Roughnecks work on a rig’s floor in Sublette County. (Angus M. Thuermer Jr.)

President Joe Biden’s Jan. 27 order to pause oil and gas leasing on federal lands hit Wyoming on Friday as the BLM postponed the auction of 383 parcels covering almost half a million acres.

The leasing pause will enable a review that’s part of an all-government fight against “a profound climate crisis” exacerbated by the burning of fossil fuels, Biden’s order states. The BLM had scheduled the first-quarter 2021 sale of development rights on 476,506 acres for March 15 after deciding the sale would not “significantly affect the rate of change” in the environment. The agency did not say when a lease sale might be rescheduled.

The BLM’s first quarter sale last year brought in $3.4 million after energy companies leased 75 parcels covering 71,689 acres. Wyoming received about half the sale’s proceeds and will also get a share of future production royalties, if production ever occurs. The auction last year sold less than a sixth of the acreage that had been proposed for sale this March.

Wyoming lawmakers last year, reacting to Biden campaign positions that threatened leasing, funded a report that says Wyoming would lose $304 million in annual tax revenue if leasing stopped on federal lands. That report has been much-touted in the wake of the official pause. But a critic who reviewed the report for The Wilderness Society says it overestimates impacts by up to 85%.

This pie graph from 2018 shows the portion of greenhouse gasses emitted from fossil fuels extracted from federal lands in individual states and Wyoming’s 57% share. (USGS)

The state-commissioned drilling-ban impact report by a University of Wyoming energy economics professor predicts production and investment losses in Wyoming, plus the lost tax revenue, would amount to $640 billion through 2040. Author Tim Considine prepared the 66-page review in December more than a month before Biden paused leasing for “a comprehensive review” of the nationwide system.

Wyoming would lose 15,269 jobs a year in the first five years of a leasing moratorium, Considine wrote. Leasing or drilling restrictions also could have a “spillover effect,” potentially making extraction less attractive or efficient on nearby private or state lands, the paper says. 

Considine included numerous caveats about the difficulty of forecasting revenues. Critic Laura Zachary, an economic and policy analyst, wrote that Considine’s findings “quickly unravel when we take a look at a number of highly flawed assumptions.”

The Wyoming study “has a number of weaknesses that exaggerate the economic impacts … by between an estimated 70-85%,” she wrote in a report for The Wilderness Society. Methods Considine used to arrive at his conclusions, her critique reads, are “simply not how markets work in reality.”

Competing narratives

Conservationists say a leasing pause shouldn’t affect energy companies because they hold many leases that have yet to be developed. The Bureau of Land Management lists 13,296 leases in effect in the state in FY 2019. They covered 8.9 million acres, about 14% of the 62-million acres in Wyoming.

Agency statistics show that 4.1 million acres of leases in Wyoming were producing that year. But more than 5 million leased acres in the state are not producing, the group Rocky Mountain Wild said in an analysis.

Leases held on public lands in Wyoming in 2020 are shown in black. (Wyoming Outdoor Council)

“Th[e] results of this analysis show that the oil and gas industry currently has millions of acres of leases where they can continue operations during this pause,” wrote Alison Gallensky, a GIS cartographer with the Colorado environmental nonprofit.

The lease sales themselves account for a small portion of revenues the oil and gas industry provides to the state, said Dan Smitherman, the Wyoming State Manager for The Wilderness Society. “Over 90% of the revenue Wyoming reaps from federal oil and gas come from royalties paid on production — which will not be impacted by pausing new leasing,” he wrote in a statement. “Operators have plenty of opportunity to continue producing oil and gas during this pause.”

Producers “would indeed drill their existing leases if permitted,” Considine wrote in an email. “They just would be drilling fewer wells because there are no longer new leases being sold.

“Drilling responds to new leases with a lag as well as prices and market conditions,” he wrote. “I found that the average term of leases is five years. So after five years the bank of leases is depleted and there are no leases available to drill.”

