Oil money rules in the West's mini-Middle East

SOCORRO, NEW MEXICO — Almost two years ago, voters in both New Mexico and Wyoming dumped their Republican governors and elected Democrats. Since then, New Mexico Gov. Bill Richardson has railed against the Bush administration’s plans to drill for oil and gas on Otero Mesa (HCN, 3/29/04: New Mexicans take a stand against oil and gas). Wyoming Gov. Dave Freudenthal has warned that gas wells threaten the state’s wildlife and water.

Still, despite the governors’ expressed concerns, there’s little indication they’ve slowed production. If anything, it’s probably the opposite. Freudenthal, faced with a Legislature long dominated by pro-industry Republicans, can’t do much except push for better enforcement of environmental rules. Richardson, for his part, understands that energy companies pay a big chunk of the state’s bills — and he isn’t burning his bridges with industry.

In fact, this year, Wyoming and New Mexico were the only two states in the Lower 48 to produce balanced budgets, thanks to severance taxes on oil, gas and coal, and royalties from mineral development on federal land. Wyoming, after some lean years, enjoyed prosperity for the first time since the legendary 1980s boom years. New Mexicans, meanwhile, lined up for a slew of local "pork" projects.

In a lightly populated state like Wyoming, the energy industry is so dominant that citizens — even with an elected governor who has good intentions — wield little clout against the giants that pay most of the public bills. New Mexico, now on an economic roll, will be reluctant to tamper with a sure source of potential revenue. Even with Democrats in the governors’ mansions, it’s still mostly petro-politics as usual in the nation’s mini-Middle East.

"Split-estate" showdown

Freudenthal, whose roots are in ranching, is an outdoorsman and hunter, but he never ran as an environmentalist (HCN, 2/17/03: Wyoming at a crossroads). He’s backed a plan to shoot wolves and gone to court to keep snowmobiles in Yellowstone National Park. Still, when it came to slowing the state’s exploding energy development, environmentalists thought Freudenthal would be an ally.

Gas development in Wyoming — once confined to isolated, fairly compact fields — has spread virtually statewide. Thousands of coalbed methane wells have already been drilled across the Powder River Basin in northeast Wyoming, and thousands more are proposed. Industry is also targeting the Hanna Basin in southern Wyoming, the Wind River Basin in the central part of the state, and the Upper Green River Basin just south of Yellowstone National Park (HCN, 8/18/03: Where the antelope and the oil companies play). Some estimates suggest that as many as 50,000 gas wells will be drilled around Wyoming over the next decade.

Increasingly, the drilling has moved to private land, where people own the surface but not the mineral rights underneath. In these so-called "split-estate" situations, mineral access enjoys priority. Literally thousands of "mom-and-pop" property owners simply must take whatever a company offers, then step aside as the drilling begins.

While Wyoming has traditionally been lax in its regulation of oil and gas — in the 1970s, sympathetic legislators exempted oil and gas facilities from the Industrial Siting Act, effectively removing state scrutiny from a major sector of industrial development — opposition has recently mushroomed. Earlier this year, landowners, environmental groups and their legislative allies worked out a proposal aimed at giving split-estate owners more bargaining leverage, and got Freudenthal’s backing. "This is one of the issues that put him there (in the governor’s office)," says Bill Garland, a split-estate property owner and activist. "He said he would not knuckle under to the oil and gas people."

In his opening legislative address in February, Freudenthal not only pushed for split-estate reform, but also warned that "the same national energy economy that fills our coffers could inadvertently turn our state into a water and wildlife wasteland."

Activists were ecstatic, but Freudenthal’s message netted a cool reception from the GOP-dominated Legislature. One Republican leader dismissed his assertions as "over-the-top rhetoric." Legislators did agree with his plan to beef up the state’s Department of Environmental Quality and increase state coalbed methane compliance inspections. The split-estate proposal, however, "went down big, in flames," recalls Garland. "They brought in the big guns," he says, referring to intense lobbying by oil and gas companies to kill the legislation.

