CASPER, Wyo. (AP) - In September, companies spent a jaw-dropping $1 billion at a lease sale in New Mexico for potential oil and gas development along the state’s eastern border, where the Permian spills over from West Texas.
The sale was the largest under the Trump administration, which has pushed a pro-business platform since taking over in 2017. Sales in Wyoming, meanwhile, have set more modest records, but operators in the Equality State have certainly had a pro-industry story to tell that is at least partially attributable to a friendly administration in Washington.
More than $100 million in a single lease sale in the Powder River Basin in early 2017 turned heads, and an 800% increase in oil and gas revenue from 2016 to 2017 did, too.
Both industry and conservation groups have marked the significance, for good or ill, of broadening federal lease sales in Wyoming. These are land auctions that give oil and gas companies the opportunity to compete for rights to develop on federal land.
But whether leasing is spreading rapidly across public acres in Wyoming is up for debate, the Casper Star-Tribune reported .
Conservation groups note that leasing has taken off, that thousands of acres are up for bid each quarter and many of those parcels overlap with protected habitats. Oil and gas firms say the environment under President Donald Trump has improved for leasing after being stymied by the last administration, but that overall, leases haven’t skyrocketed as has been assumed.
So who’s right?
Well, both.
Last year, Wyoming experienced the highest number of acres leased to oil and gas - on federal land - since 2008, according to Bureau of Land Management records. But 2017 was on par with the Obama years, and even 2018 falls below historic highs.
Conservation groups have been concerned for about two years, from the time when Trump took office, that the energy dominance rhetoric from the new president was a risk to environmental issues, starting largely with protections around Wyoming’s sage grouse. The bird, which can get a bit larger than a plump chicken, struts and mates across Wyoming. It’s also a bit of a bellwether species. Its population declines reflect damage and fragmentation of the sagebrush seas that cross multiple western states.
Changes to this protection on federal lands drew incredible attention from diverse environmental groups. And part of those changes has to do with leasing - auctioning sage grouse habitat to oil and gas firms.
Leasing concerns extended to other wildlife issues, such as parcels of land that overlap with Wyoming’s first designated mule deer corridor, the 140-mile (225-kilometer) Red Desert to Hoback route, or the more than 500,000 acres (202,342 hectares) leased in a March oil and gas sale in the sage grouse habitat’s Golden Triangle - an area near Lander that’s known as one of the most valuable regions for the birds in the country.
Those in favor of Wyoming’s approach to leasing in the sage grouse’s domain note that leasing carries restrictions on drilling in Wyoming, while opponents note that leases are property rights that risk the protected status of those areas.
Where oil and gas gets a stake is a matter of contention for some groups.
“It’s not so much the acreage. It’s where they are leasing,” said Dustin Bleizeffer, spokesman for the Wyoming Outdoor Council. “That’s the big one. It’s where.”
Additionally, it’s how, he said.
The Bureau of Land Management has made some changes to its leasing process, such as offering statewide sales four times a year instead of regional sales throughout the year, which may have increased acres. BLM has also paired back public input in what is leased or drilled on public land - to some groups’ frustration.
“It’s the manner in which it’s being leased. Just a rush passed public input and a severe lack of following process and agreements,” Bleizeffer said.
This change of tone and practice, and the administration’s attempts to encourage energy, is chartable outside of the environmental sector perspective, watchers say.
“They are trying to have it both ways,” Chuck Mason, an economist at the University of Wyoming, said of the new approach under the Trump administration. “They really did do things to make it easier for oil and gas companies to get in. That’s not fake.”
The political climate prior to the 2016 election affected producers as well, when the national narrative assumed the new president would not be a pro-energy Trump, he said. A similar attitude may have influenced decisions ahead of the midterm elections of 2018.
Their reasoning was strategic. Developers are not just looking at where to lease or drill, but when, he said.
“If I think things are going to dry up in a couple years I am going to bid acres now,” he said. “There were people thinking, ’Maybe we better get it now while the getting is good.’”
But going into the midterm elections, Mason said industry interest had less to do with the Trump administration’s promotion of energy dominance than anticipation that things may not go in industry’s favor.
Some in industry argue that the early lease sales under the Trump administration reveal pent up demand from industry, a frustrated desire to stake claims after the leasing delays and deferrals of the Obama years.
Leased acres in Wyoming are proposed by industry and decided on by the BLM before being offered at auction. The number of acres proposed by oil and gas firms over the last 10 years as ebbed and flowed, from a low in 2011 of 374,629 acres (151,606 hectares) proposed to a high of 1.7 million acres (687,965 hectares) suggested in 2008.
The Trump administration’s political support offered certainty for oil and gas producers, said Kathleen Sgamma, executive director of the Western Energy Alliance.
“I think probably what we saw in 2018 was the Trump administration moving forward,” she said. “When there is more certainty, then companies are willing to come back to federal land.”
Other market factors were also affecting the leasing potential or interest in Wyoming. One play in particular, with more leasing interest in recent years and higher bids per acre, has improved since 2017: the Powder River Basin.
Sgamma, of the Western Energy Alliance, said proving of the Powder was slowed by the lack of leasing opportunity on the federally managed land of the Powder.
The biggest reason, industry experts note, that the Powder has attracted interest and optimism has come down to the controlling factors for most of industry’s decisions.
There had been good results from wells drilled there in recent years. The price improved.
Excitement over horizontal drilling in the Powder River Basin predates the most recent story of increased leasing potential, politics and crude prices. Interest in the PRB was growing up until the price bust of 2015, which pushed the basin to the back burner for companies that had a choice to invest in more prolific money making plays in other parts of the country.
That interest returned with the price improvements.
The Powder has attracted optimism and higher-per-acre bids since that 2017 sale due to the gradually proven performance of new horizontal development in that play.
“I think the geology is the driving factor,” said Robert King, a long-time Casper oil and gas consultant, of the Powder’s attraction.
“The geology of the Powder River Basin, historically, has been based on vertical wells,” he said. “As more and more horizontal wells get drilled and we find out what is actually productive, in what zones and what the trends are, that dictates what the companies desire to do in leasing additional acres.”
King said that anecdotally he had not noticed leasing shooting up in recent years in Wyoming compared to the highs of decades ago.
Mason, of the University of Wyoming, was less of a cheerleader for the Powder. It is not admirable or impressive when compared to the Bakken or the Permian or other prolific plays in the U.S.
It’s just reliable, he said.
“It’s kind of your utility baseball player,” Mason said. “Steady, maybe. Not spectacular.”
But for environmental groups, this oil and gas play in Wyoming is being carried out against a backdrop of more general, but significant, changes to land management.
The high lease years of the past were followed by leasing reforms on a federal level. In Wyoming, there was a new sage grouse habitat protection approach that took off in the ’90s.
Those activities restricted leasing within a larger picture of federal land use, said Bleizeffer.
“What you are seeing right now is the BLM shifting back,” he said. “What you see now is the full force of energy dominance.”
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Information from: Casper (Wyo.) Star-Tribune, http://www.trib.com
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