Governor announces updated energy strategyWritten by Natasha Wheeler
Cheyenne – On March 14, Gov. Matt Mead announced the 2016 energy strategy for the state of Wyoming, a new effort building on the strategy that was released in 2013.
“This strategy is again titled, Leading the Charge. In the process of putting this together, we had six public meetings across the state and one statewide conference broadcast live on YouTube, Facebook and Google. Over 3,500 individuals commented, and those comments were received in preparation for putting this together,” Mead said in a March 14 press conference.
The 2013 strategy contained 45 initiatives, 28 of which are now 100 percent complete or nearly complete, including a water strategy, pre-development oil and gas baseline water testing, integrating additional natural gas vehicles into the state fleet and more.
Wyoming’s energy strategy is a living document, according to Mead, who explained that some goals are attainable, others may need more effort and new initiatives will be added to the list as time goes on.
“We felt very good about the 2013 strategy in terms of the initiatives, that have been set out, the public process developing it, the progress we’ve made and what we’ve learned,” he stated.
Moving forward, the 2016 strategy contains 11 new initiatives including an infrastructure investment initiative, biomass utilization initiative and a wind energy manufacturing initiative.
“A primacy initiative will help find efficiencies in the Environmental Impact Statement (EIS) process. The goal is to help federal processes within the state,” Mead added. “Another initiative is a reclamation and regulatory review, and with that, looking at Wyoming bonding requirements and regulations.”
The new energy strategy will continue to work with the Endangered Species Act initiative and will also include an initiative for the collaborative state management of invasive species on federal land.
“The eighth initiative is public land access, where we will work with local governments to make recommendations on final designations of wilderness study areas and other management actions,” he continued.
A career readiness initiative will work to expand and grow current success in matching Wyoming jobs with Wyoming workers, and the carbon innovative initiative will embrace the challenge of finding solutions for advanced technologies and opportunities related to carbon-based fuels.
“The 11th initiative is the energy information initiative, which will help to grow understanding of the energy industries so the public and decision makers know their importance and can see ways to balance energy industries and environmental stewardship,” Mead explained.
Mead also recognized a few key successes of the 2013 energy strategy, including the integrated test center in Campbell County.
“I view that as an opportunity for some great research into how to look at a coal-fired plant and take what comes off of a coal power plant to see if we can utilize it,” he commented. “We want to continue with that because we want to lead not only in energy production. I think we also have a corresponding responsibility to lead in energy innovation and research.”
Mead also mentioned he is proud of the Natural Resource and Energy Explorer (NREX) tool that was built in a collaborative effort with the University of Wyoming Geospatial Information Science Center.
“Here in Wyoming, we have pipelines, we have endangered species, we have roads and we have transmission lines,” said Mead.
When he entered office, there was no easy way to determine how all of these different elements were laid out across the state in relation to one another. The NREX tool allows access to publically available data on Wyoming’s natural, cultural, socioeconomic and infrastructure resources.
“It is built to accelerate planning and discovery. NREX is available to the public, and it’s a web-based, user-friendly geographic information system (GIS). It has analytic capability and real time data updates, yet it maintains the confidentiality of sensitive data sets and allows development of maps, reports and downloading of public data,” he described.
Continuing into the future, Mead hopes that the initiatives of the 2016 energy strategy will encompass critical segments of energy and environmental work taking place in Wyoming, representing consensus energy and environmental policy.
The 2016 energy strategy, including updates on initiatives from the 2013 strategy, can be found on the governor’s website at governor.wyo.edu.
Setback rules Oil and Gas Commission hears testimony on setbacksWritten by Saige Albert
Casper – With widespread public comment on the issue, the Wyoming Oil and Gas Conservation Commission (WOGCC) heard from the public on March 9 regarding setback rule changes at the WOGCC building in Casper.
The rule proposes to change the current setback, or the distance that drilling equipment and associated production facilities must be from an occupied structure, which has sparked controversy across the state.
“The rule does several things,” said WOGCC Supervisor Mark Watson. “First, we defined occupied structure as a building that was specifically constructed and approved for human occupancy, such as a residence, school, office or hospital.”
The setback distance was also changed, and Watson mentioned that if a well is within 1,000 feet of an existing occupied structure, there are additional requirements.
