Oil Groups File Lawsuit Against Federal Government Over Lease Sales in Wyoming
On Monday, the Petroleum Association of Wyoming (PAW) and Western Energy Alliance (WEA) announced in a press release that they had filed a lawsuit against the Department of the Interior for not holding an oil and gas lease sale in the third quarter of 2022.
In the suit, the groups hope that a judge will say the Bureau of Land Management illegally didn't have a lease sale, pay their attorney fees, hold quarterly lease sales going forward, and give them any other relief they may be entitled to.
Part of the lawsuit points to the law on mineral lands and mining which states "Lease sales shall be held for each State where eligible lands are available at least quarterly and more frequently if the Secretary of the Interior determines such sales are necessary."
Kate Groetzinger, a communications associate with the Center for Western Priorities, said that there may be some leeway for the Secretary of the Interior to halt lease sales.
"The secretary legally does have the ability to remove land from lease sales, saying we're just not gonna lease it...Apparently, the Obama administration held quarterly sales, but not in every state in every quarter," Groetzing said. "So that's another. And so that never got thrown out by the courts. So there have been, you know, presidents have interpreted this in different ways. There was a temporary pause and it ultimately didn't effect the amount of drilling going on in Wyoming, which I think is the upshot to this."
Ryan McConnaughey, Vice President and Director of Communications with the PAW, said it's important for lease sales to continue because smaller operators need consistent leases to continue working.
"That's really important for oil and gas operators in Wyoming, specifically small operators," McConnaughey said. "Because they need a continued pipeline of leases in order to keep rigs running. Especially small operators can't lay out large amounts of resources to have a stockpile of leases available to continue their leasing operations. And when the federal government doesn't offer lease sales but once a year, that's really problematic for those operators."
While it is unclear exactly how many unused leases smaller operators have access to, across Wyoming as a whole, according to the BLM, in 2021 there were 9,173 unused permits, with 2,532 in Wyoming.
Kathleen Sgamma, president of the WEA, said there are 35,871 active leases, and of those 12,068 are nonproducing, either because there are environmental reviews underway or active litigation going on.
Sgamma said they didn't sue the Trump administration when there weren't oil and gas lease sales in 2020 because they felt that they trying to go forward with more lease sales.
"We're a mild-mannered bunch, and we don't sue when there's a few lease sales missed here and there," Sgamma said. "Do we like it? No. But we try not to be over-litigious and so, by the book, there should be four lease sales in Montana...but if one or two get skipped but we see that BLM is moving forward and attempting to move forward, not just saying no, then we're not going to nitpick that they only held two lease sales that year. Even though, by the book, we could...we don't jump on everything, we're not an environmental group who's on everything. So when they miss a few lease sales, if we see that they're trying to move forward, then we're good. For example, the Trump administration was moving forward, it was doing all the necessary steps for leasing in Q4 2020 and Q1 2021, it was moving forward. Whereas now, we're seeing this administration say we only have to lease once a year or in the case of the first two years, once every two years."
Last week, the state of Wyoming also filed a suit against the BLM for a lack of lease sales, and while the group's suit is separate from Wyoming's, it may be combined at a later date.
McConnaughey said they're not asking for any legal remedy to the BLM not holding lease sales in 2022, but just to make sure the sales are implemented going forward.
McConnaughey said the active rig count still isn't up to what it was before the pandemic and that continuing the sales will give companies a sense of long-term stability.
"So we're obviously pleased to see an increase in rig count here in Wyoming. It's still down from what we saw pre-pandemic," McConnaughey said. "But given that the industry really relies on long-term forecasting, rather than cyclical or short-term swings in the market, we hope that that is a sign that these companies are seeing what they believe to be long-term forecasted good prices."
The active rig count in Wyoming currently sits at 24, the same amount of active rigs as on Jan. 10, 2020, but lower than the 33 on Jan. 11, 2019.