UWs Considine Submits Report to WEA Outlining Potential Challenges in Energy Development

infographic of information from report

Commissioned by the Wyoming Energy Authority (WEA) in December of 2020, University of Wyoming energy economist Tim Considine of the School of Energy Resources (SER) conducted a study exploring potential scenarios affecting energy development with the change in federal administration.

The study outlines the fiscal and economic ramifications that Wyoming could face with the possibility of a moratorium on new federal leases for oil and gas companies, or a full drilling ban on onshore federal leases.

With 48% of land area in the Wyoming owned by the federal government, the report forecasts that a cessation of new leases on federal land could significantly impact the state’s economy, reducing employment and severance and ad valorem tax revenues.

Under the new administration and in conjunction with the Department of Interior (DOI), it was announced January 22, 2021 that a 60-day suspension of new oil and gas leases and drilling permits for U.S. lands and waters was effective immediately, pending a review of the DOI. The order does not limit any existing operations under current leases.

According to Considine’s study, a leasing moratorium reduces Wyoming oil and gas tax revenues nearly $200 million per year during the first five years. For onshore federal lands examined in the study, a leasing moratorium reduces oil and gas tax revenues by $1.1 billion per year during the first five years. States with onshore federal lands use this income to fund education, health care, local governments, and special districts, such as conservation boards. If continued, a lease moratorium could jeopardize funding for these programs. Though the losses estimated in the study are subject to many uncertainties, the report is a significant resource for consideration if the ban were to be extended.

The report also sheds light on the relative costs of achieving reductions in greenhouse gas emissions with a moratorium on federal oil and gas leases.

“There are many cost effective ways to reduce greenhouse gas emissions,” says Considine. “Restricting development of federal oil and gas is not one of them.”

Along with the challenges that arise from the federal oil and gas lease suspension come opportunities. The report also highlights alternates to offset carbon emissions in lieu of federal leasing bans such as CO2 capture and sequestration or capturing production off-gases.

“SER is honored to recruit and support UW faculty focused on researching issues related to Wyoming’s vast energy sector,” says Executive Director of SER Holly Krutka. “Dr. Considine’s recent study provides decision makers with critical information about the impacts of specific policy decisions.”

Under the direction of Kipp Coddington, researchers in SER’s newly created Center for Energy Regulation & Policy Analysis (CERPA) are also looking at the broader scope of the changing energy landscape and how differing policies will impact Wyoming’s energy resources and the economy.

According to Coddington, CERPA is endeavoring to provide objective, rigorous, and well-written analysis of the new federal administrative policies at the state, national, and international levels and will be a critical resource for guidance to the state.

“Through its Centers of Excellence, SER will continue to support research on policy and technologies to promote a thriving and sustainable Wyoming energy industry,” says Coddington.

The full report can be read here. For more information about CERPA, visit the School of Energy Resources.

infographic of information from the report


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