While Considine’s paper considers impacts from a leasing moratorium and also from a drilling ban, myriad other forces are at play, conservationists say. Shifting customer preferences, new technologies, growing renewable energy sources and pandemic-induced slumps all have affected the fossil-fuel industry and Wyoming’s dependence on it.

In 2020 Wyoming issued 3,891 permits to drill, just 12% of the 31,529 issued in 2019, according to BLM statistics. The numbers have been on a roller-coaster ride over the last five years, from a low of 2,321 in 2016 to 2019’s high.

Now, government policies, in addition to market forces, may also directly restrict the sector.

A 2018 report found that Wyoming was the largest single contributor of greenhouse gasses from fossil fuels extracted from federal lands.

The estimates for the decade between 2005-2014, a period before coal companies saw significant loss of demand, showed that fossil fuels extracted from Wyoming were responsible for 57% of greenhouse gasses emitted from oil, gas and coal mined from federal lands nationwide.

Biden’s administration oversees federal lands that cover almost half of the state, leaving Wyoming’s drill-rig and dragline economy vulnerable to shifts in federal policy.

The cost of cleanup

Ceasing leasing on federal lands won’t solve the greenhouse gas problem, Considine wrote. The cost of avoided CO2 emissions under a lease moratorium is at least $58 a ton, he wrote. The price paid under an emission-reduction program in California, however, is only $15 a ton, his paper says.

“[R]estricting development of oil and gas on federal lands,” Considine wrote, “is a very expensive way to reduce greenhouse gas emissions.”

Oil production in Wyoming. (Wyoming Oil and Gas Conservation Commission)

Comparing the cost of avoided CO2 emissions to the price California pays is inappropriate, Zachary rebutted. The “societal cost” of carbon — costs that aren’t easily quantified in monetary terms — is about $50 a ton, her criticism reads. Methane emissions, another gas- and oilfield pollutant, cost society as much as $1,500 a ton and that doesn’t include impacts to neighbors’ health, she wrote.

Gov. Mark Gordon and industry representatives embraced Considine’s report, with Gordon calling a potential ban “a serious threat to our state’s economy.” The Petroleum Association of Wyoming suggested Considine’s work was “the most accurate and up to date data.”

U.S. Sen John Barrasso (R-Wyoming) has offered a budget amendment that would establish a fund supporting schools in states with revenue lost from a leasing ban. U.S. Rep Liz Cheney (R-Wyoming) and U.S. Sen. Cynthia Lummis (R-Wyoming) introduced bills seeking to stop Biden’s leasing changes.

While Biden’s green campaign permeates the entire federal government, Gordon’s resistance is similarly widespread. He instructed state agencies to examine the financial impacts of what he called a “ban on leasing” and its effect on employment. He also asked agencies to coordinate with his office on ways to challenge the Biden order and identify opportunities for litigation.

Gas production in Wyoming. (Wyoming Oil and Gas Conservation Commission)

Wyoming Game and Fish Department quickly responded. But while Considine said a leasing ban on federal lands could curtail development on private and state lands, the wildlife agency sees things differently.

A leasing ban “may force development to focus on undisturbed lands including those under state or private ownership,” Brian Nesvik, Director of Game and Fish, said in a statement. “A blanket ban on new sales of federal oil and gas leases decreases proponents’ ability to mitigate wildlife impacts because it restricts potential development locations,” his statement reads.

Game and Fish’s embrace of industry for the benefit of wildlife stretches credulity, said Jill Morrison, executive director of the Powder River Basin Resource Council. “It’s difficult to understand how the Game and Fish or any wildlife agency could think a leasing pause is a problem for managing wildlife,” she said.

“A leasing pause, especially when we have so many acres — millions —  already leased, isn’t going to have a detrimental impact at this point,” she said.

Biden’s review could result in higher royalty rates on federal leases, Morrison said. In some cases, those federal fees are half of what companies pay to private owners of fossil fuels, she said.

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“The state could stand to gain a lot more money,” Morrison said. Instead, it’s undertaking “desperate measures to cling to an outdated economy.

“We’re missing out on an opportunity because we’re in a state of denial,” she said.

