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Laramie Protest Over Wind Energy Regulations Slated For Wednesday Morning

in Energy/News
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By Ellen Fike, Cowboy State Daily

A group of Albany County residents seeking a change to the county’s rules for wind energy projects plans to hold a peaceful protest rally at the county courthouse at 8 a.m. Wednesday.

The protest is set to take place one hour before a special Albany County Planning Commission meeting where members will discuss the need to change current county regulations.

The rally is a response to plans to build two industrial wind plants in the county. Organizer Paul Montoya described the development of such projects as an “onslaught…that have engulfed neighboring counties such as Laramie County and Carbon County.”

Montoya told Cowboy State Daily that the Roundhouse project outside of Cheyenne was a major factor behind the rally, noting that it’s an eyesore that can be seen from as far away as Albany County. Construction on the project, which will consist of up to 120 turbines, began in 2019 and is expected to be completed at the end of this year.

A project proposed for Albany County that is being opposed by Montoya and others is the Rail Tie Wind Project, which is to be built around Highway 287 near Tie Siding.

Montoya is quick to clarify that he’s not against wind projects, but is more frustrated with the current regulations in place and the three county commissioners’ “lip-service” regarding the raised concerns.

“We just want some updated regulations and mapping of where these plants should go,” Montoya said. “We’re really wanting them to look at what Sweetwater County has done regarding its regulations for wind and solar projects, because they’ve done a fantastic job. We don’t want to be like Teton County and not allow any sort of project like this, but we want to ensure it doesn’t impact the quality of life of the people of this community.”

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Black Hills Energy Gives Back to Wyoming Communities

in Energy/News
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Black Hills Energy is much more than an energy company. The company believes in investing in local economies, helping families in need, and supporting the communities employees work and live in. 

In 2019, the direct economic impact of Black Hills Energy in Wyoming totaled $144 million. This included compensation for employees, charitable giving, payments to suppliers, and property, sales and use taxes paid to communities.

As part of this, charitable impact totaled $345 thousand dollars, including financial support for nonprofits, economic development, low-income energy assistance, investments in trees, and support for United Ways – all making a positive impact in the hometowns of employees and customers in Wyoming.

Giving back is more than just writing checks. Black Hills Energy also supported communities in 2019 in other ways, including:

  • More than 2,400 customers participated in energy efficiency programs; saving energy costs.
  • More than 65 families received energy assistance funds as part of the Black Hills Cares program.
  • More than 50 community organizations benefitted from volunteer time shared by 40 employees.
  • Over 25 first responders learned emergency response techniques around natural gas and electrical lines.

“At Black Hills Energy we believe strong communities help make for strong companies. If our communities are not strong, we won’t be either,” said Linn Evans, president and chief executive officer at Black Hills Energy. “Our hearts go out to all those impacted by COVID-19, whether physically or economically. In addition to our community impact initiatives, as the pandemic became a reality in our hometowns this spring, we partnered with our communities to help fill basic needs by designating $375,000 for immediate relief efforts. And, we stand ready to partner with our communities as they emerge from the impact of coronavirus.”

“Seeing our company and its employees give back to so many communities and organizations, exhibits the Black Hills Energy’s culture at its finest, and it is something I am glad to represent every day,” said Mark Stege, Wyoming’s vice president of operations.

To learn more about all the ways Black Hills Energy is supporting communities please visit:     www.blackhillsenergy.com/community and click on the Community section. 

About Black Hills Energy

Black Hills Corp. (NYSE: BKH) is a customer focused, growth-oriented utility company with a tradition of improving life with energy and a vision to be the energy partner of choice. Based in Rapid City, South Dakota, the company serves 1.28 million natural gas and electric utility customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. More information is available at www.blackhillscorp.com and www.blackhillsenergy.com.

Jonah Energy VP: Despite Hurdles, Natural Gas Industry Can Stabilize and Grow

in Energy/News
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By Ike Fredregill, Cowboy State Daily

A cleaner energy product could provide the ladder needed by Wyoming’s natural gas industry to climb out of a hole dug by years of low prices, high regulatory fees, and finally, the pandemic, an industry leader said.

“The challenges for natural gas producers have been growing for a number of years,” said Paul Ulrich, vice president of government and regulatory affairs at Jonah Energy LLC. “And, what we are facing today is clearly a perfect storm.”

With only two natural gas rigs operating in the state, Ulrich said Wyoming hasn’t seen natural gas rig counts this low since the 1940s.

