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(upbeat music) - [Male Narrator] With the new administration in Washington all three new regulations and policies on almost a daily basis.

That impact Wyoming's energy industry will ask the question.

What is the future of energy in Wyoming?

You sit down with Randall Luthi, governor Gordon's chief energy advisor, and we'll talk about, coal, oil, gas, wind, solar, and nuclear.

It's all things energy on the next Wyoming Chronicle.

(upbeat music) This program was funded in part by a grant for Newman's own foundation, working to nourish the common good by donating all profits from Newman's own food and beverage products to charitable organizations that seek to make the world a better place.

More information is available at NewmansOwnFoundation.org.

Funding for this program is made possible in part by the Wyoming Humanities Council, helping Wyoming take a closer look at life through the humanities, thinkwhy.org, and by the members of the WyomingPBS Foundation.

Thank you for your support - And welcome to this Wyoming Chronicle.

I'm Craig Blumenshine from Wyoming PBS.

Today it's all things energy, and specifically it's all things energy in Wyoming.

We're pleased to be joined by Randall Luthi governor Mark Gordon's chief energy advisor.

Randall, thank you so much for joining us.

- Oh, absolutely.

It's a pleasure to be here Craig.

- So just a little bit about your background, former speaker of the house, you serve nearly 10 years as president of the National Ocean Industries Association which has to do with offshore energy policy, as I understand it.

You also worked for the Department of the Interior, serving as director of the Minerals Management Service and deputy director of the Department of Fish and Wildlife Service.

- That's correct.

I've been very lucky to have a wide variety of jobs.

And I know it seems a bit odd for a Wyoming boy to be running, you know, in the offshore world.

But let me assure you, there are a lot stranger things in Washington than that, so.

- Energy is energy, regardless of where it's produced.

- Absolutely.

- We're gonna talk a lot about that today.

And Randall, I wanna talk to you about a trip you took this week with governor Gordon.

You went to Washington, and you testified before the Senate Energy and Natural Resources Committee.

Talking off camera reminded me, of course, that Wyoming has, is first in gas and second in oil, as far as energy produced from federal lands and why that's so important to our state.

What did you learn?

- Yeah, well, there's a couple of things, you know, that we thought were very interesting, the Energy and Natural Resources Committee of course, vitally interested in this.

What we did learn, And I think what the governor's main take home message for that group.

As you know, we understand a dual administration coming in and wanting to do a review of their policies but there was really absolutely no reason to put a moratorium on lease sales.

And when we talk about lease sales let me indicate just how important they are.

Again, 48% of Wyoming surface is federally owned but just almost 68% of the mineral rights of minerals subsurface usually are federally owned.

So anytime the federal government decides to put a haul to any portion of that, that's gonna have a direct effect upon Wyoming communities, Wyoming jobs, Wyoming workers, and of course, Wyoming revenue.

- This has been presented as a moratorium but others think this might be a permanent map or lead to a permanent map.

Are you sensing that?

Are you concerned about that?

- Absolutely, I mean, will it be permanent?

They keep telling us no, but you know, it's not the first time we've heard from the federal government that oh, we can do a study in three or four months and then we'll do a report and suddenly you're six months then nine months and then a year.

And what does that mean for Wyoming again in terms of lease sale?

So now I'd say just lease sales and what Wyoming gets is about 48% of the bonus beds.

And that's what a company pays when they buy a lease.

Well, over the last eight years, we've averaged about $35 million, you know, a year on those now last year was an awful year, but it was still we got about one and a half million dollars from each quarterly lease sale.

So what have we received this year?

Zero because the first two quarterly sales have been canceled.

- So as you look into the future, the pressure regardless of whether Wyoming agrees with the pressure or not is to become less dependent on carbon and oil, gas, and coal specifically what can Wyoming do anything to stem that tide that doesn't necessarily have its genesis in Wyoming but it sure does.

Not only in states around us, but across the country and across the world, when you look at Randall into the future and as you plan Wyoming's policy for the future relative to oil, gas, and coal, we'll start there.

How can Wyoming survive?

- Absolutely, and Wyoming will, I think always be an energy state, at least, you know both you and I have a little bit of white hair but I think sort of the rest of our lives.

Wyoming it's gonna be an energy producing state and the nation's got to look towards energy.

Energy that is produced in Wyoming.

It might not be the same degree of energy.

You mentioned earlier when we were talking before that we're still the number one producer of coal.

I mean, even today we talk about thermal coal and that is the coal that's used in power plants.

We're still supplying about 40% of the nation's thermal coal.

So what do we look for in the future?

Governor Gordon has been so clear on this.

Basically the target is misplaced.

We fear the Biden administration and many other States with their renewable portfolio standards, have targeted fossil fuels as opposed to what the issue should be.

And that would be the release of greenhouse gases particularly CO2 in the atmosphere.

You know, we can still use coal we can still use fossil fuels.