“Under part two, the Supervisor is provided with consideration of how the operator provides communication and comments between the operator and landowner,” Watson noted. “I also have the right to waive these requirements if the landowners approve the waiver in writing.”
In providing their comments, the Petroleum Association of Wyoming (PAW) detailed several studies directly related to the setback requirements.
“The proposed rule respects Wyoming tradition of working with landowners to achieve a mutually agreeable solution,” said John Robitaille of PAW. “We specifically support the setback of 500 feet, with the variance, and we support engaging with developing active participation.”
Increasing the setback distance beyond 500 feet, PAW noted, would dramatically decrease access to resources, particularly in Laramie County, where setback distances are hotly debated.
Melanie Peterson, a geologist, noted that under the current setback of 350 feet, the percentage of land available for well pads is 81.6 percent.
“If we switch that to 500 feet, the percent availability diminishes to 70.8 percent,” she continued. “If we use a setback of 2,640 feet, the percent of land available diminishes to two percent.”
“There is an expectation and mechanism for productive communication for operators and landowners where mitigation measures can be tailored to site-specific locations,” PAW added.
Wyoming’s agriculture groups also commented on the setback rule during the meeting and through written comment.
Wyoming Stock Growers Association Executive Vice President Jim Magagna mentioned, “This is about more than just a number. There is no single setback distance that is ideal for the interests of both parties in every instance. However, the proposed 500-foot standard represents a norm that is more reasonable than the current 350-foot setback.”
The rule also allows for deviations from the 500 feet in the event of an agreement by all parties involved.
Magagna said, “The success of the proposed rule will rest upon the commitment of the Supervisor and the Commission to fair consideration of requests by either landowners or operators for a variance.”
Rocky Mountain Farmers Union (RMFU) also expressed support of the changes, particularly in light of the variance language in the rule.
“We are in support of the proposed setback increase from 350 feet to 500 feet as an acceptable solution,” RMFU Lobbyist and Government Affairs Representative Scott Zimmerman said. “We note the mineral estate is dominant over the surface estate and could visualize circumstances whereby a mineral owner could be prevented from accessing his mineral interest if setback distances are expanded greatly.”
Zimmerman added positively, “We also note the language of issuance of a ‘variance,’ which can increase or decrease the setback distance in special situations.”
The Wyoming County Commissioners Association (WCCA) also agreed that 500 feet was a reasonable solution, noting, “The proposed rule change covers all lands in Wyoming, but clearly is a response to the private lands oil and gas activity that has begun to play a larger role in our counties without much federal land. These new activities requires us to take a careful look at the balance of development and resident health and safety.”
“We believe that increasing the setback to 500 feet is a reasonable approach and particularly appreciate the flexibility granted to the Supervisor to grant a variance in either direction for good cause,” WCCA President Richard Ladwig added.
Wyoming Farm Bureau (WyFB) took a more strong stance, noting that membership is supportive of setback increases if, “the rule remains flexible enough to not impede current ranching/farming practices. We would not recommend increasing the minimum required distance.”
Further, WyFB’s Holly Kennedy urged the WOGCC to consider the negative impacts that Colorado has seen in raising their setback.
While many groups supported the setback change, Powder River Basin Resource Council stood with some concerns.
“Our organization’s members deeply believe that Wyoming must significantly increase the setback distance between oil and gas wells and places where people live and work,” PRBRC’s Staff Attorney Shannon Anderson said. “The choice is ours – Wyoming can be a leader and set a new national standard or we can be a source of growing controversy and problems in communities across the state.”
PRBRC cited concerns about health and human safety, as well as quality of living and other property impacts, advocating for a one-quarter mile setback.
“Landowners near or adjacent to these facilities who do not own the mineral estate or the property where the well is proposed to be drilled are virtually powerless and have no effective say in the location of these facilities,” Anderson continued.
The impacts to homeowners, such as noise and light pollution, are significant.
“We advocate for a greater setback,” Anderson finished. “We also believe the Commission requirements to balance oil and gas development with the protection of health and safety requires a greater setback than 500 feet from these multi-well industrial sites.”
The WOGCC will continue to deliberate the setbacks.
