Wyoming has narrowed its definitions for who can bid on state oil and gas lease parcels, disqualifying parties that intend to conserve the land rather than produce the mineral resources.

The change, made under emergency rulemaking in June, was mandated by House Bill 141 – State land oil and gas leases-operator requirement, which the Legislature passed during the budget session. Rep. Cyrus Western (R-Big Horn) brought the bill on behalf of the Petroleum Association of Wyoming. The association raised concerns over the state’s vetting process after the Lander-based conservation group Wyoming Outdoor Council last July placed bids on a state oil and gas lease parcel in Sublette County intending to spare it from development.

If a small Wyoming conservation group can bid to block energy development, a conservation- or anti-oil-and-gas-minded billionaire could do the same, the trade association argued.

“So rather than wait for that to happen, we thought, ‘Well, let’s step in now and let’s put in place a bill that acts as a deterrent to doing that,” Petroleum Association of Wyoming President Pete Obermueller told WyoFile.

Ultimately, the winning bidder in last year’s controversial auction was Casper-based Kirkwood Oil and Gas — the same company that had nominated the parcel — at $19 per acre for the 640-acre tract. When the company later learned that it had been competing against a conservation group, the owners cried foul and claimed they were duped into paying an artificially inflated price.

The Wyoming Outdoor Council defends its actions. 

Yes, council leaders say, the organization did bid on the controversial “Parcel 194.” But it didn’t skirt the rules or misrepresent its identity. The group expected that, if it was the winning bidder, it would pay about $12,000 for the lease (based on its $18 per acre bid) out of its own budget, according to Wyoming Outdoor Council Executive Director Carl Fisher. No well-heeled individual was on standby to finance the purchase, he told WyoFile.

The bidding controversy, he said, misses the larger issue: a lack of commitment by the state to implement its own policies that were crafted years ago to avert such conflicts in wildlife migration corridors.

Path of the Pronghorn

Kirkwood Oil and Gas had nominated a state lease parcel, 194, smack in the middle of the Path of the Pronghorn — a popular name for the long-distance migration of the Sublette Pronghorn Herd. It’s part of one of the most studied ungulate migration routes in North America, and the Path of the Pronghorn portion of the route is so named because it represents a “bottleneck” — an area squeezed due to rural development and landscape features.

And, critically, according to the council, Parcel 194 bisects the New Fork River where pronghorn cross. 

Given the years of high-profile studies and discussions regarding the Path of the Pronghorn and many other well-documented ungulate migration routes in Wyoming, the group didn’t expect the state would OK oil and gas lease parcel nominations in the area for its competitive lease auction.

“To our surprise, they were going to offer an oil and gas lease directly in one of the most important spots where, like, thousands of these members of the Sublette pronghorn herd are crossing the New Fork River,” said Alec Underwood, the council’s program director.

In the weeks before the auction, the council and other conservation groups implored state officials and the Wyoming Game and Fish Department to intervene and convince the Office of State Lands and Investments to remove Parcel 194 and others inside the Path of the Pronghorn from the auction, according to Fisher. But the parcels were not removed.

At that point, Fisher said, the council felt it had no other choice. 

“We had a conversation just to say, ‘Well, if we can’t get the parcel removed, and if we do qualify as a bidder in the process, we should engage in the process and put our money where our mouth is and bid to protect the parcel and the corridor,’” Fisher said.

Delayed protections 

The state had already anticipated such conflicts.

Gov. Mark Gordon signed an executive order in 2020 outlining general protections for designated wildlife migration corridors and directed the Wyoming Game and Fish Department to develop a set of specific migration corridor policies to avoid activities that might disturb the critical pathways. But the state, under pressure from industry, still has not bestowed official designations to several migration corridors, which leaves the Path of the Pronghorn open to development without the state’s stipulations — although the years-long designation process is formally underway.

