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Barrasso, Cheney Say No To Gas Stimulus Check

in Energy/News

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By Ellen Fike, Cowboy State Daily

It makes more sense to encourage domestic oil production than use provide a “stimulus check” to American consumers to help them cope with current gas prices, according to U.S. Rep. Liz Cheney and U.S. Sen John Barrasso.

 The “Gas Rebate Act,” a bill proposed by three congressional Democrats, would provide a monthly energy rebate of $100 per person. The refund would kick in for the rest of 2022 as long as the national average gas price topped $4 a gallon during any given month. 

Wyoming’s average gas price as of Monday was $4.08 per gallon, below the national average of $4.234 for a gallon of regular.

Cheney told Cowboy State Daily on Monday that the clear solution to rising gas prices is to unleash American domestic energy production.

“In Wyoming and across the country, we have the resources and capabilities to increase production so we can regain  American energy independence, provide crucial resources for our allies around the world, and reduce gas prices and energy costs  hardworking families are facing,” she said. 

Barrasso, speaking during a news conference last week, agreed U.S. oil production must be increased.

“We are still 1.3 million barrels a day less being made in the United States now than during the pandemic,” he said. “We need to get that up and whether it’s checks, gas cards, any of those things, that doesn’t contribute to the solution of having more available energy for Americans to buy when they go shopping.”

U.S. Sen. Cynthia Lummis did not respond to multiple requests for comment from Cowboy State Daily.

Another proposed Democrat-led bill, the “Big Oil Windfall Profits Tax” would charge a per barrel tax equal to 50% of the difference between the current price of a barrel of oil and its pre-pandemic average price between 2015 to 2019.

The lawmakers calculated that if the per barrel price sits at $120, the tax would raise about $45 billion a year, which would provide single tax filers with $240 annually and joint filers with $360 each year. 

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Gordon, Petroleum Association Say Biden Should Be Embarrassed Over Oil, Gas Report

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By Ellen Fike, Cowboy State Daily

Neither Gov. Mark Gordon nor the Petroleum Association of Wyoming are impressed with a report calling for an overhaul of the federal government’s oil and gas leasing program.

The report released Friday by the administration of President Joe Biden overhaul of the system used to lease parcels of federal land for oil and gas drilling to limit areas available for development and increase the cost for companies to drill on public lands and waters, according to NPR.

Gordon said on Tuesday the report lacked any real merit.

“The Biden administration’s long-awaited review…lacks merit and is a frontal assault on Western lands that leaves nothing to be thankful for,” Gordon said. “The report encourages increasing the cost of producing oil and gas in Wyoming by hiking the royalty rate, taking more areas off the table for federal leasing  and increasing the costs of bonding. None of these options are wise or necessary for Wyoming.”

The report by the Interior Department stopped short of recommending an end to oil and gas leasing on public lands, but officials told NPR it would lead to a more responsible leasing process that provides a better return to U.S. taxpayers.

On Tuesday, Gordon argued that Wyoming was not over-leased, pointing out that only 23% of the total mineral acreage held by the federal government in the state is leased.

“With our state’s  oil and gas industry just showing signs of recovery, this is the worst time to needlessly increase expenses such as jacking up royalty rates or instituting higher bond requirements,” the governor said. “Wyoming already has an industry-funded, successful plugging and abandonment program. While we are asking our enemies to produce more oil, under less stringent regulations and drain our own national security reserves, further weakening our economy, we need to remember that the only result of the President’s actions will be driving more activity to foreign countries and to states with fewer federal lands and minerals.”

Gordon also said that the Biden administration wants the United States to become more dependent on the nation’s adversaries.

“We can do more to reduce CO2 emissions by innovating new technologies that improve our standard of living than regulating into oblivion,” he said. “Any potential modifications to the oil and gas leasing program identified by this review could have been brought forward without the illegal and devastating moratorium. As I have stated on multiple occasions to the Biden administration, the leasing moratorium does nothing to achieve their climate agenda.”

Officials with the Petroleum of Association of Wyoming shared Gordon’s opinions, saying the Biden administration should be embarrassed by the report.

“As fuel prices continue to rise, the Biden Administration’s solution is to increase the cost of production, build more barriers to Wyoming’s development and choke off exploration of new reserves. No wonder they don’t want anyone to read the report,” the organization said on Friday. “The report repeats overblown claims about the government needing a ‘fair return,’ when in fact the mineral program is second only to the IRS in revenue production for the treasury.”

