Welcome to the Star-Tribune’s Energy Journal, a play-by-play of the past week in Wyoming’s wild world of energy. I’m your energy and natural resources reporter, Camille Erickson. Sign up for the newsletter here.
Uranium company Ur-Energy receives nearly $1 million in federal relief
A uranium mining firm with operations in Wyoming received $893,300 in loans from the federal government as part of the relief package provided to small businesses during the COVID-19 pandemic. Though the company welcomed the relief, taxpayer accountability groups grumbled at the distribution of aid to a corporation they claim did not need it.
For the first quarter of the year, the company's operations at Lost Creek mine in south-central Wyoming produced 33,0000 pounds of uranium. According to Ur-Energy CEO Jeff Klenda, as of April 20, "the workforce remains healthy and fully employed."
With the closure of some other uranium facilities due to the pandemic, uranium prices have inched up. But the company cautioned not to see this as a sustained trend.
"We cannot overstate the importance of these funds to our ability to retain the highly trained operational staff we have strived so hard to keep onboard," Klenda continued. "As intended by the CARES Act (federal coronavirus relief package), this additional funding will provide longer 'runway' to maintain current operations and avoid unnecessary dilution in the depressed uranium market; it also provides continued operational readiness when we are able to ramp up production."
The distribution of aid to one of the nation's leading uranium firms came the same week that the U.S. Department of Energy released a report calling for the creation of a domestic uranium reserve. The recommendation could help resurrect parts of Wyoming’s ailing uranium mining industry and was applauded by uranium producers.
In the Trump administration’s recent budget request, the U.S. Department of Energy asked for $150 million in fiscal year 2021 to build a uranium reserve fund and boost demand for the mineral. If approved, the $150 million reserve fund could start production back up at two uranium mines in the country, according to the Department of Energy.
Wyoming leads the nation in uranium production, but the industry has been struggling for years due to record-low demand for U.S. uranium.
Yet heated opposition to uranium mining has only mounted in recent years. Several citizen and conservation groups have made repeated calls to stop uranium mining and processing on public lands and sacred sites, saying critical drinking water and human health would be even more endangered. For instance, the Lost Creek mine property falls within a designated core area for sage grouse.
What's more, according to an analysis by the nonpartisan watchdog group Accountable.US, the payment to the uranium firm "wasn't needed."
The group cited a statement made by Ur-Energy claiming "the COVID-19 pandemic has caused no interruption of our production operations at Lost Creek and did not interfere with our scheduled delivery and sales into term contract commitments in early February and again in early April."
Accountable.US also contended Interior Secretary David Bernhardt's former role as an attorney for the company between 2009 and 2012 made the aid unethical. The group opposed the distribution of the Payroll Protection Program funding to several large corporations, saying it came at the expense of taxpayers and small businesses. Publicly traded firms received over $365 million in loans from the U.S. Small Business Administration.
"The special interest self-dealing within the Trump administration is costing Americans jobs and forcing many small businesses to fold after the first round of funds were siphoned up by large, sometimes even foreign-owned corporations,” said Jayson O’Neill, spokesperson for Accountable.US.
Though Ur-Energy's corporate office is located in Colorado and the Lost Creek facility is in Wyoming, the company's registered office is in Canada.
Ur-Energy has stood by its need for the funding. "We intend to use the proceeds to secure the employment of our workforce and will subsequently seek loan forgiveness to the fullest extent possible," Ur-Energy CFO Roger Smith said in a statement.
Last week's news roundup
- Weak electricity demand nationwide has hit the state's coal industry hard and companies are responding with layoffs and production cuts. A close look into the state of Wyoming's coal industry here.
- Coal firm Peabody Energy's revenues dropped over $400 million year-over-year, according to its first quarter report. Net cash for operating activities during Peabody Energy's first quarter of operations in 2020 also ran into the negatives, coming in more than $200 million short of the same period last year. The coal company cited low natural gas prices, weak electricity demand and a curtailment of industrial manufacturing during the pandemic as reasons for the loss in demand for coal, according to a Wednesday news release.
- Four of the nation's largest coal companies that recently went through bankruptcy paid over $4 billion in dividends and stocks to the benefit of shareholders in 2017 and 2019. Three of the four firms have a history of operating in Wyoming (via Wall Street Journal).
OIL & GAS
- For roughly two months, Wyoming operators have already been pummeled by a global price war and a precipitous drop in fuel demand throughout the COVID-19 pandemic. But the worst may be yet to come for the oil and gas sector here, as adequate storage remains an issue.
- A highly anticipated management plan for 3.6 million acres of public land in southwestern Wyoming is on track to be released this spring, despite calls to delay the draft’s publication due to the COVID-19 pandemic, the Bureau of Land Management’s Rock Springs field office confirmed last week.
- Geologist Julia Lemaster wanted to create a one-stop shop where unemployed geologists and engineers in energy could find support. She launched a new website Thursday, called Petroleum Pivoters, to do just that.
- Two of the state's leading natural gas producers, Wyoming gas drillers Ultra Resources and Jonah Energy, could face significant financial hurdles in the coming months due to the pandemic and recession (via WyoFile).
WIND & SOLAR
- Utility company Rocky Mountain Power responded to Carbon County Commissioners' worry over the uptick in energy workers in the county working on new wind energy projects, including the Gateway Transmission project (via Rawlins Times).
Last week in numbers
Friday oil prices:
- West Texas Intermediate (WTI) $18.84, Brent (ICE) $25.27
Friday natural gas:
- Henry Hub $1.69, Wyoming Pool $1.53, Opal $1.55
Baker Hughes rig count:
- U.S 408 (-57), Wyoming 4 (-2)
Quote of the week
“We were in the middle of the ocean in a leaky boat, a long way from port. But we were hoping to get to land before a storm hit. We didn’t just get a storm though, we got a hurricane.”
— University of Wyoming economist Rob Godby on the economic crisis.
Follow the latest on Wyoming’s energy industry @camillereports
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