In the immediate wake of the July 2023 bidding controversy, Wyoming Game and Fish Department officials collaborated with the Office of State Lands and Investments to propose adding stipulations to Parcel 194 preventing industrial activity during spring and fall migrations.

But the State Board of Land Commissioners, made of the state’s top five elected officials, declined the proposal.

For its part, Kirkwood Oil and Gas discounts the need to significantly restrict industrial activities in migration corridors — the industry has a stellar track record of producing oil and gas without detrimental impacts to wildlife, the company’s Land Manager Steve Degenfelder said. The industry continually refines best practices for habitat mitigation, he added.

Kirkwood didn’t nominate Parcel 194 because it is in the Path of the Pronghorn, he told WyoFile. It nominated the parcel, and others in the area, because the company is trying to piece together a block of lease tracts on the western flank of the prolific Pinedale Anticline natural gas field.

“I hunt and fish,” Degenfelder said. “I value the attributes of Wyoming, both monetary and wildlife, and our standard of living with great respect. I think that we can accomplish both of them at the same time.”

Research, however, shows that pronghorn have avoided and abandoned the Anticline gas field. 

The state’s new definitions for qualified bidders went into effect just before an oil and gas lease auction that began July 8. The online auction, which is managed by Texas-based EnergyNet, was extended to Wednesday due to disruptions caused by Hurricane Beryl.

Wyoming bans conservation bidders from oil and gas lease sales is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

GILLETTE—The Biden administration’s proposal to end federal coal leasing in the Powder River Basin will have “grave” and “drastic” consequences for Campbell County, the nation’s largest coal supplier and a bulwark of Wyoming’s economy for the past 50 years, residents and local officials say.

If implemented, the proposal will destroy the livelihoods of thousands of miners and their families here and gut the community’s economy, Gillette resident George Dunlap said.

“We have to stop the Biden administration from destroying it because they will. We can’t sit back and say ‘What’s going on?’”

Dunlap, who owns and operates a photography business in Gillette, was among several speakers to address the Campbell County Commission on Tuesday. The commission solicited public testimony during its regular meeting to accompany a formal protest letter opposing the Bureau of Land Management’s proposal.

The five-member commission is hoping to rally a massive outpouring from the public and is encouraging the state to take immediate legal action to stop the BLM from banning federal coal leasing.

“The effects it’s going to have on this local community are going to be grave, and we need to fight,” Commission Chairman Del Shelstad said.

But the commissioners’ efforts to solicit testimonials garnered participation from only a handful of residents Tuesday — a disappointment for the body, even considering the shift-work nature of this blue-collar community and the 11 a.m. weekday timing of the hearing. Residents who spoke were outnumbered by other elected officials and reporters. 

The coal industry — which includes 10 active mines in the county and directly employs more than 3,000 workers here — was a no-show.

Shelstad asked whether there were any coal producers or representatives of coal mining companies in the room. There were none, which elicited a frustrated response from Shelstad.

“I think that’s a darn shame that the coal producers aren’t here fighting — if for nothing else, for their employees,” he said. “They’re probably going to have a strategy that takes a little different approach, and I’m OK with that. But it’s really shameful that we can’t get them here to make public comment and to enter this fight with us.”

Coal leasing fight

The public comment hearing was organized in response to what many regard as a historic move by the Biden administration to effectively set an expiration date for one of the nation’s largest sources of electrical power generation, as well as planet-warming greenhouse gas emissions: Powder River Basin coal. 

The BLM on May 16 announced its preferred “no future coal leasing alternative” in a federal court-mandated update of its land use plans for the Buffalo, Wyoming and Miles City, Montana field offices that oversee coal leasing in the Powder River Basin, which spans portions of both states. Conservation groups had successfully argued the federal agency must fully consider the environmental, climate and human health implications of leasing federal coal in the region.

In its proposal to ban further federal coal leasing, the BLM estimated that existing leases will support the current rate of Powder River Basin coal production to 2041, according to the agency.

