Wyoming's resurgent oil and natural gas production may be in jeopardy after a federal judge on Tuesday ruled against the Interior Department's Bureau of Land Management (BLM) for not adequately considering the effects of climate change in authorizing lease sales in the West.
U.S. District Court for the District of Columbia Judge Rudolph Contreras' ruling placed a temporary halt to drilling on more than 300,000 acres in Wyoming, causing heartburn among state and industry officials, such as the Western Energy Alliance (WEA), which accused the judge of "throwing out decades of legal precedent."
Wyoming Gov. Mark Gordon, a Republican who took office earlier this year, expressed disappointment with the ruling, promising to explore the state's options.
"Our country’s efforts to reduce carbon should not center on the livelihoods of those committed workers and industries who seek to provide reliable and affordable energy, especially when we don’t look to the detrimental effects of other expansive industries," Gordon said. "Bringing our country to its knees is not the way to thwart climate change; we need solutions not grandstanding, and seeking carbon negative, not just neutral solutions.”
WEA President Kathleen Sgamma argued that the Obama administration BLM did the "correct level" of greenhouse gas (GHG) emissions analysis for the lease sale. "The judge is asking BLM to take a wild guess at how many wells would be developed on these leases and analyze GHG impacts for wells that will never be developed," Sgamma said, noting the judge has overreached by halting drilling permits.
Sgamma thinks the decision is "ripe" for appeal, and WEA intends to continue to be an active party in the case. The ruling potentially impacts lease sales in 2015 and 2016 throughout the West, so the analysis of questions before the federal court was done by the Obama administration.
"Trump continues to do GHG analysis at the leasing stage that is similar to the type of analysis done by the Obama administration," she said.
More generally, Sgamma thinks Contreras' ruling has long-term implications for the entire federal onshore leasing system, but she is unsure what its immediate impact is for other areas. The ruling only applies to these particular leases, she said.
According to the Wyoming Oil and Gas Conservation Commission (OGCC), oil production was up 15% year/year last December to a little more than 8 million bbl. Natural gas production was down about 7% at 148 Bcf. The rig count as of March 15 was 36, according to Baker Hughes, a GE Company.
OGCC Oil & Gas Supervisor Mark Watson was unavailable to comment on the court ruling on Wednesday, but one of the agency’s attorneys said it typically doesn’t deal with BLM leasing, and it has not reviewed either the court ruling or the leases.
Similarly,Pete Obermueller, President of the Petroleum Association of Wyoming, said his organization is reviewing the judge's order and "evaluating our options."
WildEarth Guardians and Physicians for Social Responsibility filed a lawsuit in August 2016 over BLM’s decision (WildEarth Guardians et al. v. Zinke et al., No. 16-1724), claiming that it was not enough for BLM to issue environmental assessments and findings of no significant impact (FONSI) for the Wyoming auctions. An Obama appointee, Judge Contreras' ruling agreed with the plaintiffs.
The judge said the BLM violated the National Environmental Policy Act because it "failed to take a 'hard look' at GHG emissions" for 303,000 acres offered in five lease sales between May 2015 and August 2016.
WildEarth officials contend that the ruling “calls into question the legality of the Trump administration’s entire oil and gas program,” Jeremy Nichols, WildEarth’s climate and energy program director,, said the court is forcing Trump's people "to look at the bigger picture.”
Historically, in late 2017 Wyoming grossed nearly $17 million from an offering of 239 parcels totaling 94,256 acres in the state's third online oil and natural gas lease auction that year. The Office of State Lands held the sale, selling 191 of the 239 parcels. At that time, total revenue from oil and gas auctions hit $60.9 million, with 182,935 leased acres.
In 2015, 15 members of the U.S. House of Representatives wrote to the Interior Department, urging that BLM move its quarterly oil and gas lease sales to the internet, which it did successfully the next year. Traditionally, they had been conducted face-to-face in BLM field offices.
The authority for the internet-based lease sales was provided by the 2015 National Defense Authorization Act, and BLM later published a new rule amending its regulation to accommodate the expanded authority.