Key Points: Landowners, pipeline look for agreementWritten by Christy Martinez
Although the eastern Wyoming landowner group Progressive Pathways, LLC spent much time and effort developing a detailed proposed easement for the company Oneok Partners Bakken Pipeline, they recently received the easement back, with substantial changes from the company.
The landowners devoted countless hours to producing a proposed easement to present to Oneok that included several major areas of concern: landowner liability, reclamation, abandonment of the pipeline, safety and compensation.
“They’ve not worked very hard at addressing our concerns at this point,” says Progressive Pathways member Pat Wade of Lusk, noting that liability is the number one concern of the members, of which there are about 125.
“We’re trying to limit the landowners’ liability, because we’re concerned that the pipeline company operates as an LLC, so the most any of its owners can lose is their investment in the company. If something really terrible happened, the landowner could become liable, which could possibly cost them their land, which is, for most of us, our biggest asset. We have to have our land to operate in agriculture, so liability is one thing on which we’re working really hard.”
Wade says abandonment is also a top priority.
“Right now they want to leave their options really open when it comes to abandonment, and our concern is that, as these projects age they generally sell, and to a company that’s probably less financially able to fulfill the requirements of the original agreement,” he comments. “If it’s a company that does not have the financial ability, they could walk away because they don’t have the money for proper abandonment.”
Wade says that, in doing so, the landowner could become liable at that point, so he and the others would like some assurances, ideally in a type of bonding.
“I don’t know if we’ll achieve that, but we’d like some assurance the pipeline will be decommissioned properly,” he notes.
The landowners are also working on reclamation language.
“We’re trying to minimize the scarring on our places, and return them back to their original productivity,” says Wade. “We have some concerns about how the pipeline is constructed and installed, and how it’s reclaimed, and also all erosion, noxious weeds and streams that may be polluted through erosion.”
Wade says the last thing the landowners are working on is compensation and negotiating an agreement.
“To some, that may seem the most important, but to many in our group it’s no more important than anything else,” he says, but adds, “The important thing to remember is that everyone else who is involved with the pipeline will do so with the hope of having some profit, and the landowner is the only one asked to give up anything, without having any way to participate in the profits. We’d like to negotiate an annual payment so a landowner can view the pipeline as an asset rather than a liability, and that will be a tough issue.”
“When this comes through, we as landowners have the liability, and everybody’s an LLC except for the ranchers along the route,” says landowner and Progressive Pathways board member Donley Darnell. “Everybody’s making money except for the landowners. When push comes to shove, the landowner supposedly gets the appraised value of their land, which isn’t making money. We get all the added risk and none of the benefits.”
Wade adds that compensation has not been discussed at all to this point, so people can’t assume the group presented an easement with a large price tag, which caused the company to reject it.
“We’re not willing to talk about compensation until we have the rest of the terms in place,” says Wade.
Another concern of the landowners is that Oneok could change the use of the pipeline after its construction.
“When we proposed our easement we wrote that the pipeline would be for one natural gas liquids pipeline. From the beginning Oneok has represented that’s what they wanted to build, but their changes to the easement are written so they could run anything that can be run through a pipeline, and they could switch the use. Once it’s in the ground, the landowners have no ability to weigh in on any of those things. It’s one of those red flag situations,” says Wade.
The original LLC board of Progressive Pathways has been narrowed to a negotiating committee of four members, which had a meeting with Oneok on Oct. 18 in Cheyenne. The Wyoming landowners were joined at the meeting by two representatives from a similar organization for the pipeline in Montana known as the Eastern Montana Landowners Group.
“When we sent our agreement they made the changes they’d like to see, and we’re a long way off from an agreement,” says Wade. “They took out all the language we wrote concerning construction and reclamation. They struck every bit of it, and that’s a huge concern.”
Wade says Progressive Pathways board member Steve Hayes of LaGrange made the point that Oneok has emphasized their consulting with different experts on the phases of the pipeline, and, when it comes to reclamation, the landowners are the experts who understand their places and the implications of the pipeline project, should the land not be properly reclaimed.
“We have several members who have won state and nationwide stewardship awards, and we’ve worked closely with Lisa Shaw and the Niobrara Conservation District for help with the reclamation language,” says Wade.
Darnell says the conservation, reclamation and mitigation portion of the easement includes not only how the company reseeds the land, but also how long the ditch is left open, fire suppression equipment during welding and how to honor and avoid paleontological sites.