Angus M. Thuermer Jr.

Angus M. Thuermer Jr. is the natural resources reporter for WyoFile. He is a veteran Wyoming reporter and editor with more than 35 years experience in Wyoming. Contact him at angus@wyofile.com or (307)...

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  1. So. A worldwide oil glut is now President Bidens fault because of Wyomings economic problems? What a world of imagination we live in in this state.

  2. For years we have lived with a boom bust extractive industry. I kept waiting for these Republican legislators and Governors to build a more sustainable economy. It has never happened. Now, they are finger pointing.
    First, for years we have been told that selling leases doesn’t lessen environmental review of planning. But, it does. Of course these companies want this “property right” of having a lease. But, it is ludicrous to keeping selling them without planning and environmental review.
    Second, I’m disappointed in Mark Gordon. I felt he had the knowledge and ability to diversify our economy. Instead he has joined those who are shifting the blame, instead of admitting their predecessors and they have not and are not doing their job.
    No one is to blame for the state of our economy but these folks who never learned to think outside the box.

  3. Yes, the oil industry in Wyoming and other States has been guilty of over-producing, at costs that are higher than those costs in lower-cost places. Oil can be produced in much of the Middle East, Central Africa, or on Borneo for a fraction of the cost to produce in the US.

    So while reducing US production may tend to inflate the wholesale price some that won’t be good for US drilling interests in the longer term. High oil prices will also make renewable energy development much more-attractive, further driving its cost down.

    A number of other nations have already legislated an end to new gas and diesel engine vehicle sales by 2035. I would suspect that the Biden administration will want to establish a similar cut-off date here. If such a cut-off is instituted US oil sales will be stuck between high production costs relative to other lower-cost nations and rapid development of renewable energy as well as a further reduction in its cost.

    The end result would be a substantial loss of worldwide oil demand with higher-cost producers increasingly shut out as the market finds a new price vs profit production floor. The enforced loss of demand in-order to responsibly attempt to mitigate and reduce ongoing climate change impacts will likely reduce US oil production by 75% or more by 2035-2040.

    So holding onto leases will likely result in their eventual write-off. The future of oil extraction doesn’t look any better than the future of coal mining unless by some miracle the cost of carbon capture falls by 95% or more as renewable energy with battery backup will become much less-expensive than oil, natural gas, or coal and carbon capture would just further drive up the cost.

    It is likely that given the Biden administration rejoining the Paris agreement and working to rapidly achieve responsible action on climate change that the future of US fossil fuel extraction and refining industries is increasingly time-limited. While we may need oil-based lubricants we aren’t likely going to need new oil-based fuels production beyond 2035 to 2040. Only the lowest-cost producers have any future beyond then.

    It is time for States and countries dependent on fossil fuel extraction or refining for a substantial portion of their economies to plan for the day when demand for those industries no longer exists at a profitable price due to our need to responsibly mitigate climate change. That day is rapidly approaching. It is time to plan for a future beyond fossil fuels.

  4. There seems to be a widespread assumption that Biden is permanently banning oil and gas leasing.

    But the text of Biden’s order curtailing leasing is here:

    https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/

    The relevant (abridged) verbiage is:

    ” Sec. 208. Oil and Natural Gas Development on Public Lands… the Secretary of the Interior shall pause new oil and natural gas leases on public lands… pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices… In conducting this analysis…the Secretary of the Interior shall consider whether to adjust royalties associated with coal, oil, and gas resources extracted from public lands….or take other appropriate action, to account for corresponding climate costs.”

    Taking Biden’s order at face value, leasing is only “paused” until a review of current practices and royalty rates is completed.

    It’s my opinion (only speculation at this point) that leasing will be resumed in a few months, probably with additional requirements for minimizing methane leakage and protecting wildlife, and with somewhat higher royalty rates. This would be immanently reasonable and completely consistent with Biden’s wider agenda.

