Wyoming bans conservation bidders from oil and gas lease sales
wyofile.com
wyofile.com
The seller is upset they got a good deal? (Counterpoint: these are public leases being sold for the public good.)
Looks like the winning move is for conservation groups to start E&P arms. Snarling the process up in years of litigation might be as good as buying and sitting on it.
That is fraud.
This “group expected that, if it was the winning bidder, it would pay about $12,000 for the lease (based on its $18 per acre bid) out of its own budget.”
If someone "buys the oil rights" and doesn't sell any oil, they're cheating the state.
Source? (Not challenging you.)
> If someone "buys the oil rights" and doesn't sell any oil, they're cheating the state
I’d argue a better solution than thinning the buyer pool is setting a high minimum rebate, possibly one that only kicks in if the plot isn’t exploited.
Would also note that Wyoming’s revenue is from sales tax, mining tax and ticketing tourists. (Property tax is mostly minerals [1].)
Hypothetical taxes on unrealized (and possibly zero) profits are not in any way part of the transaction, and it's just bizarre to think of them that way.
There's no guarantee of royalties over and above the lease. You just dreamed that up to support your weird asspulled idea that there's some kind of fraud here. If they wanted guaranteed royalties, they could have written that in.
Furthermore, the state even had the advantage of writing the contract. If the state wants a condition on a lease, the state is perfectly capable of putting it in there (as it is now doing).
A sophisticated party (which a state is supposed to be), with experience in the business, made a public offer. Somebody took that offer with no modification, with every intention of performing on the contract, and with absolutely no attempt at falsification or even concealment of anything at all. The idea that that's somehow "fraud" is insane. Not only is it not legally fraud, but it's not colloquially fraud, either. It's nothing like fraud.
Which is probably why nobody actually involved was crazy enough to suggest that it was fraud.
If you make a deal you discover you don't like, that doesn't make it fraud.
[Edited to fix a false statement about royalties... I pasted in the wrong draft].
In this situation the conservation group was fully prepared to make good on their bid.
The state, as seller, is changing the rules to protect the buyer, which is a bit weird...
The buyer called foul and the seller sympathised.
"Why haven't you developed yet?" "Still working on it, things are hard you know, parts, labor, low price of natural gas, all that jazz. But we'll get to it, promise."
Think like a threat actor attacking attack surface of a target system, if your desired outcome is to outmaneuver these folks from a conservation perspective.
I wonder if ecotourism would work. Like some sort of American safari to see these Pronghorn migrations.
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> “So rather than wait for that to happen, we thought, ‘Well, let’s step in now and let’s put in place a bill that acts as a deterrent to doing that,” Petroleum Association of Wyoming President Pete Obermueller told WyoFile.
First, I know it is common practice for the language of bills to be written by industry groups, but I still think it's alarming, and annoying, that they're so open about having a direct channel to lawmakers that got this bill into law so quickly. I hardly think someone making an oil and gas company pay slightly more for a lease is the kind of work we want our legislators to prioritize.
Second, it just sounds like the kind of blatant protectionism that's often derided around here. If a lease has value to me remaining undeveloped, and it has value to them being developed, then shouldn't we be able to compete to see how much the market values those priorities? I think it's funny that they're afraid of a conservationist billionaire bidding on petroleum leases when there are probably way more petroleum billionaires who could bid if there was any sort of bidding war.
Heck, the lease was sold for $19/acre, something like $13,000, and the winner complained about the "inflated" price. I can't say that I know much about the startup costs for a drilling operation, but is $13,000 really a significant consideration?
No, because the actual amount the lessee is paying is the $19/acre, plus the taxes on the oil they extract. The fact that the $19 is a separate transaction is just an accounting convenience.
The state could say "place bids of price per acre plus taxes. Highest bidder wins. We'll refund taxes up to the amount you paid in the bid." It would be inconvenient for multiple reasons, but it would average to the same thing, and it would stop the conservationists cold. The fact that the state doesn't do it that way and so the conservationists can pay the price per acre by itself is just a loophole.
> Rep. Cyrus Western (R-Big Horn) brought the bill on behalf of the Petroleum Association of Wyoming.
That's far from the worst thing wrong with this, but if I were to make a court run with this case (IANAL) that's what I would do with it.
No. If the NSF gives you a grant to research cancer and you use it to make an interpretive dance video, they’re allowed to call you out for breach of contract. Similarly, if you pay a fee to enter a national park and then proceed to paint dicks on El Capitan, the rangers won’t be in a conniption about your First Amendment rights.
We’re discussing a state setting the terms of selling leases. This is not free market.