The timing of the report’s release on the Friday after Thanksgiving was also criticized by PAW.

“Wyomingites should take this report for what it is: at best a politically motivated document repeating old anti-development talking points, and at worst a nonsensical screed,” PAW officials said. “Ask yourself, if the oil and gas program was in such desperate need of reform, why did the Biden Administration try to hide it’s report on the issue by releasing it on a day most people would not be paying attention.”

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Oil And Gas Lawsuit Will Continue Despite BLM Plan To Resume Leases In 2022

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By Jim Angell, Cowboy State Daily

A lawsuit filed in Wyoming to reverse a ban on oil and gas leasing on federal lands will continue despite the U.S. Bureau of Land Management’s announcement it will resume leasing in 2022, according to a spokesman for the state’s oil and gas industry.

Ryan McConnaughey of the Petroleum Association of Wyoming told Cowboy State Daily the BLM continues to move slowly in issuing leases on federal land for energy development.

“In reality, the only reason the administration is doing this is because they have a court order and they were in danger of being held in contempt of court,” McConnaughey said. “We have no doubts they will continue to stall leasing on federal lands, so we believe our lawsuit should move forward.”

The PAW and Western Energy Alliance have filed a lawsuit in U.S. District Court in Cheyenne to overturn the ban imposed on oil and gas leases on federal land by President Joe Biden in his first few days in office. The lawsuit argues the BLM did not follow the rules of the federal Mineral Leasing Act in stopping the leases.

A similar lawsuit filed in Louisiana resulted in a judge’s ruling that the federal government did not follow the rules of the act. The judge also issued an order for mineral leasing to resume nationally.

The BLM recently announced it will allow the lease sales for parcels offered for lease in the first and second quarter of 2021 to proceed in early 2022.

However, McConnaughey said the announcement does not address the lease sales that should have been held in the third and fourth quarters of 2021.

“At this point, at this rate, we’ll still be two quarters behind what they should be doing in accordance with the Mineral Leasing Act,” he said.

The BLM’s announcement came shortly after the PAW and WEA filed a request with the federal court asking the judge in the case to expedite proceedings so the merits of their lawsuit can be argued.

“By proceeding directly to the merits of our case, we believe we can compel the federal government to uphold its obligations under the Mineral Leasing Act,” PAW President Pete Obermueller said in a statement.

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Gordon: Energy Moratorium Is Bad For Country, Climate, Wyoming

in Energy/News/Mark Gordon

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By Ellen Fike, Cowboy State Daily

Wyoming’s public services will all suffer with the halt in energy development on public lands, Gov. Mark Gordon told a congressional committee Tuesday.

Gordon spoke in front of the Senate Energy and Natural Resources Committee, telling the senators why President Joe Biden’s energy moratorium is unnecessary and how the policy is harming Wyoming’s economy.

“This leasing ‘review’ is a crafty way of establishing a moratorium on federal lease sales, making continued progress ever more tenuous, more difficult, and more likely that good-paying, family supporting jobs will migrate somewhere else,” Gordon told the committee. “That is bad for this country, for the climate, and especially for Wyoming.”

In addition to Gordon, testimony came from Vicki Hollub of Occidental Petroleum, Pueblo of Acoma Gov. Brian Vallo and U.S. Bureau of Land Management Deputy Director Nada Culver.

Gordon noted that Wyoming ranks first in natural gas production on public lands and second in oil, and that this production is vital to the funding of schools, health care, public safety and other essential services.

Energy-related tax revenues from public lands in Wyoming totaled $457 million last fiscal year. Approximately $5.7 million of that was due to lease sales, but Wyoming has seen no lease sale revenues this year because of the moratorium.

“Doing something as extraordinarily draconian as we are with the policies of this administration doesn’t give us time to evolve,” Gordon said.  

In his first seven days in office, Biden issued two executive orders that have halted oil and gas leasing on federal lands pending a review of the federal government’s leasing programs. Gordon and a number of western governors wrote letters protesting the moratorium and members of Wyoming’s congressional delegation have also expressed their opposition.

U.S. Sen. John Barrasso, who invited Gordon to the meeting to testify, also spoke about how the moratorium will hurt the state.

“Wyoming’s energy has powered this nation for decades, but today, Wyoming and the Rocky Mountain West is under attack,” the senator said. “There are benefits that solar and wind will never be able to replicate.”