We can still use them in power plants but we need to be able to bring in the technology remove that CO2 from the process.

- Let me ask about that a little bit in more detail because certainly the governor has been clear about that your office has been clear about that then that calls still vital.

I'm not sure the rest of the country agrees with that.

- I didn't say it would be easy, but we are, we're absolutely resolute that again.

What is good about call, it's reliable, there's a big supply of it.

And we saw just last winter, both in Texas and as well as here that if you have a certain weather event a long cold snap, a nasty, you know degree of a series of storms reliability on the electric grid becomes an issue.

Fossil fuels such as coal, you can stockpile, you know, large amounts it's readily available.

And I think a lot of people realize that at this point and I'll underscore at this point, purely wind and solar just will not carry the day for 24 hour dispatchable power.

So we believe fossil fuels still has a history but we do have a bit of education.

- Can you give us any insight on decisions that have been made with that notable Texas grid failure to today on that might kind of have shed a little better light on Cole's future in Wyoming.

- I believe I can, now the Texas, I will just call it the Texas event.

You know, that's gonna be analyzed for a long time and it's gonna Texas themselves are really looking at it at what happened, what didn't happen, why they lost a big chunk of renewables, why they also want some of the fossil fuel per, you know, plants went offline.

But I think the overall message and we took it in Wyoming is we have to make sure we have a reliable, you know, source of electricity and it's gotta be able to be used 24 hours a day.

So you saw the legislature actually took up some of this issue in there requiring the PFC to make sure that reliability is now part of their deliberation - In many people's eyes I think that pressure means, yeah but we're gonna have to pay a little more for power.

If we wanna rely on fossil fuels, do you see it that way?

- You know, it's always a possibility but you also have paying more for the new sources of energy as well.

You know, you don't build a wind farm you don't build a solar farm and not have expenses.

And if it's a utility company that makes those investments they're allowed to pass those expenses on to the consumer.

So in the end the consumer always pays for the energy they receive.

And that's one of the issues we wanna talk about when we say, well, okay, let's continue to use coal, but it is gonna take quite a bit of money.

And we wanna say federal money is gonna be real key to making carbon capture technology workable in Wyoming.

So the main focus now is all right, now, how do we burn it and remove the greenhouse gases primarily CO2 as well.

- And is that technology gonna be developed fast enough to maybe not save the day, but prolonged day.

- I believe it will prolong the day the technology is there, Petra Nova, and Texas proven that you can use, you know, CO2 capture facilities to reduce CO2 will the technology improve with every plant that's built?

Yes, and that's one of Wyoming goals.

The governor made it very clear.

He would like the next carbon capture facility to be built in Wyoming.

And then we'll have technology of a new plant would work with North Dakota.

Who's also very interested in this issue and soon hopefully we'll have technology that can be used across the country as well as around the world.

- Any sense of a timeline that you're willing to talk about?

- Sure, I mean, now to some degree I don't think you're gonna see it before 10 years but you might actually see some good progress within that 10 years.

If I were to, you know, make that moonshot type prediction I would say in 10 years let's have a carbon capture project up and running.

And if we can do it in eight, even better.

- Wyoming currently is the number three state in total energy production, big energy exporter of course, eighth and crude oil, ninth and natural gas, one in coal.

Let's turn the page to 2031.

Our hair will be a little greater even by then.

- Hopefully we will have hair.

- That's true.

What's Wyoming influence on the national energy picture going to be them.

Have you looked at a decade?

- We have now most predictions are that fossil fuels gonna maintain a pretty good share within 10 to 15 years.

And that's probably a 40% to 50, 55% share.

Will coal continue the current share?

I suspect not.

I think that it will continue to be reduced down, but again we've got a tired into reliability CO2.

If we get those two concepts front and center on coal production, I think coal actually stabilized.

- The governor said, I believe I'm articulating correctly that it's an all encompassing energy policy that does include solar, it does include wind.

It includes oil, gas, coal, hydro, geo thermo, nuclear.

- Yep, they don't leave out nuclear.

- And we're gonna talk about that in just a minute for sure that pie is as it is today.

What's it gonna be like in a decade?

- I try, I suspect coal continue as I mentioned to decrease I do hope we reach an equilibrium there.

I just don't know where that is.

- And believing that we may not have seen that equilibrium yet.

- I do not believe we have, gas will continue to increase, oil in terms of heating, you know, has not been a big element for some period of time.

So I think at most we deal with two, 1% of oil.

So I suspect that that will either stay the same or decrease where I expect to see the increase in overall.

And again, maybe not strictly it's energy but I think you'll see an increase in uranium.

I do believe that there's a greater interest now in small nuclear modules, there's a lot of advantages to them in terms of it should take less time to permit.

And certainly the waste issue should be a lot lesser degree of concern.

- And that's, let's talk a little more about that.

Of course, Wyoming and Fremont County in particular has some of the great and Natrona County as well.