Before the coronavirus pandemic, the U.S. natural gas market was flooded with cheap product. Oil producers in the Permian Basin, an oil field covering parts of Texas and New Mexico, drew up an abundance of natural gas as a byproduct of oil drilling.

“There was a glut of natural gas on the market,” Ulrich explained. “The price differential (to extract natural gas in Wyoming) puts us at a disadvantage in the marketplace.”

In Wyoming, natural gas producers drill for gas and pull up a small portion of oil as a byproduct, Ulrich explained.

Because Wyoming’s producers focus on natural gas production, their operating costs are higher, making it difficult to compete against oil producers, he said.

But when oil production slowed to a crawl in the U.S. as a result of a price war between Russia and the Organization of Petroleum Exporting Countries (OPEC) earlier this year, Ulrich said an opportunity opened for natural gas producers.

“I strongly believe that if we as a state collectively make smart and major decisions that remove financial and regulatory hurdles, we have the opportunity to not only stabilize, but grow the industry back to pre-2019 production rates,” he said.  

A key factor in regrowing Wyoming’s natural gas sector would be the willingness of producers to adapt to cleaner energy demands.

“The market is extremely interested in consuming more responsibly produced energy,” Ulrich said.

Taking part in a program designed to encourage the responsible production of natural gas, Ulrich said Jonah Energy qualified its product as low emissions and also reduced surface disturbances by working with state agencies and researchers on best practices.

The company earned a gold TrustWell rating, a score developed by the Independent Energy Standards Inc. to rank natural gas producers based on responsibility metrics across a range of risks and impacts. Jonah is also the first producer in the nation to receive TrustWell’s Verified Attribute for Low-Methane.

“From our standpoint, the whims of the market are one thing,” Ulrich said. “But if we can provide a cleaner source of natural gas, a more responsibly produced natural gas, we believe there’s a place in the market for it.” 

Jonah is exploring options for opening another rig in July, which could bring the state’s count up to three, he added.

As the Wyoming Energy Authority’s vice chairman, Ulrich said he was working with the state to help position Wyoming once again as a competitive market for natural gas producers.

“The authority is envisioned as a one-stop shop for developers, who want more information and help finding opportunities in Wyoming,” he explained. “Natural gas is a tremendous feed stock for a myriad of manufacturing processes, and could be a tremendous opportunity to diversify our economy.”

Both the Legislature and Governor Mark Gordon’s office have been supportive of the industry, he said, but the state has some work to do before natural gas can return to its former glory.

“Our best path forward — as a state and energy producers — is working together toward a shared goal,” Ulrich said. “The most important thing we can do as a state is remove any and all barriers to capital investment as well encourage and incentivize Wyoming operators, whether drilling for natural gas or oil.”

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Wyoming Oil Production Decline ‘Catastrophic,’ Recovery Unlikely

in Coronavirus/Energy/News
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By Ike Fredregill, Cowboy State Daily

EDITOR’S NOTE: This is the second of a two part series detailing the struggles of Wyoming’s energy sector in a post-pandemic economy.

Before COVID-19, Wyoming officials were hopeful the potential for increased oil demand could offset declining natural gas and coal revenues, but a foreign price war dashed those hopes this spring, a University of Wyoming economist said. 

“In April, there was a price war between the Organization of Petroleum Exporting Countries (OPEC) and Russia,” said Rob Godby, UW’s Energy Economics and Public Policies Center director. “Prices fell through the floor.”

Oil prices plummeted to less than zero — at a negative $37.63 per barrel — near the end of April. As of Thursday, the price per barrel rebounded to a positive figure of $35.60 per barrel, according to U.S. oil benchmark West Texas Intermediate, but prices are again trending downward as markets anticipate a second wave of COVID-19 cases. 

“Worldwide demand for oil collapsed by about 30 percent,” Godby said. 

Supply, demand

Before the pandemic, the world produced about 100 million barrels of oil a day, but international demand only called for about 70 million, he explained.

“It got to the point there was too much oil coming out of the ground and people didn’t have a place to put it,” Godby said. “They were paying people to take it off their hands.”

The U.S. was the world’s largest oil producer before COVID-19, but American producers struggle to make profits when the price per barrel is below $40. Diminishing income forced many producers in Wyoming and throughout the U.S. to cap wells.

“Capping wells is drastic, because it can damage (oil) reservoirs,” Godby said.

