As climate fight shifts to oil, Biden faces a formidable foe
CASPER, Wyo. — President Joe Biden’s bid to tackle climate change is running straight through the heart of the U.S. oil and gas industry — a much bigger, more influential foe than Democrats faced when they took on the coal industry during the Obama years.
Coal dominated U.S. power generation for decades, with the bulk of that fuel coming from the massive strip mines of Wyoming’s Powder River Basin — a market that collapsed in recent years as utilities switched to natural gas.
Fast forward to 2021 — and oil and gas have eclipsed coal to become the biggest source of greenhouse emissions from public lands and waters, federal production data indicates. That’s made government fuel sales an irresistible target for Democrats as they try to rein in climate change.
Biden’s election has put big oil companies on the defensive after largely having their way in Washington under President Donald Trump. But in taking on petroleum companies with a moratorium on oil and gas lease sales, Biden picked a foe that spent lavishly over decades to secure allegiance from Republican lawmakers.
The industry is also deeply enmeshed in local economies — from Alaska and the Gulf Coast to the Rocky Mountain drilling hub of Casper, Wyoming — posing a challenge to the Democrat as he tries to navigate between strong action on the climate and recovering from the pandemic’s financial devastation.
“You’re not hurting the big guys that are doing all the development. You’re hurting these little guys that are dreaming up where no one else thought there was any oil and gas,” said Steve Degenfelder, land manager for family-owned Kirkwood Oil & Gas in Casper, a community of about 60,000 known as The Oil City.
Trump’s final months in office saw a huge spike in new drilling permits after his administration sped up approvals. As a result, some companies with the biggest presence on public lands have announced that they are ready to weather changes under Biden.
An executive from Devon Energy told investors last month that the company was “ready to roll with the punches” and has about 500 drilling permits in hand. That will last the company for years in Wyoming and New Mexico.
“They expected this….They prepared for it,” said University of Oklahoma Associate Professor Robert Lifset, who teaches history of the U.S. energy industry. “But the difference now is going to be stark. (Oil and gas companies) don’t get to run energy and environmental policy in the way they once did.”
Just a week after his inauguration, Biden announced the sales moratorium while officials review potential climate impacts and whether energy companies are paying enough. He’s following a familiar template — a 2016 Obama-era moratorium on federal coal sales that Trump and other Republicans seized on as evidence of a “war on coal” by Democrats.
The oil industry stumbled last year during the coronavirus pandemic and a price war, but now companies such as Devon, EOG Resources and Occidental Petroleum are poised to expand their presence on public lands, including in the Powder River Basin.
Less insulated against the policy changes are smaller companies such as Kirkwood Oil & Gas, operating in downtown Casper since it was founded by William Kirkwood in 1965. It’s now run by his sons with about 40 employees and drilling in several western states.
A company like Kirkwood can spend years piecing together federal leases like a jigsaw puzzle and assessing the profitability of oil and gas deposits as market conditions and oilfield technologies evolve, said land manager Degenfelder.
But after last year’s price drop and now the leasing moratorium, its plans to further develop areas such as western Wyoming’s Upper Green River Basin — home to two of the most productive U.S. onshore gas fields — are on hold.
Trump supported the U.S. oil business, Steve Kirkwood said. “Biden will support it in Saudi Arabia, Iran — everywhere else.”