    If this turns out to be the case, then the current uproar is uncalled for and is an unneeded distraction from truly important issues

  5. Another thought, what does OPEC do when oil is low??? CUT PRODUCTION!!! A strong argument can be made that over production in the west Texas Permian and incredible advances in PA and WV shales, have hammered natural gas production and prices in Wyoming. Lots of gains in Louisiana too. Over supply.

  6. I knew our elected officials would do their usual knee-jerk reaction.
    “This is bad!”
    “This is horrible!”
    “The sky is falling!”
    OK, all you Chicken-Littles… Will you stop moaning long enough to consider reality?
    There is a world wide OVER SUPPLY of gas – that’s why prices are low and oil companies are going under. Don’t believe me? Ask your friends who hold/held Ultra stock.
    Remember the old adage of supply and demand? More production means more supply means lower prices. Scarcity raises prices, remember?
    A local energy company near Pinedale received permission to DEVELOP 3,500 new wells and has yet to drill the first one. WHY? The price of gas is too low to make up production costs.
    Wyoming already has 1,000 permits to drill approved right now. With only 5 rigs operating in our state, that’s enough permits to drill for the NEXT 200 YEARS at the current drilling rate.
    Wyoming has over 41,000 PRODUCING oil and gas wells right now – adding to the world glut.
    Instead of wringing your hands dear Elected Leaders, how about taking a close and HARD look at where we are, and where the world, (which will impact Wyoming) is going? Yes, it takes more effort than to cry out the same tired slogans but it will reap more benefits to plan for Wyoming’s future.
    A break in drilling, a temporary pause, a momentary respite has been offered to catch up with reality, and discern the impact of hanging our fortunes on declining industries. The Governor, elected and non-elected leaders can be responsible and use this time wisely.

    1. Excellent point Jay Morton. It could be added that the worldwide glut of natural gas – and the resulting rock-bottom gas prices for the last several years, is in the process of single-handedly killing Wyoming’s coal industry (along with the entire thermal coal industry continent wide).

      To see a bit of discipline brought to the natural gas industry – enough to raise prices and actually make the industry profitable, would result in coal becoming more competitive and could end up being the best thing that could happen to Wyoming and her coal workers.

  7. If we over produce oil in the US – it drives the price of oil down. A year ago, we were over producing particularly in west Texas and New Mexico – both oil and gas. The recent correction has allowed oil to recover to about $60 per barrel for WTI. Some of the Biden administration’s actions might actually benefit us. Example, Keystone XL pipeline would deliver about 800,000 barrels per day of Canadian oil – shutting it down seems to benefit Wyoming since we will receive a higher price for our oil. Canada has long flooded the American market with wheat, cattle, lumber and oil. Another example, lumber futures are about 970 per thousand today mostly due to the border being closed due to covid – almost triple of normal prices. The few remaining American sawmills will make a killing at 970. Supply and demand. So the question is, would Wyoming be better off with restrictions than with over supply?? How about a higher price for our oil and gas product!!

  8. Good article. It is unfortunate that Wyoming leaders always get their backs up over the downside of new policies and never seem to acknowledge the upside. Our state misses so many opportunities by being knee jerk reactionary. Normally experts would be assembled to look at all the aspects of a change in federal policy, so that a plan would be in place for a range of positions to get the best result. I know that lease rates offered by industry and accepted by both private land owners and the state have declined exponentially in the last few years. That means the state can now force private land owners to accept much reduced lease offers and also that the state is failing to get maximum return for schools from leased state lands. This is the underbelly of this whole discussion that needs to be looked at. Why has Wyoming put in place regulations that favor the industry and harm income for schools while totally ignoring the welfare of private land owners? It would be in the best interest of the state to also pause leases and evaluate what is happening.

  9. It sure sounds and smells like UW analyst Tim Considine was told to build his study towards a preordained conclusion favorable to industry and the political coterie in Cheyenne , following orders from on high. It wouldn’t be the first time that UW’s economics and energy departments have been conscripted to toe the line in order to conserve their paycheck ….

  10. It sure seems like President Biden is determined to bring Americans to our knees so we are easier to control.

    1. Mr Biden you have to actually win an election to be president not have one iligitimately handed to you.