When producers re-start capped wells, the damage done to reservoirs can reduce the wells’ output.

“It’s not great,” Godby said. “But, it’s all you can do to stop the bleeding.”

Prior to 2020, Wyoming’s oil production never fell by more than 10% in a single year.

“We have very little data, but we expect oil production to decline in Wyoming in our baseline forecast by 45%,” Godby said, explaining the prediction was presented to the state in the latest Consensus Revenue Estimating Group report. “This is catastrophic.”

During the next five years, according to the report, Wyoming’s oil production rates are not expected to return to the levels seen in 2019, Godby added.

Will energy recover?

Given the unprecedented nature of COVID-19’s impact on the global economy, predicting post-pandemic energy demands is a lot of guesswork, Godby said.

But, few believe Wyoming’s energy sector will return to pre-pandemic production rates — which were on the decline — any time soon, he added.

“Some of the most rosy projections predict oil could come back, but the problem is the U.S. is a high-cost producer,” Godby said. “Where we think oil will come back is in newer fields, not in places like Wyoming.”

Most experts agree coal production will continue to decline, but determining the rate of decline is still up for debate.

Natural gas is poised for a rebound as oil production slows, decreasing the surplus gas flooding the market, but Godby said experts question whether Wyoming would be considered a prime location for new wells in the future.

“We don’t expect the increases in natural gas through 2024 to bring us back to where we were in 2019,” he said. “In the short term, there may be a price spike, drawing renewed interest. But it’s possible oil and gas development will occur elsewhere outside of Wyoming.”

COVID-19 Could Prove Lethal To Wyoming Energy Economy

in Energy/News
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By Ike Fredregill, Cowboy State Daily

EDITOR’S NOTE: This is the first of a two stories detailing the struggles of Wyoming’s energy sector in a post-pandemic economy.

Wyoming’s coal, oil and natural gas producers are facing significant losses following the COVID-19 pandemic, a University of Wyoming economist said.

Before the world turned upside down, Rob Godby, director of the Energy Economics and Public Policies Center at the University of Wyoming, helped produce several scenarios for Gov. Mark Gordon detailing the state’s potential energy revenues .

Legislators were taken aback by the dismal scenarios presented. 

Six months later, the scenarios’ worst-case projections look optimistic compared to post-pandemic realities.

“COVID-19 caused a decline in coal that was more than double what we expected,” Godby said. “2019 was the worst year for coal in the last 20. We produced 15% less coal in 2019 than in 2018.” 

Since March, the state has produced about 40% less coal than in 2019, he explained.

Natural Gas

“Prior to Covid-19, the market was flooded with cheap natural gas,” Godby said.

Oil drilling operations in the Permian Basin in Texas and New Mexico were pulling up natural gas as a free byproduct of oil production and selling it on the open market, which made it difficult for natural gas producers in Wyoming to compete because they dealt solely in natural gas. 

In May, Ultra Petroleum Corporation, one of Wyoming’s largest natural gas producers, filed for bankruptcy for a second time in four years.

While some companies continue to pump out natural gas, Godby said the search for new wells is grinding to a halt.

“These companies were not drilling any more, so natural declines were going to happen,” Godby said, explaining natural gas production was previously predicted to decline by 25%.

“COVID-19 hasn’t really changed the rate of decline of natural gas. What has changed is the potential outlook a year or two from now.”

With most of the nation’s natural gas coming from oil drilling operations, the collapse of oil demand worldwide makes it difficult to predict how natural gas producers — especially those who produce only natural gas and not oil — might respond.

“With less natural gas coming on the market as a result of decreased oil production, there is a possibility for natural gas to rebound,” Godby said. “As early as the start of next year, we may see prices rebound.” 

There is uncertainty, however, about whether Wyoming’s producers will be able to weather the downturn long enough to capitalize on increased natural gas demand.

“The firms in the natural gas sector were already in trouble,” Godby said. “But the question is ‘Will they fail completely in the current situation?’”

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Governor, Mayor Express Dismay Over Refinery Job Losses

in Coronavirus/Energy/News
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Gov. Mark Gordon and Cheyenne Mayor Marian Orr both expressed dismay on Monday over the announcement that 200 HollyFrontier refinery workers in Cheyenne will lose their jobs in the next 12 to 18 months.

HollyFrontier announced Monday it would convert its Cheyenne refinery to a plant to create diesel fuel from soybean oil and cut its workforce by 200 in the process.