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Report: Wyoming Will See Gas Price Increase This Year

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By Ellen Fike, Cowboy State Daily

Wyoming will see an increase in gas prices this year, a petroleum analyst told Cowboy State Daily on Tuesday.

According to gas comparison website GasBuddy, both Wyoming and the United States will see sharp increases in gas prices during the year, with the national average possibly peaking at $3 per gallon at some point this year, likely in July.

However, for the year as a whole, average gas prices will increase by only about 27 cents per gallon, the report said.

Wyoming’s gas prices will follow the same pattern, said Patrick De Haan, head petroleum analyst for GasBuddy.

“I don’t expect Wyoming to be much different in 2021 than what’s prescribed in the outlook, as the themes we expect to impact gas prices in every of the nation’s 50 states is common – COVID COVID COVID, unfortunately,” De Haan told Cowboy State Daily.

However, De Haan said Wyoming’s fluctuations would probably occur several weeks after changes in the rest of the country.

“Wyoming gas prices typically lag the national average by several weeks, so that may mean prices rise after the national average does, and they may also take time to fall should there be a circumstance in which the national average decline,” De Haan said.

The GasBuddy report predicted that the nation’s yearly spending on gasoline will rise to nearly $326 billion dollars in 2021, an increase of over $45 billion from last year, as the average household sees its annual gasoline spending rise to $1,670.

While much of the U.S. population will see prices remain in the $2 per gallon range, major cities in California and Hawaii will spend the entire year over $3, while others, including Chicago, New York City, Philadelphia, Phoenix and Seattle are also at risk of seeing average prices over $3 per gallon in 2021, the report said.

Most of the increase an be traced to the coronavirus and oil production, GasBuddy said.

However, De Haan said he expected gas prices nationally this year to remain below previous records.

“I’m very optimistic that we’ll see improvement in the pandemic and see gas prices stay far under their previous records, leading Americans to perhaps turn to the nation’s highways to seek happiness after a year of stress and challenges, slamming the door on what was an awful 2020,” De Haan said.

Current gas prices ranged widely throughout Wyoming in GasBuddy’s latest survey, with the lowest being found in Laramie ($1.89 per gallon) and the highest being in Jackson ($2.67). The average price found across the state is around $2.15.

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Wyoming Oil, Gas Industry In Position To Thrive With Better Markets, Report Says

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By Jim Angell, Cowboy State Daily

Once market conditions align to pull the oil and natural gas industry out of its slump, Wyoming will be in position to take a national role in the industry, according to the Wyoming State Geological Survey.

“When supply, demand and price factors align, Wyoming’s oil and gas industry is well positioned to rebound,” said the survey’s report on the industry. “Overall, Wyoming is in a position to remain a major player on the national oil and gas stage for years to come.”

The report, written by Erin Campbell, the WSGS director and state geologist, said Wyoming was on track early last year to produce oil in quantities not seen since 1991.

“Within months, however, a perfect storm of dynamic national and international market conditions and a global pandemic drastically changed the trajectory of Wyoming’s production, especially of oil,” it said.

The report said surpluses of both oil and gas have contributed to market declines, as did declining demands for fossil fuels caused in part by fuel economy gains, increased energy efficiency and above-average winter temperatures.

“When the COVID-19 pandemic lockdowns abruptly slowed most of the economy, the combination of an oversupplied market and severely diminished demand worsened the supply-demand imbalance and briefly forced April oil prices in to the negative,” the report said.

The global oil and gas industry is now in what the WSGS described as a “holding pattern,” with oil prices recovering slightly.

Looking to the future, the WSGS said a number of factors must improve before the industry will see significant gains.

“The timing of Wyoming’s oil and gas industry recovery will depend on demand for oil and gas returning to levels that will draw down and balance supplies, future OPEC decisions, and prices returning to a value at which production from Wyoming reservoirs is profitable,” the report said.

However, it added that once conditions do improve, Wyoming’s oil and gas industry is in a good position to take advantage of the situation.

“Unconventional reservoirs in the Powder River and Denver basins contain substantial oil and associated gas reserves,” it said. “In the Greater Green River Basin, horizontal drilling has greatly increased the production potential of Wyoming’s large gas fields. Recent investment in pipeline infrastructure ensures the continued distribution of the state’s resources.”

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Legislators on dwindling state revenues: ‘It’s real, it’s bad’

in Energy/News/Taxes
Silhouette of a Pump Jack

By Ike Fredregill, Cowboy State Daily

As coal, oil and natural gas revenues decline, state legislators could have some hard decisions ahead, according to information generated by a strategic planning effort created by Gov. Mark Gordon. 