Cooperating agencies — such as local and state governments in the region — have until June 17 to file letters of intent to protest the BLM’s preferred no future leasing alternative. That gives those entities legal footing to challenge the decision. In addition to filing a protest letter, Campbell County commissioners are circulating an online petition urging the BLM to reconsider its preferred alternative.

“The coal industry employs thousands of workers across the country, and this ban will put many of these jobs at risk,” the petition states. “Additionally, coal is a vital source of baseload electricity for millions of Americans. Without a reliable supply of coal, our nation’s energy grid could become unstable.”

As of Wednesday morning, the county had collected 455 petition signatures, according to officials. Shelstad said he hopes to eventually collect at least 20,000 signatures.

Has the market already spoken?

Coal proponents in Wyoming say the BLM’s coal leasing ban is the latest in a series of Biden administration actions designed to kill the industry in favor of renewable energy sources and an effort to appeal to voters concerned about the global climate crisis.

The U.S. Environmental Protection Agency in April issued four “final” rules aimed at drastically cutting coal pollution, including a mandate that operators of existing coal-fired power plants commit to cutting or capturing 90% of the planet-warming carbon dioxide emissions by 2032 or convert the facilities to natural gas or close altogether.

Those coal-fueled power plants represent nearly the entirety of the Powder River Basin coal market today.

Energy market analysts, along with conservation groups, have suggested that the administration appears to be issuing rules and compliance deadlines that follow market trends already in motion, noting that many utilities are moving up coal plant retirement dates and that mining companies have not nominated a major new federal coal lease in the Powder River Basin since 2012.

Market trends have already cut production in the region by half since 2008, and the decline in demand for Wyoming coal appears to be accelerating — down by 20% so far this year. In fact, one of the region’s biggest coal producers, Arch Resources, has said it plans to sell or close its two coal mines in Campbell County: Coal Creek and Black Thunder.

Rep. John Bear (R-Gillette) and other local elected officials assured commissioners that they’re hearing pleas from their constituents to use every resource to fight the federal rules. If there is a lack of presence among coal companies themselves, Bear told WyoFile, it might be attributed to years of bad news and mounting pressures on the industry.

“The local [mining companies], most of those boards are located in St. Louis [Missouri] and they’re not interested in fighting this fight the way we’re going to have to fight it as government entities,” Bear said.

Wyoming Mining Association Executive Director Travis Deti, who could not attend the meeting, has said the mining companies rely on the association to speak on their behalf in the state, as well as other advocacy groups at the national level. 

“As far as the Mining Association, which represents those companies, we’re fully engaged with our congressional delegation, with the governor’s office, with the Legislature, and we’re using every tool at our disposal to try to fight back on some of this stuff,” Deti told WyoFile by phone on Wednesday.

Some state and local officials are skeptical that the market has already spoken louder than the Biden administration. While some companies such as Arch Resources might not anticipate a future in Powder River Basin coal, others see an opportunity to apply carbon capture technologies and coal-to-products manufacturing — all of which is under threat by the BLM’s no future leasing proposal, according to Bear.

“Even if we’re forced to do it alone, other investors will see an opportunity,” Bear told WyoFile. “They have to see that somebody is fighting back right now.”

Bear said he worries that even some in Campbell County might not be aware of future opportunities for coal, or the dire consequences if the industry goes away completely.

“The rest of the country is going to be in trouble, too,” he said, adding that the rapid move to shut down coal plants presents an electric reliability issue. “Reliability is absolutely critical and that’s what this stuff provides.”

Past layoffs, bankruptcies linger

Though most coal miners and residents here squarely pin the blame for the coal industry’s decline on the Obama and Biden administrations, they’ve been burned by coal companies in the past.