Gordon and Orr issued separate statements about the announcement.

“These job losses are real,” Orr said. “And they hurt.”

“The announcement … is a devastating blow to Cheyenne, Laramie County and all of Wyoming,” Gordon said.

HollyFrontier said it no longer considered the refining of petroleum products to be a sustainable business for its Cheyenne refinery. Officials said much of the refinery’s equipment will be used to make the renewable diesel for sale in California and Colorado, while the rest will be idled.

Orr said the announcement is a sign of the reduced demand for fossil fuels.

“It certainly feels as if the hits keep coming,” she said. “This is the world we live in, a world that is moving away from coal and oil and moving towards clean an reliable new energies such as biodiesel.”

Gordon said he asked the state Department of Workforce Services to be ready to help the displaced refinery workers find new jobs and Orr said she also contacted DWS.

“The good news is we have time,” she said. “HollyFrontier isn’t leaving our community and I know they will continue to be good community partners well into the future.”

Cheyenne Refinery To Shift To Renewable Diesel, Cut 200 Workers

in Business/Economy/Energy/Jobs/News
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By Jim Angell, Cowboy State Daily

HollyFrontier’s Cheyenne Refinery will shift from refining petroleum to producing a diesel fuel made out of soybean oil, the company announced Monday.

HollyFrontier announced in a news release that the conversion from petroleum refining will take 12 to 18 months and by the time the work is completed, about 200 workers will have been released.

The reduction in the refinery’s workforce will occur over a period of time, said Liberty Swift, manager of corporate communications for the company.

“Everyone’s learning today what the plan is so no one would be taken by surprise,” she said. “We’re working with everybody to try to assist them through this process.”

The refinery on the south side of Cheyenne has been processing petroleum for 86 years, according to Mike Jennings, HollyFrontier’s president and chief executive officer.

But Jennings said given the crash in oil prices caused by both oil price wars and the coronavirus, the company did not believe petroleum refining was a sustainable business.

In addition, the company was looking at high operating and maintenance costs related to the refinery over the next three to five years, he said.

Swift said there is a growing demand for diesel fuel made from renewable resources, particularly in California, but also in Colorado.

The Cheyenne refinery was well-suited for the conversion because some of the equipment already in place can be used to produce the renewable diesel, she added.

Any equipment not used in the production of renewable diesel will be idled, Swift said.

The conversion process is expected to cost about $125 million to $175 million, the company said.

When the work is finished, about 80 employees will remain at the refinery.

The company will work where possible to put employees removed from the refinery to work at other HollyFrontier plants, Swift said.

She added the company wants to continue working with Cheyenne as it has in the past.

“We want to continue to be in the Cheyenne community and want to continue to be a strong community partner,” she said. “This is a way we can stay in the community.”

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Minerals Industry Recovery From Pandemic Will Be Long Process

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By Ellen Fike, Cowboy State Daily

The closure of businesses across the state has led to a drop in demand for energy, resulting in a downturn for much of Wyoming’s energy industry, industry representatives said Friday.

During Town Square Media’s “Economy Town Hall” on Friday morning, Travis Deti, executive director of the Wyoming Mining Association, and Pete Obermueller, president of the Petroleum Association of Wyoming, agreed the coronavirus pandemic has had a significant impact on their industries.

Obermueller noted that there wouldn’t be one single moment when miners, oil rig workers and other industry employees would head back to work, but that recovery would be a “long-term process.”

“When people start driving and flying again, we’ll get the demand back,” Obermueller said. “It’s a demand issue right now and until that comes back, oil and gas in Wyoming won’t come back.”

Deti agreed, adding that the Wyoming coal industry has been on a downward trend for a few years due to competition with low-cost natural gas and other alternative forms of energy. But with much of Wyoming’s businesses being shut down, there has also been a decline in demand for coal.

The WMA executive director wouldn’t speculate about whether or not the coal industry in Wyoming would see long-term effects from the virus, but felt the situation would ultimately “get better.”

The two men also discussed how federal and state social distancing guidelines would change the way miners and oil riggers would work.

Obermueller noted that for the most part, employees on drilling rigs are usually physically distant, but for Wyoming miners, the situation has been a little different because they work nearer each other.

“We’re essential, so we have to keep operations up and running,” Deti said. “We have to provide appropriate work conditions for our employees to be safe, so we’ve put restrictions on vendors and visitors to the sites. Certain sites are implementing temperature checks. All of the operators are taking appropriate steps.”