Wade says the requests in the easement aren’t unprecedented.
“A whole lot of what we proposed is patterned off an agreement that’s already agreed to, signed and recorded in courthouses between a large landowner group and a large pipeline company,” says Wade. “What we’re doing is not setting a precedent. We’re trying to negotiate something similar, and we’re in hopes that Oneok could do at least as good, if not better.”
“We’ve put a lot of pressure on them, and when we’re not plowing new ground it’s difficult for them to say no, we can’t do that,” says Darnell.
Oneok has chosen a route for their project that avoids federal lands at all costs, because of the red tape and expense that is involved.
“In the end, Oneok appears to have the power to condemn their way through with this, and one of the requirements for condemnation is that the land is needed for the public good. If it’s for the public good, shouldn’t public land be used as much as possible?” asks Wade. “By avoiding federal land there are many permits they don’t have to get. As far as we can find out, the only permit they have to get is a stream-crossing permit through the Army Corps of Engineers, so the whole thing has no regulation or oversight. There’s no comment period, and there’s no opportunity for the landowners to weigh in.”
Wade says that recently Oneok stepped up its public relations campaign, meeting with county commissioners in the affected counties and interviewing with local newspapers.
“They’re representing the whole process considerably differently than the way we view it,” says Wade, noting that’s what prompted a letter to the editor for local papers from Wade and fellow landowner Danny Hanson.
The letter outlines the landowners’ opinions and goals, and also encourages new members to join with Progressive Pathways.
“Right now Oneok is stepping up their process, and they sent out a letter to every landowner that could be interpreted as somewhat threatening, so we’re hoping people will join with us as they receive that letter and see the limited success they’d have in negotiating on their own,” states Wade.
Pipeline statutes discussed, determined to be sufficient to address concernsWritten by Saige Albert
Worland – At the direction of Management Council, the Interim Joint Agriculture State and Public Lands and Water Resources Committee of the Wyoming Legislature’s second priority was landowner and state land issues related to energy development.
During the group’s late-April meeting in Worland, the Petroleum Association of Wyoming (PAW), several Wyoming agencies and stakeholders testified on the subject.
“We came to a few conclusions after looking through federal and state statutes, rules and regulations, agency responsibilities and policies,” said John Masterson of Lewis Roca Rothgerber Law.
Masterson first emphasized that oil and gas production greatly contributes to Wyoming’s economy, with two-thirds of state revenue resulting from mineral production and nearly 21,000 jobs in the state a result of pipelines.
“If we decide to take steps toward regulating or passing statutes to further regulate pipelines, it needs to be done deliberately and carefully because of the impact it has on a number of levels,” Masterson said.
Additionally, Masterson referred to the state’s current regulations, coupled with federal policies, as “an alphabet soup” of policies.
“Finally, based on our research, we did not find any indication that pipeline spills are a systemic problem in the state of Wyoming,” Masterson commented. “There is not a chronic, ongoing problem with pipeline spills.”
He continued that he believes the regulatory systems currently exist for all types of pipeline spill cleanup – including infield and feeder lines, intrastate pipelines and interstate pipelines.
“There is already a mechanism in place for the smaller, infield and feeder pipelines underneath the jurisdiction of the Wyoming Oil and Gas Conservation Commission (WOGCC),” Masterson explained.
WOGCC holds authorities for oil and gas production regulation, including the ability to require posting of bonds in the event that a spill occurs.
“There are other bonding requirements when we talk about intra- and inter-state pipelines,” he added.
Masterson noted that a wide list of agencies have jurisdiction over pipelines within the state, including the Office of State Lands and Investments, Department of Environmental Quality, Public Service Commission, BLM and others.
Each agency has various authorities within the structure of regulations, as well.
“The WOGCC has the ability to promulgate rules and regulations preventing waste, which I believe covers spills,” he said. “The Wyoming Public Service Commission has jurisdiction and inspections of intrastate lines under grant authority from the U.S. Department of Transportation.”
Further, interstate transmission lines trigger federal regulations and national-level protections.
When looking at the ability of regulating agencies to establish bonds, Senator Larry Hicks asked, “How does bonding work for pipelines that have been in the ground for 50 years? The problems we deal with are not chronic and reoccurring. They are acute and can be catastrophic.”
