Backing Gordon, Legislature looks to bet big on fossil fuels - Casper, WY Oil City News
Oil City News Logo

Backing Gordon, Legislature looks to bet big on fossil fuels

Gov. Mark Gordon chats with Rob Piippo, president and general manager of the Kemmerer Coal Mine, after Gordon’s State of the State address on Feb. 10, 2020, in Cheyenne. (Dan Cepeda, Oil City)

February 13, 2020 by Andrew Graham, WyoFile

During Gov. Mark Gordon’s state-of-the-state address Monday, lawmakers’ greeted Gordon’s strident pledges to defend Wyoming’s fossil fuel industry with raucous applause and a clear signal that the Republican majority is in lockstep with his position. 

Gordon used much of his second annual state-of-the-state speech to elevate his stature as a defender of coal, while also calling for a tax break for oil and gas. He touted his administration’s petition with the U.S. Supreme Court to try and open coal ports on the west coast and asked lawmakers to invest millions of dollars in carbon capture projects and other coal protection measures. 

Article continues below...

Wyoming is the cleanest and safest energy producer “on the planet,” Gordon said. “Yet our industries are still discriminated against, maligned and decried as dead.

“Well, not on my watch,” the governor said to loud cheers. 

Gordon’s speech is the latest sign of his commitment to combat a rapid national transition away from coal by mobilizing state government. 

“We will not recklessly abandon our most abundant and reliable energy source just because it is unpopular with some people,” Gordon said. 

Answering the call 

Lawmakers are practically leaping over each other to take up the flag. By Wednesday, day three of the budget session, leading senators and representatives had brought a number of defensive measures to the table. 

The list includes SF125 – Electricity production standard, from the powerful Senate Appropriations Committee that would prohibit utilities from selling wind- and solar-generated electricity to Wyoming power customers. Down the hall, House Revenue Committee Chairman Dan Zwonitzer (R-Cheyenne) sponsored a measure that would use Wyoming’s Public Service Commission to mandate carbon capture into the energy portfolio of utilities operating in the state.

Zwonirzer’s HB200 – Reliable and dispatchable low-carbon energy standards would allow utilities to pass on the costs of expensive — and still commercially unproven — carbon capture technologies onto ratepayers. It is a direct subsidy of carbon capture on the backs of electricity users up to $1 billion, according to the Powder River Basin Resource Council. 

The bill would also prevent utilities from recuperating the costs of new renewable energy built in Wyoming unless they’ve attempted to meet the carbon capture requirements. The bill is an answer to Gordon’s call for a “low-carbon” standard for utilities operating in the state, according to the governor’s spokesperson Michael Pearlman. 

Wyoming is an electricity exporter. Utilities that produce energy from coal, gas, wind and solar in Wyoming sell most of that power to states with larger populations. Attempting to control those companies’ production is one facet of the Legislature’s emerging strategy. Others include placing hefty financial wagers on coal exports and carbon capture, and offering tax breaks for oil, gas and exported coal. 

Despite a much discussed structural deficit, lawmakers are proposing at least $48 million in spending for coal research at UW and Gordon’s efforts to open ports and market coal. 

Speaker of the House Steve Harshman has introduced a bill to convert a portion of the state’s severance tax, much in demand of late, into a war chest for Gordon to pursue exporting opportunities for energy companies. 

Rep. Steve Harshman, R-Casper. (Dan Cepeda, Oil City)

Harshman’s bill would devote 0.5% of the state’s severance tax to a new account controlled by the governor. The move would sluice $12 million a year into the account, and away from the state’s general government budget. 

The governor would have latitude to spend the money negotiating with other states and tribal governments to promote the exportation of Wyoming’s coal and other minerals. Gordon could also spend it on litigation like the case he is already pursuing against Washington state over coal ports.

Gordon also called for $25 million for an “energy commercialization program” in his speech. The Joint Appropriations Committee previously rejected that request, preferring to fund UW research projects directly rather than route the money through Gordon’s office. The current draft budget offers Gordon $4 million for the new program. 

Many of these statutory wagers come with unknowns. Lawmakers don’t know how much money a tax break for oil and gas could cost the state. Gordon touted the effort as a response to low fuel prices. If a sharp uptick in oil or gas prices sparks a boom, however, Wyoming could miss out on significant tax revenue.

