Oil and gas field wastewater ponds near LaBarge. (Dave Showalter)

The number of rotary rigs drilling for oil and gas in Wyoming tripled since President Joe Biden announced a pause on leasing federal minerals for development more than five months ago.

Oil and Gas companies were operating five rigs in Wyoming the week of Jan. 29 when Biden announced a pause to review oil and gas leasing policies and royalty rates. This week, drillers, roughnecks and tool pushers were staffing 15 rotary rigs, according to Baker Hughes, a leading energy technology company.

During the ongoing pause, the Wyoming Oil and Gas Conservation Commission has granted 1,984 drilling permits to energy companies, according to commission records. That’s almost double the 1,059 issued during the same five months — February to June — in 2020.

The activity somewhat erodes fearful statements exclaimed by the energy industry, its supporters and communities reliant on extraction that followed Biden’s executive order in January.

The Bureau of Land Management stopped at least two scheduled lease sales in Wyoming this year, sales that historically have earned Wyoming millions of dollars earmarked for education and other services.

But the industry has ample federal leases to develop, according to a 41-page report by the Conservation Economics Institute. The Natural Resources Defense Council funded the study, which was endorsed by various conservation groups, including Wyoming’s Powder River Basin Resource Council.

The CEI report downplays the importance of federal land development, which it says accounts for only 6% to 8% of domestic oil and gas production respectively.

Further, of hundreds of counties in the Intermountain West, Wyoming has nine of the 15 with the highest number of federal leases sold in the last five years. Wyoming has enough untapped, leased federal property to sustain drilling for 67 years, the CEI report states.

“This is indicative that in the short term, change in federal leasing is not likely to have much of an impact on oil and gas employment,” said Evan Hjerpe, director of the research institute. “Wyoming has almost 5 million acres of non-producing federal leases, which allows for ample opportunity for future development.”

Delegation pushes development

Hjerpe’s report has failed to convince Wyoming’s federal delegation that all is fine in the oil patch. U.S. Sen. Cynthia Lummis this week called for her proposed prohibition on leasing moratoria to be included in Democrat’s $3.5 trillion reconciliation package.

Biden’s pause, since declared illegal by a judge, is “stifling Wyoming and America’s own domestic production of oil and gas and empowering OPEC,” Lummis wrote on Twitter. She called the pause a “ban,” saying it would increase reliance on energy from foreign entities, “particularly from Russia and the Middle East, where energy is produced without the environmental protections that the United States has in place.”

The Lander BLM office proposes to withdraw about 5,000 acres of public land from attempts to mine for gold, gypsum and other minerals, in order to protect the Johnny Behind the Rocks mountain biking recreation area. (courtesy of Bob Wicks/BLM)

U.S. Sen. John Barrasso and Gov. Mark Gordon have endorsed Lummis’s concept and U.S. Rep. Liz Cheney last month also pushed for development. At a gathering of House Republicans, she introduced Jonah Energy’s vice president for government and regulatory affairs, who said higher royalty rates that could result from Biden’s review would harm Wyoming.

“Any significant increase or change in royalty rates … could be devastating,” Paul Ulrich said. Operators like Jonah that drill on federal lands are at a competitive disadvantage because of time-consuming regulations, distance from markets and other factors, he said.

The oil and gas industry recently touted its own new analysis showing that Wyoming’s oil and gas industry supports 68,600 jobs in the state. Sponsored by the Petroleum Association of Wyoming and the American Petroleum Institute, the 134-page report outlines what’s at stake “if policymakers restrict access to affordable, reliable energy,” API president and CEO Mike Sommers said in a statement.

Industry employment amounts to between 14% and 17% of the jobs in Wyoming, API says. Oil and gas production generated $1.5 billion in labor income in 2019, according to the organization.

The political jousting over the leasing pause and potential reforms began before Biden even took office, with Wyoming legislators commissioning an analysis by University of Wyoming professor Tim Considine on potential Biden actions. Considine estimated Wyoming would see $2.3 billion in investment losses from 2021-2025 were a moratorium to extend across those.

CEI wrote that the professor’s conclusions “are not credible.” Considine did not respond to a request for an interview.

His work “is fraught with methodological issues that critically undermine the validity of the study,” CEI wrote. “[T]he Considine study is also lacking in methodological transparency, making it irreproducible,” CEI stated. Reproducibility is an essential element of scholarly work, the consultant said.

Considine’s work also has been undercut by Laura Zachary, an economic and policy analyst. She wrote that the professor’s findings “quickly unravel when we take a look at a number of highly flawed assumptions.” 