Most infamously, Blackjewel in July 2019 abruptly closed its Eagle Butte and Belle Ayr coal mines — among the nation’s largest — leaving some 600 miners in limbo about whether they could return to work or collect paychecks. The company furloughed many workers and eventually brought others back as both mines resumed operations. But the company’s unannounced mine closures and subsequent bankruptcy left coal miners as well as local businesses and governments fighting to get paid for wages and taxes owed.

Arch Resources (then Arch Coal) and Peabody Energy separately announced massive layoffs on the same day in March 2016, cutting jobs for some 500 miners. Both companies subsequently shed billions of dollars in debt in Chapter 11 bankruptcy reorganizations.

Coal industry a no-show at Wyoming event to rally against federal leasing ban is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Lawmakers have advanced six draft bills intended to ensure Wyoming electricity customers pay only what’s necessary for utilities to provide reliable energy without lining executives’ pockets or footing the bill for other states’ demands for renewable energy.

The legislative efforts attempt to fill perceived regulatory gaps in a rapidly changing utility landscape, according to Corporations, Elections and Political Subdivision committee members who debated the bills Friday in Cheyenne. Though some measures were criticized as redundant of existing utility practices and Wyoming Public Service Commission authority, and for adding to the under-staffed commission’s workload, they’re also intended to send a message.

“A big part of what we’re doing is perception,” Rep. Jeremy Haroldson (R-Wheatland) said. “We’re having this conversation and [residents] want to know without a shadow of a doubt that when they pay their utility bill next month they’re not paying for another state’s decisions.”

All six bills will be sponsored by the committee. Bills sponsored by legislative panels are historically more likely to succeed than measures backed by individual lawmakers.

Despite the two-thirds vote threshold required to introduce non-budget bills in February’s budget session, committee members are hopeful the high-profile issue of soaring electric rates will win consideration for the slate of utility measures before the Legislature.

Historic rate hike spurs measures

Lawmakers said they’re responding to rising utility costs, in general, and worry the industry’s ongoing shift from fossil fuels to renewable sources of electric generation will result in continually rising rates and less reliable power. 

Panel members repeatedly pointed to Rocky Mountain Power’s request to hike electric rates by nearly 30% — the largest hike Wyoming has seen in more than 10 years and a move lawmakers believe is, in large part, the result of anti-coal and natural gas policies in several West Coast states where the utility’s parent company, PacifiCorp, also operates.

The company’s ongoing investments in new Wyoming wind farms and high-voltage transmission lines to send the power to customers in other western states is a primary example, Corporations Committee Co-Chairman Sen. Cale Case (R-Lander) said. Though it’s not a major factor in Rocky Mountain Power’s current rate hike requests, its parent company is investing $8 billion in interstate electric transmission lines, adding more future costs and risks for Wyoming customers without a proportional benefit, according to Case.

“Those lines, the commission is going to find that they’re [a just and reasonable expense],” Case said. “Do you think they’re useful for Wyoming? I don’t. I think we’re getting screwed.”

The committee, over the course of about eight hours, heard testimony from the Wyoming Public Service Commission, Rocky Mountain Power, Montana-Dakota Utilities Co., Black Hills Power, Wyoming Rural Electric Association, Wyoming Industrial Energy Consumers and several members of the public. The discussion often invoked the Rocky Mountain Power rate hike hearing taking place before the Public Service Commission just a couple blocks away from the Capitol, with some of the same parties in that case taking time to hash out their arguments in the legislative setting.

Sen. Case, for example, is participating in the rate case hearing as a citizen. Holland and Hart attorney Thor Nelson represents the Wyoming Industrial Energy Consumers coalition — also an intervening party in the rate case — and testified before the legislative committee in support of several bills the coalition offered and that the committee accepted.

Meantime, the Public Service Commission and Rocky Mountain Power sent staff members and representatives not directly participating in the rate hearing to testify before lawmakers.

The Public Service Commission is expected to rule on Rocky Mountain Power’s rate request before January, long before any potential new legislation might take effect — or even be debated by the full Legislature.

