CASPER, Wyo. — Wyoming’s U.S. Rep. Liz Cheney, who serves as the House Republican conference chair, has joined 19 of her House Republican colleagues in signing a letter urging President Joe Biden to revoke the temporary ban on new oil and gas leasing and permitting on federal lands.
The Biden administration announced a 60-day ban on mining and oil and gas leasing on federal public lands and waters last Wednesday.
The letter to Biden argues that the administration’s actions on implementing the moratorium contradict Biden’s campaign promises to work to unify the country.
Article continues below...
The letter argues that the policies banning mining and oil and gas development on federal lands and waters could have negative economic consequences:
Biden is expected to announce further moratorium policy on Wednesday, following the administration’s decision last week to supsend new drilling permits for 60 days, the Associated Press reports.
Wyoming politicians and oil producers have expressed anxiety about potential impacts the Biden policies could have on the state’s oil and gas industry, though production won’t come to a halt even under the moratorium.
“Even a one year ban on leasing could impact Wyoming should operators decide to invest in states with less federal lands exposure or state and private projects that cross federal lands get held up in bureaucratic red tape,” Petroleum Association of Wyoming Communications Director Ryan McConnaughey said on Tuesday.
Regardless of the expected moratorium, oil and gas production is expected to continue declining through February in the region, according to a Jan. 2021 report from the U.S. Energy Information Administration (EIA).
The EIA uses the umbrella term “Niobrara Region” to refer to oil and gas activity in Wyoming, Colorado and smaller sections of Nebraska and Kansas:
Oil production in the region is expected to decrease about 17,000 barrels per day in the region month over month and natural gas production is expected to decline by 62 million cubic feet per day, according to the EIA.
Oil production from new wells is actually projected to increase by about 17,000 barrels per day in the region, but the EIA says that legacy production (production from existing wells) is expected to decline by 34,000 barrels per day.
A similar pattern is projected for natural gas projection in which declines in legacy production are expected to outweigh production from new gas wells, according to the EIA:
If the Biden administration implements a moratorium to halt new oil and gas leasing in addition to the temporary suspension of new drilling permits, most large companies will be able to lean on existing permits to continue producing oil and gas.
The AP reported on Jan. 10 that companies submitted over 3,000 drilling permits to the Bureau of Land Management in a three month period toward the end of the Trump administration and that the BLM approved about 1,400 of these permits. 4,700 federal drilling permits were approved in 2020.
KeyBank Capital Markets Managing Director of Equity Research Leo Mariani told the AP that most companies have up to two years to act on federal permits they have received.
Reuters reported in Sept. 2020 that most producers in Wyoming’s Powder River Basin have “a runway of 12 to 18 months,” citing Jake Roberts at energy investment bank Tudor, Pickering, Holt & Co.
Even if companies are unable to drill on federal lands, they will still be able to pursue drilling on state and private lands. The Wyoming Oil and Gas Commission approved 490 oil and gas permits to drill in 2020.
However, a pro-longed ban on new federal oil and gas leasing and drilling could impact Wyoming more than other oil and gas producing states.
Wyoming in among the top 10 states in terms of natural gas reserves but the EIA says that about two-thirds of natural gas production in the Cowboy State is produced on leased federal land.
While oil production in Wyoming is less reliant on federal leases, the Petroleum Association of Wyoming (PAW) said in October that a federal ban could lead to a 31% decrease in oil production in the state. They said a ban could lead to a 36% reduction in natural gas production.
Governor Mark Gordon said on Tuesday that the expected moratorium would be a “crushing blow” for Wyoming.
He said the ban could also hamper Wyoming’s efforts to advance carbon capture projects aimed to reduce CO2 emissions.
“The lost jobs and revenue caused by this action inhibit Wyoming’s ability to invest in C02 capture and likewise the ability of the oil and gas industry to contribute to those projects,” Gordon said. “In the longer run, Wyoming may find itself with no choice but to increase the costs of doing business on other energy sources to balance our budget.”