State Committee Hears Reports On Forming Energy Authority, State Of Oil

Nov 30, 2018

$70 BBL of Oil on Federal Mineral Acreage
Credit Daniel Johnston and Co. Inc.

A new study from consulting firm Daniel Johnston and Company analyzed how Wyoming ranks up to nearby oil-extracting states, plus Texas and Oklahoma, in terms of tax burden and competitiveness. It was presented to the Joint Minerals, Business, and Economic Development Committee Thursday.

The study found Wyoming does have higher royalty and tax rates, takes a larger share of profits on state-lands, and has fewer incentives to motivate drilling. But it also found Wyoming has a higher tax burden and doesn't discourage exploration or production.

Co-author David Johnston said geology is more of the deciding factor.

"I asked the geologist when I spoke to the Wyoming Geological Association. Why are there more rigs on the Colorado side?" Johnston said, "The answer from all of them was geology--better geology on the Colorado side of the Niobrara."

The committee didn't want to translate the report into any policy yet, but Laramie Senator Chris Rothfuss did ask the presenter what structural changes could theoretically be made. Johnston said any change would require Wyoming to increase the risk it takes on.

"If the state wanted to do something like that which could be an incentive to the oil companies they'd be taking on what we call price risk. So, Wyoming doesn't take on very many risks and this commission here agreed that they did not," he said.

The report also said federal lands in the state raised prices and added red tape.

Chairman of the committee Mike Greear reiterated they needed more time to digest the report.

"Energy Authority"

Wyoming has an infrastructure authority and a pipeline authority, but no central group that leads on energy policy. The Joint Minerals, Business, and Economic Development Committee discussed the possibility of creating one in an interim meeting - it would be called the "energy authority."

The original goal tasked to the Infrastructure Authority last year was finding a way to implement an energy strategy. Laramie Senator Chris Rothfuss said one coordinated policy group would be the front door for energy policy.

"As we're looking at trying to get the next generation [of] energy and power development that we have a single office where they can be focused on that policy as we move into the next administration," Rothfuss said.

The Infrastructure Authority's presentation pointed out that Alaska, Colorado and Utah all have its own state-focused energy groups with its own employees and annual budgets. Casper Representative Chuck Gray questioned the need for more funds if the groups already exist to implement policy goals. Rothfuss said in an interview that there already aren't enough people to simply answer the phones and get things done - that's a hindrance to economic development, he said.

Voting in the Environmental Quality Council

The same committee saw a tied vote in changing how the environmental quality council (EQC) votes. The current iteration requires an in-person majority or four out of seven members present. The EQC is an independent review board looking at matters related to air, land, water and pollution.

A bill presented to the Minerals Committee would allow that majority number to be met by members participating over the phone. Sundance Representative Tyler Lindholm said that's a problem.

"I would argue sometimes, some of their votes are more important than what we do in the legislature. I think there's value in them being there in person and showing up for those votes," he said.

Though the bill won't move forward, Lindholm said change still needs to be made. Right now, members occasionally won't show up - he said the recusal system still needs a change.