Nearly all aspects of the draft measures exempt rural electric co-ops because the state has limited authority over their rates or facility investments. Rocky Mountain Power is the primary target for much of the draft legislation affecting all regulated electric utilities in the state because it is the largest in Wyoming, serving some 144,000 customers, according to statements by lawmakers.

Here is a summary of the six draft bills advanced by the committee. 

Electric reliability

Public service commission – electricity reliability would direct the commission to establish standards for “adequate, dispatchable and reliable” electric generation and to impose penalties for outages and for not meeting the standards. The committee considered, but backed off from, increasing penalties to a potential maximum of $1 million per day for a major outage.

The new reliability standards would be applied only to electric generation facilities and not distribution systems, such as power lines. 

Utilities are already held to such standards and potential monetary penalties by both state and federal authorities, utility representatives testified. However, the new standards should compel utilities to be careful not to become over-reliant on renewable sources of electric generation, and should give the commission “more teeth” to disallow passing the cost of renewables to Wyoming ratepayers, Sen. Charles Scott (R-Casper) said.

Decommissioning costs

Reclamation and decommissioning costs would direct the commission to hire a third party to study the cost of closing and remediating power plants. The bill includes an appropriation of $500,000, which would be recouped from power plant owners — an expense that committee members said should not be passed on to ratepayers.

However, both the commission and utilities already account for reclamation and decommission costs in rates, according to testimony from their representatives. The money is collected in pace with scheduled closures. Further, the measure would add to the workload of an already understaffed commission and potentially require another $1 million in staff support, according to an estimate by the agency’s Chief Counsel John Burbridge.

Despite existing laws and rules, several lawmakers still worry that divvying up power plant closing costs among ratepayers in multiple states might become more complicated than usual. For example, Wyoming might choose to support a coal-fired power plant long after states like Washington and Oregon have opted out. That scenario, too, according to critics of the draft bill, is already taken into account within the existing regulatory system. 

“Perhaps it’s a solution looking for a problem,” Burbridge told the committee.

Wyoming’s benefit?

Electricity rates for costs that do not benefit Wyoming would direct the commission to conduct a cost-benefit analysis of multi-state, systemwide facilities and disallow any costs that do not benefit Wyoming ratepayers. It attempts to address concerns such as the example that Case mentioned regarding PacifiCorp’s $8 billion investment in new interstate transmission expansions necessary to deliver power from expanding wind and solar energy facilities to out-of-state customers.

“We are not benefiting from that in any proportion to the cost that our ratepayers are being asked to [pay],” Case said.

PacifiCorp’s $8 billion investment accounts for only a fraction of Rocky Mountain Power’s currently proposed rate hike, according to the utility. Just how much Wyoming ratepayers are being asked to cover, and how much is legally justified, is now being contested before the Public Service Commission.

The bill does appear duplicative of the commission’s core mandate to scrutinize the costs of multi-state, systemwide facilities and to only allow utilities to recover the portion that’s proven to serve Wyoming customers, Case acknowledged. But he and most of his colleagues on the committee are convinced the current level of regulatory scrutiny still leaves Wyoming customers vulnerable to paying more than their fair share. 

Also, Case said, the regulatory calculations don’t take into account the environmental, cultural and natural resource losses imposed on Wyoming by industrializing landscapes with wind farms and transmission lines.

“Those lines are being built for the major purpose of taking renewable energy out of the state of Wyoming,” Case said. “We don’t need that power. Our customers don’t need that power. Our growth doesn’t justify that power, and on and on and on.”

Only a small portion of a multi-state utility’s wind farms and interstate transmission lines might serve Wyoming customers. But they more broadly benefit them via economies of scale when it comes to geographically large, systemwide savings, according testimony from utility representatives. Though utilities didn’t oppose the measure, the bill merely adds another layer of work and expense for something the utilities and the commission already do, they said.

