Wyoming leaders criticize pause to federal oil leasing
January 21, 2021
CASPER — The Department of Interior on Wednesday temporarily suspended issuing new federal oil and gas permits or leases for 60 days unless approved by new appointees, to give the agency time to review existing policies.
The order, signed by Acting Interior Secretary Scott de la Vega, will momentarily pause the authorization of new drilling on federal land until new personnel assume positions and have time to evaluate the program. Before extending new leases or permits to oil and gas companies, the agency will need to obtain approval from certain officials appointed by the Biden administration.
Though conservationists considered the move in line with a change in presidential administrations, Wyoming’s political and industry leaders were quick to blast the Biden administration’s action as one that would mean fewer jobs and further economic troubles for a state already struggling through a downturn.
“Since the November election, we have known that executive orders aimed at hampering natural gas and oil production on federal lands would come fast and furious in the first days of the Biden administration,” Ryan McConnaughey, communications director for the Petroleum Association of Wyoming, said in a statement. “Yesterday’s 60-day suspension of all federal leases and permits to drill is just the start. It is unfortunate that on its first day in office, the new administration would implement policies that will slow Wyoming’s economic recovery.”
However, John Rader, a conservation advocate with the Wyoming Outdoor Council, called the order “pro forma” and typical for a new administration.
“This is a 60-day pause to review the program,” he said. “This is just an opportunity for the new administration to take a look at the program and identify issues with it. It will not bring oil and gas on public land to a halt. It only temporarily suspends new leases. Existing oil and gas leases can continue.”
According to the order, the Interior Department is temporarily suspended from issuing “onshore or offshore fossil fuel authorization, including but not limited to a lease, amendment to a lease, affinnative extension of a lease, contract, or other agreement, or permit to drill,” unless an action is “approved by leadership.”
In other words, no new permits or leases can be extended by the Bureau of Land Management to oil and gas companies, until approval is given by newly confirmed agency leaders.
The Bureau of Land Management, a branch of the Interior, is charged with managing 245 million surface acres of land and 700 million acres of subsurface mineral estate across the country.
Wednesday’s order aims to give the agency time to review existing operations in an effort to ensure it upholds the “health, safety, and national security matters consistent with all legal obligations and policy goals.” It also intends to honor “treaty responsibility to tribal nations and to responsibly steward the Nation’s public lands, waters, and resources for current and future generations.”
Attorney Shannon Anderson with the Powder River Basin Resource Council said the order signals that any new decisions need to be reviewed first by incoming officials. That means new leases or permits could still be issued, but will first need special approval.
“Those actions can continue, just with the right signatures,” Anderson said.
Nationwide, only about 10% of oil and gas production occurs on federal land. But in Wyoming, over half of oil production is drilled on federal land, along with almost all, 92%, of natural gas.
Wyoming produces more oil and gas on federal land than almost any other state in the country, contributing 38% of the natural gas produced on federal land nationwide, along with 16% of oil production.
The Petroleum Association of Wyoming promised to undertake “all legal means at our disposal” to challenge the Biden administration’s efforts to slow natural gas and oil development.
The order came just hours after President Joe Biden signed an executive order on his first day in office placing a temporary moratorium on drilling in the Arctic National Wildlife Refuge.
To many officials in Wyoming, the order coming from the Interior simply foreshadowed more dramatic oil and gas policy changes coming down the road.
“When it comes to energy policy, the Biden administration is off to a divisive and disastrous start,” said Sen. John Barrasso in a statement. “Wyoming and other western states have oil and gas lease sales scheduled. Several of these lease sales will be held in the next sixty days. Slowing these projects down will kill jobs for hardworking Americans and reduce a critical source of revenue to states like Wyoming.”
Last year, the Trump administration scheduled the state’s first quarterly oil and gas lease sale of 2021 for the week of March 15.
Wyoming could lose an estimated $2.74 billion in investment and an average of 18,228 jobs annually between 2021 and 2025 if drilling on federal land is banned, according to a study conducted by University of Wyoming economist Tim Considine. If a moratorium on leasing is instituted, Wyoming could miss out on an average of $2.31 billion in annual investment, the study predicted.
Drilling on federal land provides significant tax revenue to mineral-dependent states like Wyoming, flowing from two kinds of mineral taxes, federal royalty payments and lease bonus payments.
But others aren’t so sure the economic windfall from a leasing moratorium or drilling ban would be so drastic. To Rader, the Wyoming conservation advocate, it’s high time the federal government reviewed the oil and gas leasing program to ensure taxpayers are receiving a fair return on the development of minerals. Meanwhile, oil and gas drilling can still continue on existing leases, he noted.
“There are a lot of leases that have been stockpiled across the West, so companies have enough leases and APDs (permits to drill) to continue developing for years,” he said.
Steve Degenfelder, who works for Casper-based Kirkwood Oil and Gas LLC, said it’s much more complicated than simply how many leases a company possesses.
“Unfortunately, the federal government doesn’t lease in big blocks, so it’s kind of like a jigsaw puzzle,” he said. “This year, you get these pieces and next year you get these pieces. So over a three- to five-year period, you’re able to put together a whole area. But it doesn’t all come together in one lease sale.”
Therefore, if the Biden administration institutes a moratorium on new leasing or other regulatory hurdles, those changes could detrimentally slow the longterm exploration and development plans for the company.
Overall, Wyoming-based energy companies and state lawmakers have been holding their breath in anticipation of the Biden administration’s effort to address climate change by curtailing fossil fuel development.
Many slammed the Interior’s decision to temporarily suspend leasing and permitting, saying it would severely slow economic recovery and threaten jobs.
“A mere 24 hours ago, President Biden stood before America promising to unify our nation,” Sen. Cynthia Lummis said in a statement. “Yet on day one, he took divisive actions to devastate Wyoming’s economy. Make no mistake about it, the Biden Ban is a strike on the heart of Wyoming jobs, families and communities. His actions to appease the radical left will be borne disproportionately on the shoulders of states like Wyoming with high amounts of federal lands.”
Rep. Liz Cheney called the Interior’s order “senseless” and “misguided.”
“At a time when we need to be doing everything possible to support our energy producers and our economy, prohibiting BLM offices from leasing and permitting will negatively impact so many hard-working families who rely on the national treasures in our state to make a living,” she said in a statement.