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Natural Resources & Energy

Litigation A Possibility As State Sees Stark Numbers With Potential Leasing Restrictions

Shale plays throughout the US
Wyoming Energy Authority

Dec. 15 was a busy day for federal oil and gas. New numbers detail the impact of possible restrictions to production, leases are being sold, and environmental groups are once again calling for a ban.

The Wyoming Energy Authority released a report teased at a November legislative committee. A report, authored by University of Wyoming energy economist Timothy Considine and commissioned by the state, found Wyoming could suffer a roughly $20 billion loss in tax revenue over twenty years with either a leasing moratorium or drilling ban.

"Either way, the economic predictions are devastating, to be blunt, to Wyoming," said Gov. Mark Gordon in a virtual press conference about the report.

Oil and gas has become an increasingly important part of Wyoming's economy with the decline of coal production. The majority of both resources' production occur on federal land within the state.

"That relationship can be [a] cooperative, united partnership that benefits our economy and our environment," said Gov. Gordon. "However, based on some of the comments we've heard from the Biden energy team, that relationship could be headed in a very different direction."

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Credit Wyoming Energy Authority
Graph showing roughly $20 billion loss in tax revenue to Wyoming in both scenarios

The report calculated the possible impacts of the two scenarios in five-year increments for eight western states that engage in federal drilling. The average annual oil and gas tax revenue loss across all eight states is between eight and ten billion dollars within the first five years, according to the report.

Report author Considine added the impacts won't just be on state revenue, but on income and jobs. He foresaw employment in Wyoming falling between roughly 9 thousand and 15 thousand in the first year of a lease moratorium or drilling ban.

The state-funded report also questioned the value of such a move on climate impacts both in terms of outsized cost and in terms of demand being replaced outside of the U.S.

Kate Hudson, western U.S. advocacy coordinator for the Waterkeeper Alliance, pushed back and said regulation and cost are typically steeper on private land and that, at least in the U.S., there isn't enough private land to be replaced there.

More than 538 groups have called on the incoming Biden administration to order a ban on fossil fuel leasing and permitting. Groups want both activities on hold while it's reviewed for climate impacts.

"Development could restart only if the review showed that fossil fuel development would be consistent with reducing greenhouse gas emissions by 50% by 2030 to near zero by 2040 and if climate change can be kept below 1.5 degrees Celsius," read a press release sent by WildEarth Guardians.

Several questioned what tact Wyoming leaders might take in response to a drilling ban or leasing moratorium from the federal government. Gov. Gordon did not rule out litigation, saying it's one of the reasons he has kept the attorney general's office as complete as he could.

Glen Murrell, executive director of the Wyoming Energy Authority, said the study is just preparation for now.

"Because there's not much we can do in terms of policy, regulatory technology, what have you... not much we can do that can offset the impact of removing 50 percent of our resources from consideration," he said.

Dec. 15 marked the first of a three-day online auction of federal leases in Wyoming of 261 parcels containing 275,701 acres.

 

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