Bonding mechanisms, added Masterson, allow for the ability to adjust bonding, but he also commented that he was unsure about how that applied to pipelines that existed prior to bonding requirements.
Hicks further asked about the instance of acute failures where bonds were inadequate.
“I did not find any instances of acute failures that were not covered by bonds,” Masterson said. “I’m not saying they don’t exist, but I was unable to find any.”
“I think the concerns of the committee are focused on those areas where there is insolvency,” commented Committee Co-Chair Representative Mark Semlek. “Discussions that oil and gas folks around the state and the Governor’s Office on the orphan well situations with coal bed methane is an illustration as to why there is concern.”
Masterson noted that the legislature has passed statutes to protect innocent landowners, also commenting, “I am not aware of a situation where insolvency has been a problem. We do have mechanisms to pay for remediation.”
“I am not minimizing a potential problem, but there are things in place,” he continued.
Wyoming Stock Growers Association Executive Vice President Jim Magagna commented that landowners do have concerns with potential pipeline problems.
“Large pipelines may be in the ground and in use for 50 years or more,” said Magagna. “Over the generational change in the ownership of the land, if a problem does occur, knowing where to go and who holds the current liability is an overwhelming challenge that is faced.”
Navigating the complexities of regulations is an additional challenge facing landowners.
“As Mr. Masterson pointed out, there could be six or seven agencies involved, and for the average landowner to know where they should go to receive assistance in addressing problems can be a tremendous challenge,” Magagna continued, citing examples of landowners who have 11 or more intra- and interstate pipelines running across their property.
Magagna further requested the committee consider a bill to create a position within state government to serve as a landowner liaison.
Committee Co-Chairman Senator Gerald Geis said, “Could we put this in the consumer advocacy division of the Public Service Commission?”
Geis moved to forward a bill that would create a landowner liaison position to assist landowners in navigating channels for assistance, but the bill failed due to lack of a second.
An additional motion passed asking the Legislative Services Office to look at issues for landowner indemnification and preparing a draft bill for review if there are no measures available.
Landowners unite for collective bargaining with pipeline easementsWritten by Christy Martinez
A few months ago, in late 2010, individual landowners in eastern Wyoming received requests from the company Oneok Partners LP for permission to survey for a 12-inch natural gas pipeline that is planned to move natural gas from Sidney, Mont. to Buxton, Kan.
After learning of the planned pipeline, and in response to the requests for permission to survey and the impending use of eminent domain for a pipeline right-of-way, landowners along the proposed route have formed a landowner group that encompasses the length of the pipeline in Wyoming, and also partners with a similar group in Montana.
“Our goal is not to stop the pipeline – we just want to be treated fairly,” says eastern Wyoming landowner Steve Hays, who’s involved with the group, known as Progressive Pathways, LLC. “Our four points of concern are liability, reclamation, abandonment and compensation for what they do to our land.”
Currently the group is still in the signup stage and is recruiting more landowners to join in the effort.
Progressive Pathways is divided into three 100-mile increments, which run from the Colorado line to the Platte River, from the Platte River to the northern Niobrara County line, and from there north to the Montana state line. Each of the three sections has its own board of directors, composed of four landowners, giving a total governing body of 12. The boards of directors were voted into service at each of the areas’ landowner meetings.
“My big concerns are liability, reclamation, abandonment or change of use, and one thing we’re really adamant about is that the easement is written as a one-time, one-pipeline use only, so there can’t be other pipelines or other things added to the easement later on,” says Lusk area landowner Pat Wade, who is a member of his region’s board of directors and who was in on the initial planning stages of Progressive Pathways.
“With our landowner group we’ll be able to collectively bargain,” says Hays of the reasoning behind forming the group, which has hired Cheyenne attorney Frank Falen of Budd-Falen Law Offices to advise them. Hays says that, while the 12 representative landowners will conduct negotiations on behalf of the rest of the landowners, Falen will help educate and guide them.
“If we were to walk in alone to negotiate, we’d be one leaf in the forest, but if we walk in together we represent 300 miles with a unified voice, and hopefully they’ll pay attention to us,” says Hays.
Falen says he’s in the final stages of working with a similar landowner group in Montana, South Dakota and Nebraska.
