If the Cowboy State is going to fully get behind President Donald Trump’s vision for U.S. “energy dominance,” fossil fuels — as well as uranium and rare earth minerals — are going to need a boost from Wyoming taxpayer dollars, according to industry and top state officials.
And that help won’t be extended to wind and solar energy.
Two bills offering tax cuts, loans and grants to energy companies have advanced to the second half of the Legislature’s budget session, while lawmakers may contemplate separate energy-company-bound appropriations in the budget bill.
House Bill 128, “Enhanced oil recovery-severance tax exemption,” would create a five-year window for a 2% state severance reduction to encourage investments in secondary oil and gas recovery methods. Backers hope the policy would eventually boost the state’s oil production by millions of barrels.
The tax break, if passed into law, would mean about $1 million less in state revenue in 2028 and $2.7 million in 2029, according to the bill’s fiscal note. The bill was assigned Monday to the Senate Minerals, Business and Economic Development Committee.
Senate File 123, “Wyoming energy dominance fund,” would temporarily divert a portion of severance taxes — 0.5% of the standard 6% — to create a new pot of money tapped for matching grants and loans to companies with new oil, natural gas and coal projects, as well as initiatives aimed at developing uranium and critical minerals.
The two-year severance tax diversion would fill the Energy Dominance Fund to $105 million.
The bill was referred Tuesday to the House Minerals, Business and Economic Development Committee.
Last year, lawmakers gave coal producers a $10 million annual tax break and created a $10 million fund for companies that sell carbon dioxide for enhanced oil recovery.
Energy dominance
The goal is to fill the fund to $105 million and sustain it via investment returns and private contributions, according to the bill draft. The energy dominance fund, however — which has the backing of the White House — doesn’t include wind and solar energy. Those are explicitly excluded.
“Due to many different things outside of Wyoming’s control, a lot of these energy companies — that aren’t wind or solar — have had a hard time getting access to capital and have had a lot of regulatory uncertainty,” Ranchester Republican Senate President Bo Biteman told a legislative committee earlier this month.
The Petroleum Association of Wyoming, among the bill’s backers, noted that the source of funding — severance taxes — primarily comes from the fossil fuel industry that would enjoy the benefits of the new program.
“By investing in Wyoming Energy Dominance Fund, the Legislature has the opportunity to reinvest industry-paid taxes to the benefit of Wyoming families and the state’s long-term prosperity,” Petroleum Association President Pete Obermueller said in a prepared statement.
Critics of SF 123 say, regardless of where the taxpayer funds originate, it doesn’t make sense to exclude wind and solar if the state is going to invest in energy projects.
“If the purpose of the fund is to ensure Wyoming is the ‘energy backbone’ of the country, and to fund Wyoming energy dominance, it doesn’t make much sense to intentionally exclude forms of energy production that could round out Wyoming’s energy portfolio,” Wyoming Outdoor Council Government Affairs Manager Auna Kaufmann told WyoFile.
Energy funding redux
Senate File 123 would create a fund closely resembling the state’s Energy Matching Funds program launched in 2022, including a dollar-for-dollar private or federal match requirement.
The Energy Matching Funds program, intended “to spur innovation and bring transformative energy projects to Wyoming,” was filled with $155 million in taxpayer money and had a broader focus. Among the program’s nearly 30 awards, $5 million went to Airloom Energy for “modular, scalable utility-scale wind energy” and $2 million to Flowstate for artificial intelligence leak detection for hydrogen pipelines.
This month, Gov. Mark Gordon awarded $4.9 million to Carbon GeoCapture and Black Hills Energy for a coal-carbon capture and sequestration pilot project in northeast Wyoming, and $6.25 million to international coal giant Peabody Energy to refine critical minerals from Wyoming coal. All told, the Energy Matching Funds were spent on nuclear projects ($10 million, or 7.1%), renewable energy ($5 million, or 3.5%) and fossil fuels ($126.1 million, or 89.4%), according to a November report.