“It really doesn’t advance the ball very much because this is essentially what is done anyway,” said Bruce Asay, who represents Montana-Dakota Utilities Co.

Integrated resource plans

Public service commission-integrated resource plans was brought to the committee by the Wyoming Industrial Energy Consumers coalition, and it has tentative support from the Sheridan-based landowner advocacy group Powder River Basin Resource Council.

The bill would direct state regulators to more closely review a utility’s long-range planning and provide guidance for how the utility can better meet Wyoming’s needs and policies.

Utilities routinely update what’s referred to as their integrated resource plan — a roadmap of sorts for how they will provide electrical service well into the future. Rocky Mountain Power, for example, filed its most recent 20-year integrated resource plan update in April, setting tentative retirement dates for several coal-fired power units in Wyoming and neighboring states as well as plans for major investments in new transmission lines, renewable energy and battery storage.

The internal utility-by-utility planning process tends to set an agenda and investment plan in motion ahead of deeper scrutiny by state-level authorities such as the Wyoming Public Service Commission and the broader public, proponents of the bill say.

“So it ends up having an elevated presence and less scrutiny, I argue, than if we had scrutinized it at the very front end,” Case said.

Utility representatives said the bill would result in additional layers of work for both them and the commission, but they did not oppose the measure.

“We do this in Utah. We do it in Oregon. We’re happy to do it in Wyoming,” Rocky Mountain Power Vice President and General Counsel of Government Affairs Richard Garlish said.

Cost sharing

One particularly unpopular aspect of Rocky Mountain Power’s contested 21.6% (or $140.2 million) “general rate” increase proposal is another request couched within it. 

Currently, the utility operates under a “cost sharing band” — a regulatory mechanism that splits fuel cost overruns between the utility and its Wyoming customers. Ratepayers are tapped for 80% and the utility is responsible for 20%. The same 80/20 ratio applies when fuel costs come in lower than the amount fixed into rates, sometimes resulting in a rebate to customers.

That type of shared risk and benefit is a good “insurance” policy for ratepayers, and incentivizes the utility to do its best in forecasting prices for wholesale coal and natural gas to fuel power plants, as well as electrical power it sometimes purchases on the open market, according to the Wyoming Office of Consumer Advocate. 

But Rocky Mountain Power wants Wyoming authorities to shift that cost sharing band to 100/0 — requiring Wyoming ratepayers to accept all the risk and reward, depending on how well the utility has estimated future fuel costs. 

The Public utilities-net power cost sharing ratio draft bill would disallow a 100/0 ratio and mandate that the risk and reward be shared to some degree. Though many proponents of the measure support a permanent 70/30 split, the committee declined to establish a specific ratio — only that it could not be 100/0.

Rocky Mountain Power representatives strongly opposed the measure.

Bidding on utility facilities

Lawmakers and large Rocky Mountain Power customers, particularly the Wyoming Industrial Energy Consumers coalition, worry that the utility’s process for inviting bids from contractors puts potential fossil fuel developers at a disadvantage.

Public utilities-energy resource procurement mimics existing laws in Utah and Oregon that call for an independent evaluator to judge whether a utility’s “requests for proposal” faithfully solicit a full range of technology options for new power generation facilities regardless of their primary energy resource.

Though the commission considers it redundant of current practices and authority, utilities did not oppose the measure. A Rocky Mountain Power representative noted the company already undergoes similar scrutiny in Utah and Oregon.

Deregulation?

One measure, Third party electrical generation, which would have allowed groups of customers to generate and potentially sell their own electricity, failed to move forward. 

It’s a form of deregulation, according to critics, and an ongoing legislative effort that’s been defeated in the past. But it’s likely to reappear before the Legislature given strong support among Wyoming’s trona, natural gas and manufacturing industries, as well as bitcoin miners.

WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.

Wyoming rate hike inspires slew of bills to scrutinize electric utilities is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.