“That has worked really well – we put together one big group, elected a negotiating team and they worked with the pipeline company to reach a template agreement that was then distributed to the members, and almost everyone has adopted that easement agreement,” notes Falen. “We’re hoping to repeat the same thing, because it was a successful and is a useful template.”
In a mere two-and-a-half months the eastern Wyoming landowners have succeeded in organizing the group and recruiting 70 landowners that control approximately 50 percent of the proposed pipeline route, and Hays says they hope to get that number to 80 percent.
Hays says signup to join the group will be open as long as possible, and that it’s quite involved to figure out where the pipeline is going and which landowners are involved, because Oneok is not sharing any information on their route plans.
“Once a neighbor tells us they’ve received a letter, we’ll have them talk to their neighbors to the north and south to see if they’ve also received one. It’s really tough, and we have some out-of-state landowners and some people who don’t believe in what we’re doing and want to negotiate their own treatment,” explains Hays.
Although the board of directors of Progressive Pathways will represent everyone as a group in negotiations, individual landowners have the option, after the best deal possible is struck with the company, to either take it or leave it. Also, if they feel they need to do more negotiation particular to their property, they can.
“Everyone has the right to say it’s not working for them, and they have the right to drop out,” says Hays.
Progressive Pathways is collecting membership fees on a per-mile basis to pay the bills and the cost of operating.
Falen says a unique and unexpected twist in the Oneok negotiations is the company’s claim that their line will not be subject to Federal Energy Regulatory Commission (FERC) requirements.
“It’s Oneok’s position that, because the product is called natural gas liquids, as opposed to liquid natural gas, they’re not required to get a certificate before they can begin construction of the pipeline,” says Falen. “That’s interesting, because it leads to the question of who, if anybody, regulates it.”
In a traditional FERC process, Falen says there’s much opportunity for landowner involvement, and he had planned on being involved.
“You’d think with a $500 million project there’d be some regulation and permit requirement somewhere,” he continues, adding that not even Montana’s Major Facility Siting Act applies because the pipeline isn’t big enough in circumference, even though it will move a lot of material.
“It doesn’t come under the Montana act, and there is no regulation in Wyoming, if this is treated like a crude oil line, which doesn’t need any permits in Wyoming,” says Falen. “The concern for us is that the condemnation allows them to take property, and most landowners would like to say that, if they’re going to put this industrial use on their property, they have a lot of concerns, and if they were a true ‘willing seller’ those would be addressed before permission is granted.”
“Condemnation is more political than it is legal,” notes Falen. “There are many politics wrapped up in it, and if you feel like you’re being steamrolled what you have to do is look at the places that are capable of regulating it. A group of this size has the ability to pull some of those levers, whereas it’s difficult for an individual landowner to do that.”
Falen says it’s also been his experience that, if a group of landowners is large enough, they can speak higher up the ladder to those in the company who are the policy makers and who have more authority to actually address concerns rather than, for example, one landowner talking to a field agent.
“The goal of a group like this is to be a large enough size that it’s worth the company’s while to have the folks at the policy-making level sit down in the same room and work on their issues. That’s one of the first big advantages,” he adds.
“We just want to represent the landowners as a whole so they’re not taken advantage of in a forced transaction,” says Hays. “Oneok would have a carte blanche right to take advantage of each of us individually, and there are many, many horror stories of pipelines crossing people and then being abandoned, or reclamation not conducted up to specs. If something happens, we don’t want to be held liable for injuries, and if the pipeline is abandoned, the cost to excavate a natural gas or crude line would break most landowners. Those are some of our negotiating points, and our goal is to keep them chained to the negotiation table so that both parties are happy in the end.”
“So far Oneok seems open to talking with us and working with us on our issues, but our concern is what to do if they don’t address them to the extent we think they should,” says Falen. “We have some options, and a lot of ideas, but it seems that if state law takes away a landowner’s ability to truly protect himself, there ought to be some help somewhere.”
Hays says Oneok would like to start surveying immediately and begin construction in Spring 2012. The first meeting between landowner representatives and Oneok was held March 23 in Cheyenne, and Falen expected five representatives to attend.
“I helped organize the vehicle, and I work with them, but it’s their decisions,” says Falen of the meetings. “They’re free to listen or not listen to my advice – I’m not the one doing the negotiating.”