’t clear.

The bottom line for industry activity in Wyoming will be led by the price of oil, Hinchey said, and crude pricing is both volatile and unpredictable.

Wyoming state lands brought in a total of $61 million in 2017, leasing about 182,000 acres. Federal land lease sales contributed an additional $85 million for nearly 391,000 acres.

The final lease sale of the year, from the Bureau of Land Management, brought in $1.25 million for the state, much less than spring and fall auctions that stoked excitement in the oil and gas community and pushed up the year’s total income.

A number of the land parcels were contested by environmental groups that argued the leases overlapped with designated sage grouse habitat contradicting BLM policy regarding development in habitat. The agency denied the protests, arguing that the sage grouse areas were open for development according to its management plans.

The December leases were located in four southern counties, including the oil fields of the Denver Basin in Laramie County and the gas region of the southern end of the Greater Green River Basin in Sweetwater County.

The highest bid to close out the year went to Southland Royalty, a Fort Worth, Texas-based company that has been positioning itself in Sweetwater County throughout the year after taking over some Anadarko leases. In June alone, Southland put in 277 applications to drill in the county, more than the total applications submitted in Sweetwater in 2015 and 2016 combined.

Wyoming is currently facing a more than $700 million budget gap due to the retreat of coal, oil and gas revenue over the last few years.

State income from the year’s oil and gas leasing largely goes to school funding, the farm loan fund and public buildings.

Josh Galemore, Casper Star-Tribune 

Bob Garberg carves his way down the Boomerang slope at Hogadon Basin Ski Area during their official opening day of the season Tuesday morning, Dec. 26, 2017. Garberg, who's father was the director of the ski school and mother worked for ski patrol on Hogadon when he was a child, learned to ski at the age of five.

Better late than never: Hogadon opens to skiers but most runs are still closed

CASPER MOUNTAIN — With a brand new, $5 million lodge to welcome patrons, this winter’s Hogadon Ski Area opening may have been one of its most anticipated. It was also one of the latest, with warm December weather keeping the slopes closed until Tuesday.

“It’s just been unseasonably warm this whole month of December and November,” said Hogadon manager Chris Smith. “We normally like to get open by the first of December.”

But even with just a single run open, those who trekked up the mountain the day after Christmas to ski in sub-freezing temperatures weren’t complaining.

Bob Garberg learned to ski at Hogadon when he was just five years old. He hopes to bring his granddaughter to ski here next year. But on Tuesday, he was alone, having just finished a few runs along Boomerang, the intermediate slope that snow-making equipment had allowed to open this week.

“It’s good exercise,” Garberg said. “It gives you something to do in the winter in Wyoming instead of sitting around the house.”

Marci Durtsche said she plans to take advantage of the ski school for her 8-year-old son Kade, who wants to learn to snowboard.

“I’ve taught all four of my boys how to ski here on Hogadon,” Durtsche said.

A fifth-grade teacher, Durtsche also brings students up to Hogadon for lessons, some of whom have never been on the mountain before.

The opportunity for more Natrona County School District students to participate in physical education classes at Hogadon helped win over some Casper City Council members who were skeptical about the city spending $5.3 million to build the lodge.

Smith said the beginner’s area and terrain park will be open Wednesday morning.

He said the Hogadon crew had been making snow whenever the temperature allowed starting in November, but that the ski area still needed another roughly 8 inches of snow to open the runs that snow-making equipment do not reach.

While November brought several feet of snow, Smith said much of that snow melted in December. Crews have worked to pack down what snow has fallen this month to slow melting and create a base.

But he said under the circumstances, things were going well.

“The skiing’s good,” he said.

In 11 months, Natrona County school board voted to close five schools

In mid-November 2016, a trio of Natrona County School District officials sat a table and said the district was recommending closing Grant Elementary, along with several other unoccupied and non-school buildings.

Less than two weeks later, the district’s board of trustees unanimously approved the recommendation, shuttering a 94-year-old building. The district was facing budget cuts that were going to get worse, and elementary enrollment had been dropping in the wake of the economic downturn. There were too many seats and too few dollars.

“We have too many buildings,” Superintendent Steve Hopkins said at that Nov. 28, 2016, board meeting. “It’s hard to say that, but it’s the stark reality.”

Almost exactly 10 months later, the same trio — Michael Jennings, Rick Skatula and Dennis Bay — again sat a table at the district’s headquarters and announced that they were again recommending the closure of buildings. This time, it was four in-use schools: Willard, Mountain View and University Park elementary schools and Frontier Middle.

The closures would affect hundreds of students and more than a hundred staff members. All four schools were Title 1 designated. The elementaries were all neighborhood schools. Mountain View was the last school in the Mills area. Frontier was the smallest middle school in the district.

But the problems that led to the closure of Grant had persisted and grown worse. For years leading up to the economic downturn, the district had seen its elementary enrollment steadily growing. So steady was the influx of young students that Natrona County officials were told to build new schools and to keep building them.

That growth ended with the bust. But the plans to build new elementary schools were already laid, construction started, buildings nearing completion.

When Grant closed, officials had said there were 500 empty elementary seats in the district. When they announced the recommendation to close the four schools in September, they said there were 970 open seats in Natrona County elementary schools.

On top of the empty seats, the district was facing dwindling state funds, another byproduct of the economic downturn. The board had approved a budget in July that was $4 million lighter than the previous year. In the best-case scenario, the board would have to cut at least that much in the coming two years.

Less than four weeks after the proposal was released, the board voted 8 to 1 to close the four schools. A late amendment attempted to save Mountain View, noting that it was the lone elementary in Mills. But it was voted down, and the ax fell a few moments later.

Officials have said that if the board did not vote to close the schools — which will save an estimated $2.5 million a year — then the district would have to cut costs elsewhere. That almost certainly meant layoffs, which the district has been able to avoid so far, even with the closures.

Still, no one was happy with the closures. Board members said they hoped to never have to close schools again. The Mills Town Council approved a resolution opposing the move. Community members lined up before board meetings and expressed their displeasure. They told the board to crunch the numbers again, to do their jobs, to think of the kids being bused and of the communities losing their schools.

Now the district faces down another spring that will see the last day for more schools. The three officials who initially recommended the closure of Grant in 2016 and the four schools this year say there are no plans to close more schools. But their study of the district’s schools continues.