In 2024, the Legislature created the Large Energy Project fund with a one-time spend of $100 million. In December, Gordon awarded the $100 million to BWXT to support the company’s proposed TRISO fuel manufacturing facility in Gillette.
With little fanfare, the Energy Matching Funds and Large Energy Project programs appear to be winding down, given there’s no new appropriation proposed for them in this year’s budget session.
In their place might be SF 123, the Energy Dominance Fund, with a narrower focus to benefit the industries prioritized by Trump’s Unleashing American Energy and Energy Dominance initiatives.
“Wyoming is at the tip of the spear for President Trump’s energy dominance plan,” SF 123 sponsor Biteman told the Senate Appropriations Committee. “In order to make some of these big projects happen, it takes a lot of capital up front, and it takes regulatory certainty.”
Despite a wave of federal regulatory rollbacks for fossil fuels under the second Trump administration — including stepping back rules on mercury from coal smokestacks and greenhouse gas emissions, and the restoration of coal lease sales — Wyoming’s fossil fuels, uranium and rare earth minerals industries need a boost after being buffeted by the Biden administration, Biteman suggested.
“I want to remove all roadblocks and bottlenecks and get these things going as fast as possible,” he said.
Wyoming Mining Association Executive Director Travis Deti said he recently attended a coal industry convention in Florida, where members of Trump’s Energy Dominance Council were in attendance. “This bill was a center of conversation,” Deti told a legislative panel, “because what we’re seeing at the national level is an administration that is actually serious about energy production, about using our resources — you know, [natural] gas, coal, nuclear. And this bill is something that we can do at the state level.
“Most importantly,” Deti added, “[these industries are] about jobs for our young people.”
Enhanced oil recovery
When a plumb oilfield is discovered, it’s usually perforated with a bunch of vertical wells fitted with pumpjacks that remove the easy stuff. That’s primary oil production. But there usually remains a lot more oil. To recover the leftover reserves, oil companies employ tertiary methods such as water flooding or pumping carbon dioxide into formations to squeeze out more oil.
It’s commonly referred to as enhanced oil recovery, and it still requires significant investment with potentially slower returns than primary production.
Not only does Wyoming have a lot of old oilfields that are good candidates — at least 12, according to one state office — the state is also home to one of the few institutions dedicated to promoting the practice: the Enhanced Oil Recovery Institute.
More than 2 billion barrels of oil are “stranded” in Wyoming, according to the institute’s director Lon Whitman. Yet securing loans to invest in enhanced oil recovery is challenging, he said, adding that the capital investment for one project could exceed $250 million.
Whitman estimated there are up to four enhanced oil recovery projects ready to expand if HB 128 is passed into law.
“Over the full life of the [enhanced oil recovery] project, just these three or four fields have the potential to produce 100+ million barrels of oil,” Whitman told WyoFile via email. “Again, that is oil that otherwise will be left stranded.”
The bill’s fiscal note — an estimated revenue loss of $4 million — is difficult to quantify, Whitman added.
“From my perspective, there is really no risk associated with this severance tax exception,” he said. “The severance tax reduction is only on the incremental production associated with the [enhanced oil recovery] process, and only for 5 years. Most importantly, any loss of revenue due to the reduction in severance tax during that period is more than made up by tax revenues over the full life of the project.”
But others question whether the tax break will actually influence a company’s decision to move a project forward.
The oil market is notoriously volatile, with the price-per-barrel oscillating far beyond what a 2% tax break represents, said Bob LeResch, former executive director of the Alaska Energy Authority and a member of the Powder River Basin Resource Council’s board of directors.
That means the state would be giving a tax break to a company that’s already decided the economics of a project make sense, according to LeResch.
“Things fluctuate, and they look at the market much more than they look at a little 6% [standard state severance tax] cost,” LeResche said. “Nobody’s going to make a long-term investment decision based on that little, marginal savings. They’re going to do it, with or without the severance tax break.”
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NO to tax payer money for the fossil fuel industry. This is just wrong. Free market economy?