Rep. Don Burkhardt (R-Rawlins) will propose a severance tax break for natural gas, the governor’s spokesman said. And House Appropriations Committee Chairman Bob Nicholas (R-Cheyenne) introduced a bill to knock 3% off of the state’s 7% severance tax on coal exported through Mexico or Canada. Such exports today don’t occur. Some argue that’s because the logistics are expensive.

Betting on carbon capture 

Like tax breaks, betting steeply on carbon capture and other technologies to preserve the life of power plants carries risks. With few exceptions, such technologies have not become economical enough for widespread adaptation by utility companies. 

Coal plants that buy Wyoming’s coal are nearing retirement around the country. Lawmakers supporting a push to require utilities to sell coal-fired power plant units in Wyoming instead of retiring them hope carbon capture technologies can keep plants running.

Utility giant PacifiCorp has drawn much lawmaker attention for its plan to retire coal plants early.  

PacifiCorp isn’t citing climate change concerns alone in its arguments. It also lists expensive upgrades to stem air pollutants.

It would cost $100-150 million each to upgrade the two older units at the Jim Bridger Plant outside Rock Springs, according to PacifiCorp. Those upgrades would be needed to bring the plant into line with existing EPA regulations, and are unrelated to carbon dioxide.  

PacifiCorp concluded closing the units early instead would save its customers hundreds of millions of dollars. 

That hasn’t stopped lawmakers, and industry evangelists, from focusing on carbon capture as the best path to keep power plants running.

Terrence Manning, CEO of Glenrock Petroleum, told the Senate Corporations Committee Tuesday that his company could use captured carbon to stimulate oil production through a process known as enhanced oil recovery.

His company has expressed interest in buying a coal plant unit. But Manning’s company would focus on the units that are already in compliance with EPA regulations, not the ones that need expensive new technologies. “You have to start with a unit that is compliant and we’ve never said otherwise,” Manning told WyoFile. 

Instead, Manning outlined an ambitious path to save other units. Injecting captured CO2 could “unlock 1.6 billion barrels of oil,” in Wyoming, he said. The tax money from that oil would wipe out the state’s revenue deficit, he said. 

“Which means none of your services go away, you don’t have to impose a tax… and there’s enough extra revenue … to upgrade [coal] facilities that the state also wants to keep,” Manning said. “This is about the state taking control of its own future.”

Community impacts 

Despite the flurry of bills that focus on bolstering industry, few address retraining workers, economic-impact funds or anything else that might blunt the blows to energy-dependent communities. The dearth didn’t go unnoticed. 

The Legislature is eyeing a $1 million appropriation to create a Coal Marketing Program desired by the governor. Similar to Harshman’s measure, it provides money for the new office to spend on “projects with a public benefit associated with expanding and protecting Wyoming’s coal markets and coal facilities.” 

It also allows the money to be spent on projects that address impacts to cities, towns and counties from changing markets.

On Wednesday morning, the House Minerals, Business and Economic Development Committee heard from one coal miner who hoped for more impact money and less “marketing.”

“A fund to help with medical expenses would seem like a better idea,” Lynne Huskinson of Gillette said. Huskinson is a lifelong coal miner who retired after Blackjewel failed to pay some of her retirement benefits and then laid her off at the start of a chaotic bankruptcy. 

Huskinson, along with representatives from the Powder River Basin Resource Council and the Wyoming Outdoor Council, argued in favor of shifting the new program’s focus entirely to community impacts. 

Wyoming’s 500 Blackjewel miners lost their health insurance during the bankruptcy. State agencies were able to help and should be given more resources, Huskinson said. “If the Wyoming [Department of Workforce Services] hadn’t stepped in we would’ve been a lot worse off,” she said. “We should find better ways to deal with the coal community rather than giving people false hope that coal will find its way back.”

Lawmakers rejected the proposition. Other bills drafted by the new Select Committee on Coal/Mineral Bankruptcies will protect workers, some lawmakers said. 

One committee member, Rep. Joe MacGuire (R-Casper), spoke up to address what he called “the general rhetoric” following the coal miner and the conservation groups’ testimony. Miners shouldn’t forget that coal companies have built up the state’s workers’ compensation and unemployment insurance funds for years, he said, in addition to other achievements.

“Here we are at 8 o’clock in the morning holding a meeting and our room is lit and our heat is working,” MacGuire said. Without a reliable — coal-fired — grid,  “we just wouldn’t have lights this morning,” he said.


This article was originally published by WyoFile and is republished here with permission. WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.