Wyoming’s nine counties

In the five years from 2016 to 2020, nine Wyoming counties — Campbell, Johnson, Big Horn, Niobrara, Converse, Natrona, Fremont, Sublette and Sweetwater — ranked among the 15 counties in the Intermountain West where the federal government auctioned the most leases, according to CEI.

“More than 2,500 leases were sold in Wyoming over the last five years,” Hjerpe said. They cover more than 5 million acres, an area larger than Connecticut and spanning more ground than leases in four other Intermountain West states combined, he said.

Borne on two flatbed rail cars each, wind turbine blades pass through the historic coal mining town of Rock Springs in March, 2019. (Andrew Graham/WyoFile)

The leasing pause may not affect counties with numerous federal leases, Hjerpe said. “Wyoming has almost 5 million acres of non-producing federal leases, which allows for ample opportunity for future development.”

Conservationists don’t see a loss coming from any potential curtailment of oil and gas leasing, according to the CEI report and a press call. Some rural communities are shifting from dependence on oil and gas to instead accommodate higher-end service sectors like financial consultants, the report states.

Environmental values are key to the lifestyle of such professionals, CEI states, but large amounts of leasing and development can be a drag on any transition a community might be making.

The institute found an inverse relationship between “amenity migration” and oil and gas leasing. Census data from 1980 to 2010 show that “the same areas that are leasing the most federal lands are also struggling to retain residents,” Hjerpe said.

“Oil-and-gas-dependent counties repel migrants over the long term,” Hjerpe said. “With oil and gas production … we have boom and bust cycles, and that really leaves … rural communities, worse off, socially and economically in the long run.

“The profits are leaked out of the region,” to large, private companies, he said, and transient workforces are a hallmark of industry-dependent communities. 

Migrants are not looking to move to where there’s a large reliance on extractive industries, he said. “Research has also indicated that oil and gas can exclude other development options — limit your recreation opportunities.”

A one-year leasing pause would keep 1.4 million acres nationwide from being leased and developed, the report says.

“The resulting improvement in societal welfare, or public willingness-to-pay for conservation …  is estimated to be at least $3 billion using benefit transfer methods,” the report says.

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. I have contacted Lummis and Barrasso on these issues but just get the same politician remarks about how hard they are working for the american people. How by taking a check and only they are doing is working hard to see how bad they can make the other party look bad. On the oil and gas issue all you have to do is look at what the barrel of oil was in 1980, $134.30 avg. price, and the avg price of gas at the pump, $1.19. So why is it we are paying $4.00 plus a gallon now with barrel of oil not quite up to that $134. yet. And the federal tax on gasoline is like 18.4 cents a gallon and that has not been changed for close to 40 years but there are politicians claiming it is the current administrations fault. It also looks like we have more drilling leases and rigs active now then we’ve have in the last couple of years. The only way I can see how these high prices are the current admins fault is they are not fighting against not only the oil companies but the consumer goods companies also have now the biggest profit margins in history. Why do they have to make millions or billions of profit and not have some kind of government oversight or control from gouging the american consumer. Maybe because these companies are putting millions into the politicians campaigns or possibly their pockets?

  2. It’s worthwhile to expand the perspective and timeline on drilling rig count. At the federal Energy Information Agency you can look back over the decades for comparisons.
    Back during the 1980-82 oil boom … the last big upturn in all of Wyoming and the West … there were 4500 rigs running in America. Forty years later in the here and now there are 464 in the entire country , down by 90 percent from 1982 peak . In the most recent upturn 2011-2014 ( think Bakken and Permian Basin ) the total rig count never went above 2,000 . In the last half century the national rotary rig count bottomed out in August 2020 when only 250 rigs were running nationwide ( think Pandemic ).

    The problem with stakeholders, policy makers, and politicians currently is their thinking is stuck in the past…comparing it all to what ” was ” instead of what ” is” .

    I cannot foresee any circumatnces where Wyoming will have drilling rigs dotting the countryside as far as the eye can see, or will mine and sell 400 million tons of PRB coal in a year , ever again. To believe fossil fuels will rebound is fossil thinking. Recalibrate.

  3. I, like all of the other commentors, do not know how a reduction in oil leasing effects oil production or oil prices. I do know that a year ago we had energy independence and 2 years ago we had relatively cheap fuel. Now that Biden’s policies are in effect, we have neither.

