In Major Policy Shift, Wyoming Redefines Who Can Bid On State Oil And Gas Leases

The Wyoming Outdoor Council did nothing wrong when it tried to outbid a few oil and natural gas companies that wanted to strike it rich on a chunk of state land put out for auction nearly a year ago south of Pinedale.

The Wyoming Office of State Land Investments said so.

As a qualified bidder in the auction, the Lander-based conservation advocacy organization has admitted it wanted to knock off energy industry players in the auction process and preserve a bottleneck migratory route used by pronghorn antelope.

It had no interest in developing oil and gas on the land.

That was it.

But that wasn’t how some in Wyoming’s energy industry interpreted what they claim is a gambit to deny them the leases or drive up the bid to make them overpay.

Representatives with the Petroleum Association of Wyoming and Casper-based Kirkwood Cos. expressed worries about some outside billionaire — namely Michael Bloomberg, who is spending more than $1 billion on an energy transition plan to create a carbon-free world — swooping into Wyoming and dominating a state-led oil and gas lease auction.

“There is concern for billionaires like (Michael) Bloomberg or (Bill) Gates or (Warren) Buffett putting in bids for these leases with no intention of ever developing them for oil and gas,” said Steve Degenfelder, land manager for the Casper-based Kirkwood Cos., in an interview with Cowboy State Daily last week.

Bidding War?

The Wyoming Outdoor Council’s bidding war against two oil companies for the migratory route, called tract 194, a dusty bowl of a place rich in oil and gas and located on 640 acres south of Pinedale, led Peter Obermueller, president of the Petroleum Association of Wyoming, to remark that the conservation group’s efforts “triggered our interest in nipping this in the bud before somebody with significant resources decided to wreak havoc,” he told Cowboy State Daily on July 3.

After all, Wyoming depends on oil and gas money for everything from education to penitentiaries, and the financial implications for the state are huge if it lost a few billions dollars in annual revenue.

Kirkwood operates more than 400 wells in six states, including Wyoming, Colorado, Nevada, North Dakota, Montana and Utah.

The spat over Wyoming Outdoor Council’s participation in last year’s auction came to light after Wyoming Gov. Mark Gordon signed an emergency order last week to implement changes in this week’s state-led oil and gas lease auction to keep environmental activist groups from driving up bids and taking energy-rich properties out of the hands of developers.

“We have updated the definition of what a qualified bidder is. We are in a different world today than we were last year,” said Jason Crowder, deputy director at the Wyoming Office State Lands and Investments.

During the 2024 legislative session, lawmakers passed State House Bill 141, which redefined qualified bidders, making it virtually impossible for groups like the Wyoming Outdoor Council to bid on state land and do nothing with it, Crowder told Cowboy State Daily.

Narrow Definition

With the new legislation, the Wyoming Outdoor Council can only participate in an oil and gas lease auction if it becomes a qualified bidder and intends to drill on the land, Crowder explained.

While the Board of Land Commissioners is allowing this sale to move forward with the new definition, it has also put the definition, along with other changes within its oil and gas leasing rules, out for public comment, said Crowder.

This is why Gordon issued the emergency order last week.

The new rules came about because of concerns raised by Kirkwood and a second oil and natural gas firm, Englewood, Colorado-based PureWest Energy LLC, the largest producer of natural gas in Wyoming. They went up against the Wyoming Outdoor Council in the bidding for tract 194 in last July’s auction.

The Auction For Tract 194

According to a copy of the tract 194 bid history, PureWest got bidding started in the July 12, 2023, auction at $1 an acre, with the Wyoming Outdoor Council upping the bid to $2.

PureWest countered at $3, then Wyoming Outdoor Council at $4, then PureWest kicked in another buck.

But that’s when things got interesting.

Wyoming Outdoor Council then came in with a bid of $18, more than three times the previous bid, with Kirkwood jumping in with the final and winning bid of $19 and acre.

After the dust settled on the bidding, Degenfelder concluded that his company had overpaid for the tract given that the conservation group had submitted its bids anonymously and Kirkwood had no idea who was behind large overbid that drove the price up.

Electronic auctions to buy oil and gas leases on state-owned land can be challenging. This is because anonymous bidders in auctions operate over a private online network, called EnergyNet, by Wyoming’s Office of State Land Investments (OSLI) and don’t always tell the full story of an entity’s motives or disclose their identity.

Not Fair

Degenfelder became incensed over the bidding.

He argued that the Wyoming Outdoor Council wasn’t a qualified bidder and that his company wanted a refund of $14,720 related to last year’s auction.

Kirkwood alleged that the group was not a qualified bidder because the Wyoming Outdoor Council’s “sole interest” was to not develop the oil and gas resources, while the purpose of the auction to develop it.

“While hindsight is often instructive, there are many variables that make Kirkwood’s analysis speculative,” wrote OSLI Director Jenifer Scoggin in a Dec. 11, 2023, response to Degenfelder.

In a rejection of the refund request, Scoggin also wrote that the council met the definition of “qualified lessee” and “may participate in oil and gas lease auctions.”

But this was before the law was changed earlier this year.

The Wyoming Outdoor Council played down some of the conspiratorial thinking alleged by the energy industry players.

“While we recognize the importance of the oil and gas industry to Wyoming’s economy, we believe this one parcel would be better left undeveloped and ask that you weigh the concerns outlined below before moving forward with this lease,” wrote the Wyoming Outdoor Council’s Meghan Riley, public lands and wildlife advocate, and Alec Underwood, program director, in a Sept. 8, 2023, letter to Kirkwood.

Passionate About Pronghorn

The letter, noted that the group’s Sublette County members are “passionate about the big game herds that carry out long distance migrations through their backyard.”

Besides the migratory pathway of the Sublette pronghorn herd through parcel 194, the council cited scientific studies demonstrates that oil and gas development lead to “habitat avoidance and fragmentation for pronghorn.”

“Following the massive losses this herd suffered during our recent, harsh winter, these pronghorns need all the help we can give them to rebound in coming years,” the letter added.

The group also called on Kirkwood to consider relinquishing its claim to parcel 194 until the Wyoming Game and Fish Department completed drafting maps on the migratory patterns of pronghorn.

“We remain steadfast in our position that development should not occur within this bottleneck, but it certainly shouldn’t be leased without stipulations for migrating pronghorn in place,” wrote Riley and Underwood.

Wyoming Outdoor Council executives are upset with what they say are mischaracterizations of the group’s plan to drive up prices for leased land in last year’s auction.

“Our involvement in the oil and gas lease sale was an effort to prevent development of one parcel (out of 197 parcels) that was located in critical wildlife habitat, while also respecting the revenue generating model of our state trust lands,” wrote Underwood, the council’s program director, in a July 6 email to Cowboy State Daily.

“It was not to ‘play shenanigans’ or start a ‘bidding war’ or ‘drive up prices,’” he said.

Carl Fisher, executive director of the Wyoming Outdoor Council, declined to answer several questions submitted to the group for this story.

That includes confirmation of his group’s involvement in the confidential bidding process with Kirkwood and PureWest, and whether the auction on tract 194 is the only lease of state or federal land that it has bid on and owns.

Pat Maio can be reached at pat@cowboystatedaily.com.