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Gordon: Energy Decrease Catastrophic For Wyoming; “Country Needs to Get Back to Work”

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By Jim Angell, Cowboy State Daily

A lengthy recovery in the price of oil will be needed to return Wyoming’s oil production to where it was before the coronavirus pandemic, Gov. Mark Gordon said Friday.

Gordon, speaking during Town Square Media’s “Economy Town Hall” broadcast on the company’s Wyoming radio stations, said a rise in the price of oil alone will not be sufficient to sustain a recovery of the industry.

“It is going to take a serious recovery on two fronts to make that work,” he said. “One is it has to recover price to get back to where it’s economic in Wyoming to produce and then it has to stay there for some time because a lot of companies are idling their rigs. Those rigs don’t go back up with just a click of the fingers.”

Oil prices have declined significantly in recent weeks due to a decline in demand for energy with the coronavirus pandemic and an oil price war between Russia and Saudi Arabia.

At least part of the problem could be solved with the resumption of normal business activities in the country, Gordon said.

“The demand destruction has just been catastrophic,” he said. “People aren’t flying. People aren’t using electricity like they used to. We’ve got to get this country back working again.”

The state’s role will be to make sure Wyoming’s mineral industry is ready to meet that demand once things return to normal, he said.

“Today I’m going to be talking about the things we can do to try to stimulate our economy to make sure we have all the oilfield service companies, the miners … available so when our economy does rebound, which it will, that we’re ready to be right in the lead.”

The Legislature is expected to meet in special session later this year to address how to spend $1.25 billion in funds received from federal aid programs and how to adjust the budget its members approved in March to compensate for an anticipated drop in mineral revenue.

Gordon has already ordered state departments to freeze hiring and the issuing of contracts and has asked department heads to look at ways to cut their spending, although exact income cuts are not yet known.

“Unfortunately, we won’t really know the impact of this quarter for a while yet,” he said. “Probably around May 20, we will see numbers that will make our eyes pop. I think it does mean we’ve got to re-examine our budget pretty substantially.”

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Why Aren’t Wyoming’s Gas Prices Lower?

in Energy/News
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By Ike Fredregill, Cowboy State Daily

As oil prices plummet worldwide, the price of gasoline at the pump in Wyoming is following a similar trajectory across the nation, albeit not as dramatically. 

“I call it the rocket-feather effect,” said Rob Godby, a University of Wyoming energy economist. “Gasoline prices go up like rockets and fall like feathers.” 

Wyoming’s average price for a gallon of regular gasoline as of Wednesday, April 1, was about $2.17, not quite 20 cents higher than the national average of about $1.98, according to AAA’s gas map at gasprices.aaa.com.

GasBuddy’s price map, at gasbuddy.com, displays a more detailed summary of national gasoline prices, but both maps show the same thing — west of Wyoming, gas is more expensive, and for the most part, gas to the east is cheaper.

The price a consumer pays at the pump is affected by numerous factors — from the price of oil per barrel to the distance between gas stations — but for the sake of brevity, Godby, the director for UW’s Energy Economics and Public Policies Center and a college of business associate professor, boiled it down to three factors: the regional taxes or additive requirements at play, a pump’s proximity to large clusters of oil refineries and demand in an area.

“Typically the West Coast is more expensive than the rest of the country, because it’s more difficult to get oil there,” Godby explained. “And, the lowest prices for gasoline are in the Gulf states to the Southeast. That’s simply because that’s where all the gas is made.”

Hawaii boasts the nation’s highest gasoline prices with an average of about $3.35 per gallon, and California comes in second at about $3.02 per gallon. 

Gas prices around the Gulf are lower than much of the nation, but the lowest prices are in Wisconsin with an average of $1.53 per gallon and Oklahoma at about $1.54 per gallon.

While Wyoming is home to a number of petroleum refineries, the lack of demand can inflate pump prices. What Wyoming has in oil assets, it lacks in population. Fewer people attracts less competition, allowing gasoline providers to keep their prices higher for longer.

“In a small town in Wyoming with only one gas station, you’re not competing against anybody,” Godby said. “So, why lower the price?” 

Ultimately, gas stations are forced to reduce prices at pumps near neighboring towns to remain competitive, but Wyoming’s gas trends trail the national average.

“Wyoming’s holdout can’t last forever,” Godby said.

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