Dubbed “Power Wyoming,” the planning effort forecasts several scenarios for mineral-based state revenue streams during the next five years, all of which predict a deficit in coming years. 

The information compiled by Power Wyoming was presented to the Wyoming Legislature’s Joint Revenue Committee on Nov. 11. 

“The best projections in this model are very unlikely, and the worst are the most likely,” said Sen. Cale Case, R-Lander, the Senate committee’s chair. “That’s very scary.”

Case worked on Power Wyoming with Rep. Dan Zwonitzer, R-Cheyenne, chairman of the House Revenue Committee. Also on the team were members of the executive branch and economists familiar with the state’s energy sector such as Rob Godby, the University of Wyoming director for Energy Economics and Public Policies Center and a College of Business associate professor. 

Zwonitzer said the planning effort is the starting point to prepare for diminishing mineral revenues. 

“Power Wyoming is just the first step of saying, ‘Here’s what’s going to happen to Wyoming,’” he said. “The group was formed to get the message out there: ’It’s real, and it’s bad.’”

Renny MacKay, Gordon’s policy adviser, said Power Wyoming was not established to be a group of individuals working on potential solutions to the state’s revenue problems, but rather a group of experts working to gather to analyze data.

“This is a cone of different scenarios for both revenue and energy production,” MacKay said.

In its current iteration, Power Wyoming provides insight by compiling information from the state’s Consensus Revenue Estimating Group and the U.S. Energy Information Administration, among others.   

“Energy production is declining … and if there is production decline, the traditional jobs we have in Wyoming would be impacted,” MacKay said. “Information gives us power. The more we look at it, the more we talk about it, we can figure out what our opportunities are as a state.”

Worst case scenarios

While the coal industry’s struggles are being felt across the state, Case said Power Wyoming illuminated potential problems with the natural gas sector as well.

“I did not realize the issues with natural gas were as serious as they are,” he said. “Everybody else is thinking natural gas is doing great, and it’s not.”

The planning effort’s initial simulation results highlight some scenarios where the state’s total mineral revenue drops by 10 percent as early as 2020-2022 before a potential partial recovery by 2024. Some scenarios show a full recovery to expansion in revenues, but Power Wyoming reports they are the least likely cases within the current market conditions and expectations.

Most scenarios predicted a decrease in both Wyoming’s total employment and population, but in the worst case scenarios, the state’s total employment could decrease by about 20,000 jobs by 2024, followed by a similar decrease in population.

“In the next five years, there’s no way to absorb those (lost) jobs,” Zwonitzer said. “That means we’ll either have to have an increase in taxes, or a decrease in government services.”

In the worst case scenarios, he said the state would most likely need to pursue both. 

“We’ve lived a certain way in this state for 100 years with minerals paying the taxes,” Zwonitzer said. “That major revenue source is going away. So what does that look like for our future, and what do we want to do about it?”

Unreliable oil

Some of the scenarios, including those in the best case category, relied heavily on increased oil production balancing decreased coal and natural gas production. But Case warned against putting faith in the oil market.

“I think oil is very susceptible to environmental and carbon risk,” he said. “Changes in policy from Washington, D.C., and from other states could make it impossible to grow petroleum.”

A low-carbon policy consideration was also provided for the Revenue Committee as part of the Power Wyoming data package. Case said the presentation offered a more realistic outlook of oil than the initial simulation results put together by Godby.

In the policy consideration, Shell Global estimates a high usage of liquid hydrocarbon fuels, such as gasoline, in 2020 by about 25 million barrels a day. After the peak, however, the oil company predicts a gradual decrease down to 10 million barrels a day in 2060 and about 2 million barrels in 2100 as part of its strategy to comply with the Paris Climate Accord.

Most scenarios presented by Power Wyoming indicate the mineral sector is going to take a significant hit in the next five years, but even if the best case scenarios come true, Case said the future of energy is moving away from Wyoming’s traditional mineral offerings.

“This will tell you that the bad times are here,” Case said. “This is not just a tool for the Revenue Committee, but it’s also a tool for us. If you’re an employee in the coal industry, it’s probably time for you to get your own house in order.”

MacKay said Gordon is already working on the next steps of the planning effort. 

“We are bringing folks from the private industry now,” he explained. “Power Wyoming will definitely stick around for the foreseeable future.”

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