Wyoming lawmakers wrestled with two energy questions Wednesday: Should the state invest heavily in squeezing more oil from aging fields, and should it pass a resolution calling for a compact with neighboring states and Canada to build CO2 pipelines?
The Joint Minerals, Business & Economic Development Interim Committee delivered a split decision — keeping alive ambitious proposals to boost enhanced oil recovery while rejecting a resolution calling for an interstate pipeline compact.
The committee generally supported the idea of coordinating with other states and expanding Wyoming's CO2 pipeline infrastructure, but not everyone saw the need for passing a formal resolution.
The proposed joint resolution stated that "the Legislature supports the establishment of an interstate compact for the development of carbon dioxide pipelines and infrastructure" and would have requested the governor "to initiate discussions with the governments of North Dakota, Montana, Alberta and Saskatchewan concerning the establishment of a regional and international compact for developing carbon dioxide infrastructure."
“We currently have a common pipeline with Montana and over into North Dakota,” noted Sen. Ed Cooper, R-Ten Sleep. “There's a CO2 pipeline from North Dakota into Canada. It only makes good sense that we try to pull all of this thought process into one brain pool if you will and try to put a little bit of commonality into the whole process.”
The resolution failed, however, with Rep. Christopher Knapp, R-Gillette, arguing that it wasn't necessary.
“We have that ability now to start negotiations or start dialogue with other states,” he said. “Dialogue in itself I don't think requires a resolution."
EOR Enthusiasm
Enhanced oil recovery using carbon dioxide injection works by pumping CO2 into old oil fields to push out crude that traditional drilling methods can't reach.
"We've never had a failed case in Wyoming for CO2 EOR," Lon Whitman, director of the Enhanced Oil Recovery Institute, told lawmakers.
The Patrick Draw Field exemplifies the technology's power, transforming from a near-dead well producing just "17 barrels a day to over 7,000 with CO2 injection.”
When Wyoming last incentivized these projects between 2003 and 2008, the return was significant. The state invested $29.4 million in tax breaks and got back $236 million in revenue over the following decades.
"That investment the state made of $29.4 million provided revenue for the life of that project," Whitman explained. “Through 2024 your net profit was $207 million for an investment of $29.4 million."
Resource Constraint
Pete Obermuller, president of the Petroleum Association of Wyoming, framed the stakes facing the Minerals Committee in stark terms: America can't produce enough energy to meet skyrocketing demand.
"We find ourselves in a resource-constrained environment," Obermuller told the committee. "We collectively, in Wyoming and in the United States, cannot produce enough energy to meet our demand."
Just one planned artificial intelligence data center in Laramie County "will require enough energy that is 10x the rest of Wyoming combined. Shocking," Obermuller said.
Against this backdrop, Wyoming sits on an estimated 2 billion barrels of recoverable oil in conventional fields — oil that's already been discovered but remains locked in aging reservoirs.
"This is the next frontier for our oil development here," said Rep. Scott Heiner, R-Green River. "It's harder to find new oil, but we already know where that oil is. It's just a matter of getting it out, and we have the technology to get it out now. So we need to help as much as we can."
Incentive Fund
Committee members kept alive three proposals to incentivize enhanced oil recovery, including Obermuller’s boldest idea.
"What I'm suggesting is a $250 million grant fund funded by oil and gas taxes," Obermuller said. "If we want to move the needle we can't play small ball. We have to think very big on this.”
Wyoming hasn't seen a new CO2 enhanced oil recovery project in 13 years, partly because the industry has shifted from corporate giants to smaller operators.
"You don't have Shells and Anadarkos. They're not the ones developing these projects. They're much smaller companies. Some are just family-owned companies," Whitman noted.
These smaller companies struggle with the massive upfront costs. Tom Kropatsch from the Wyoming Oil and Gas Conservation Commission explained their dilemma.
"It's difficult to compete for capital from these operators when you can drill maybe 10 or more horizontal wells and get an almost immediate return on your investment, the capital flows to those wells and not to these EOR projects," Kropatsch said.
Proposals Ahead
Ryan McConnaughey, vice president and director of communications for the Wyoming Petroleum Association, emphasized that the committee's focus remained on boosting oil production.
"The non-binding resolution on working with North Dakota was voted down. The other three ideas floated are still alive," McConnaughey said following the hearing.
The surviving proposals include making it more financially appealing to use CO2 for enhanced oil recovery instead of piping CO2 into dedicated storage.
The committee is also considering a severance tax exemption for five to seven years on new oil produced from enhanced recovery — plus the $250 million grant program Obermuller floated to help build enhanced oil recovery infrastructure.
"Any one of these or especially a combination would be very helpful in producing more oil from Wyoming's legacy conventional fields," McConnaughey noted.
Recent federal legislation created parity between CO2 used for oil recovery and permanent storage, both receiving $85 per ton in tax credits.
Sen. Chris Rothfuss, D-Laramie, proposed restoring Wyoming's edge with a $5 per ton state bonus specifically for enhanced oil recovery.
"It seems to me a $5 bump at the state level, saying the state of Wyoming is willing to put $5 on the line, we’ll give you $5 per ton if you do it through EOR, might provide an incentive," he said, explaining the incentive would be paid for by severance tax revenue that comes in.
Meanwhile, Wyoming maintains crucial advantages in the EOR space.
"There are no other states with five developing CO2 EOR projects. It's not happening anywhere," Whitman said. "So people have been looking at Wyoming. We want to keep them looking."
"Wyoming is in a really good position right now. We have projects that are essentially shovel ready," Kropatsch added. "Not many other states are in that position."
Before the 2026 budget session, the committee could request a future meeting to develop specific legislation around the enhanced oil recovery concepts discussed on Wednesday.
David Madison can be reached at david@cowboystatedaily.com.