Freudenthal blames industry "scare tactics" for the defeat, but environmentalists say that he could be more assertive. "It’s troublesome," says Dan Heilig, executive director of the Wyoming Outdoor Council, the state’s largest environmental group. "Where he finds it might be politically expedient, he’s not hesitant to send in his legal attack dogs. (But) when he’s urged by Wyoming sportsmen and wildlife advocates to do more, he throws up his hands and says he has no authority."

Freudenthal says he’s trying to strike a balance: "I don’t think I’m going to be the centerfold of the next Wyoming petroleum industry publication, and we’re not a subsidiary of the Sierra Club."

Green on the outside

In New Mexico, Gov. Richardson is quick to cite his position on Otero Mesa as evidence of his green credentials. "I’m a very strong environmentalist, and I think I’ve demonstrated that by my stand on Otero Mesa," he says. And he tilts toward environmental considerations when he makes decisions, because, he says, "I feel that quality of life and protecting the water and land is very important in New Mexico." Richardson also "cleaned house" at the State Game Commission, tossing out the "good old boy" rancher-dominated appointees.

Still, some observers say his actions smack of "political opportunism." His top priority is neither the environment nor keeping energy companies in check, but, as Richardson relentlessly tells audiences around the state, economic development — much of it financed by oil and gas money.

Richardson’s administration has called for increased exploration — even more than the federal government has proposed — at an area on the Jicarilla Ranger District in the Carson National Forest in northern New Mexico. A Richardson spokesman told the Santa Fe New Mexican that the area, which sits on the edge of the San Juan Basin, represents a "higher payoff for the public" than proposed drilling at Otero Mesa.

Gilbert St. Clair, a University of New Mexico political science professor, says Richardson’s pro-environment actions are aimed more at accommodating the strong green movement in the northern part of the state he once represented in Congress. "He’s careful to call the polluters to task," St. Clair says, "but I don’t see any real policy initiatives."

Richardson’s approach to development simply reflects New Mexico politics, St. Clair says, "which are not about ideas, but about jobs and contracts. It’s about distributing the goodies."

Petro-realities and windy possibilities

Even with new occupants in the governor’s mansions in Cheyenne and Santa Fe, the two states remain tightly tied to their petro-riches, the energy booty that keeps a large share of the West in a sort of colony status, even as it fuels the rest of the country.

Still, there is a glimmer of change: At a conference in Albuquerque in April, using his clout as a former diplomat and U.S. Energy secretary, Richardson challenged Western governors to put more emphasis on renewable energy, such as solar and wind power. The West, "where the wind blows and the sun shines," he said, has the potential to become a cleaner, more efficient source of energy.

That’s a tall order, given that renewables currently account for only about 1 percent of the West’s electrical generating output, according to a new report by Western Resource Advocates. The Boulder, Colo.-based nonprofit is pushing a plan that would increase the renewable share to 20 percent by 2020, when the region’s population is expected to have grown by the equivalent of five Denvers. The group’s John Nielsen says the West’s businesses, not the governors, will lead the way because renewable energy offers reliability, low cost, and the cleaner air that means healthier employees and citizens.

Randy Udall, an energy consultant with the Community Office for Resource Efficiency in Carbondale, Colo., says the private sector will help develop the region’s "world-class" wind power simply because its cost is now competitive with natural gas. But it’s "politics that can change a landscape," he says, and "we need leadership to bring these innovative, cutting-edge renewable technologies on," especially solar power in the Southwest.

Richardson, for his part, has created a task force to study building a concentrating solar power plant in his state. He has also declared New Mexico the "Clean Energy State."

But for now, the big money and the power still lie with the oil and gas industry. The new coalbed methane developments — Colorado’s Piceance Basin and Wyoming’s Pinedale Anticline — offer production in the trillions of cubic feet of gas, each field worth perhaps $50 billion, says Udall: "That’s enough money to buy a dozen governors."

The author writes from Socorro, New Mexico.

Gov. Bill Richardson 505-476-2200, www.governor.state.nm.us

Gov. Dave Freudenthal 307-777-7434, www.wyoming.gov/governor/governor_home.asp

• Energy & Industry
• Politics
• Wyoming
• New Mexico