  4. Just a reminder to @CynthiaLummis @SenJohnBarasso & @RepLynnCheney & Governor Gordon “Wyoming has enough untapped, leased federal property to sustain drilling for 67 years, the CEI report states.” 67 years put the leasing pool out to the year 2088. The vast majority of us will be dead and moldering in our graves by then. Can we stop with all the fake hand wringing and deal in reality for once?

    1. I think Angus has pointed out in the past that the typical lease is good for 5 years. Perhaps he can elaborate on that.

      As I am sure you know, many leases are investments that may not be worth exploring at the moment. Often, the cost of extraction exceeds the rewards from extraction. It is always possible that other leases are better bets than the ones currently held. So Biden’s efforts may indeed harm Wyoming.

      It is so cheap to lease some lands that doing so is like buying a term-life insurance policy for peanuts (only has value under certain circumstances and expires). The cost of the lease is a tiny fraction of the reward from a real gusher in a demanding market.

      Another good way to make money is to have conservation organizations or individuals pay you to not drill (sell out) so as to protect habitat or viewsheds. I would buy up all sorts of leases if they were in Teton County and start rolling in the bulldozers. The intention is never to drill, just get someone to pay you to not drill.

  5. Angus, thanks for this.

    I wrote about the Considine report in December. The whole thing seemed fishy to me, but I wasn’t sure where to look for a rebuttal. Alas, I’m retired now from K2 Radio, and this is the sort of thing I wish I could revisit.

    Glad you folks are keeping the flame.

  6. In the early part pf 2020 the oil industry was shocked between the Russian State Oil Companies and the Saudis starting a price war for more market share of the world oil supply. Prices dropped dramatically as both the supply side of oil and the cost cost of even drilling for oil in the United States shutdown drilling in Wyoming, to the point there were zero drilling plateform actual doing any drilling in Wyoming. As thisnrange war raged between Russian and Saudi interest the storage capacity of unrefined oil climbed steadily until even this resource became scarce. at one point 95% of the storage capacity was used, refinery processes had shutdown due to a low demand for fuel, both in aviation, and gas as people were just not traveling nearly as much in the dangerous pandemic spreading across the country. Other sources tp store crude oil were also disappearing as reports showed that crude oil tank cars were loaded then moved to be stored onlittlenused siding until market conditions imporoved. In Wyoming out of pure curiosity I drove over to Fort laramie in Goshen county where a crude oil loading facility was a very busy place in normal times. There then tracks were full of with fully loaded crude cars possible 3 trains worth with no place to go. I checked and according to a source their oil storage tank was full, and they had no more room for more tank cars to be shuffled around to be loaded and then loaded trains had no more siding to be store on further down the track. Trump announced a planto buy the cheap Saudi Oil to be used to fill and top off the Strategic Oil reserve while thousands of barrels , yes, more expensive Wyoming crude sat 0n sidings and in tank cars and storage full facilities in Wyoming and surrounding states ready to be processed. Not a peep was made from the Wyoming delegation to oppose the purchase of this crude that would of continued to support this state, it’s workers, and our state funding of many of our obligations to the people of Wyoming, including education that has long suffered from the growing lack of funds to keep it relevant in a ever changing world. I cannot remember how many times during the election I asked asked Senator Barrasso how many barrels of Wyoming crude has the Trump adminstartion used to fill and top off the Strategic Petroleum Reserve. Never one did I receive anytime of answer from anyone the Wyoming Delegation. I guess, like most things with the slogan and policy America First rings extremely hollow when a Republican isn there

  7. Another great story by Thuermer. Sen. Lummis’s comments are a great example of how Republicans live in a world devoid of facts and science and amazingly, these know-nothings continue to win reelection.

  8. What a surprise. The GQP pearl clutching was as unfounded as every other complaint they’ve tried to use to take Biden down. And any number of people who knew better tried to to tell our suddenly far right gov at the time he filed his sill suit.

      1. if you could just follow then facts, sir, the danger does not come from the left but even today, we have a continued slow moving coup by those that follow conspiracy theories, false accusations of voter fraud, and a mentally unstable ex President that if you believe the rantings of a burned out coke user that makes pillows with a BBB rating of a F would be reinstated on Friday August 13 after then current President would suddenly wake up resign as well as the Vice President from office. Not only does this once again fail the instructions of the Constitution it fails on several other points that it’s just a matter of time I believe indictments its and other legal proceeding many, already taking place will render Mr Trump ineligible to hold any office, including dog catcher.

      2. It’s amazing to me how surreal things have become. You conservatives pretending everything is fine, normal, while the rest of us can see, and know, that the planet is totally wasted. No wonder you all make such good cannon fodder.