Uranium reserves in the country, Fremont County grew up on uranium.

What is the outlook and what is the your administration's efforts relative to these small form nuclear reactors?

There's been just some discussion in the legislature in the last few sessions about it.

The infrastructures are at these coal fire power plants.

Let's retrofit has been one idea as you suggested.

And I think it's worth a lot of discussion.

The waste issue is not like it was with larger form nuclear sites that have been developed in our country.

Will we see any small form nuclear reactors in Wyoming in the next decade?

- Is certainly in our policy.

You know, we supported the legislative efforts to at least put together that study and where we're going with small modular nuclear.

I suspect that nationally, it will continue to be pushed.

We are very interested in that and seeing that move forward again, with every form of energy there will be issues.

There will be permitting issues.

Again, we mentioned renewables and how important they have been, particularly in this last year.

You know, we saw wind projects get completed when nothing else was moving.

So that was a source of jobs - And sales tax revenue.

And sales- - - Source.

- Absolutely, now, so, and we recognize that now the thing you also see is those, you know, we talk a lot about, well, how do we get transferred jobs?

You know, from the coal industry, from the fossil, for oil and gas.

- 10 and up president Biden is suggesting is federal support to do that.

Have you talked about it?

And what is the applicability Wyoming?

- We have, I mean, there's great opportunity, right now it's not a one for one trade.

You know, most jobs in the fossil fuel industry most jobs that a coal mine a very well paying, very stable, you know, it's, we have generations of people that have worked at coal mines, you know, from father to daughter, from mother to daughter and on down to the grandchildren.

And so when you do renewable jobs at the moment, right now it is not a complete equal trade.

You know, often you've got to move out of that community.

Often you take less money for it.

And they, one of the things we've noticed construction jobs, you know, you'll use all crew of 135 that lasts for eight months, maybe a year.

And then most one of the advantages, you know, from the utility point of view of say a wind farm is that you then go to just maintenance but that drops that construction crew to about 10 people.

- Why should the states be able to choose their own energy portfolio?

- And they should, it's just that we believe on if you go on an absolutely even market.

I mean, if you took away some of the production tax credits that makes coal more at track.

Now I have to be careful there because I'm getting myself into where, you know, I enjoy being consistent where I can, but the reality is we're not gonna have CO2 capture without the 45Q tax credit as well.

So we have always taken the position.

All right, if we're gonna move ahead with production tax credits for wind solar let's also move ahead for the, with the 45Q making sure that that's readily available as well.

- Can policy shifts our initiatives from your office and the governor's office, Randall.

help oil and gas companies as they need to become successful in this less carbon dependent future.

That appears to be the writing on the wall.

Is there anything that this office does or can do for oil and gas to assist them in their future?

- I believe there really is.

And I think an example of this it might not exactly be pointed on to your question, but again, last year 2020 I think everybody wants to pretty much forget 2020, but, you know, we lost about 6,000 oil and gas jobs in 2020, the road to recovery, there is slow but it's getting better.

And I think what makes the difference there is the overall price of oil, you know, on a worldwide market but we've still only gained about 200 of those jobs.

But one of the things that did come in handy was the energy rebound program that the governor put together last year.

And what it did was care's money to be used for re completion of wells and plugging and abandonment of wells.

And that really made a shot in the arm difference for the oil and gas industry.

So those kinds of policies can help when times are tough.

And I'd also changes, you know, our focus somewhat, you know, they'll, we always wanna be developing oil and gas but if we can make sure that the back end of that also has a healthy industry associated with it that also is a good number of jobs.

Industry predicted that the energy rebound program probably produced close to 5,000 jobs at the end of last year.

- And is that money still being spent today or did that, had that been spent by the end of the year?

- It has been nearly all of it was spent by the end of the calendar year.

The legislature did allow an extension of all those projects or all those projects we had going through care's money.

So I think you'll see a little bit of a winding up on that as well.

- Why is it today that wind turbines aren't manufactured in Wyoming?

- Well, they will tell you they'd rather manufacturer them somewhere else.

- Is it a workforce issue?

You know, if it is, I don't really buy that.

You know, most people will follow jobs.

And again, if you're really starting to transfer some of these mining jobs, coal mining jobs, there's a workforce right there.

They're already highly skilled.

It might not be the exact skill you need but you can bet with the minimal of training, it will work.

- Is there anything that you've come to learn about the American Rescue Plan Act that will in a positive or a negative way I guess, impact Wyoming's energy future?

- Yes, I believe we will be able to use some of those monies on infrastructure.

The scary part of the whole act as you know, coming from Wyoming is a very fiscally conservative state is just the degree of money that's available and out there, I think, you know, most people don't really think it through what does this mean?

How do you pay for it?

That's the biggest concern how you pay for it.

But, you know, we are gonna put together a list of projects we think will work on the infrastructure side the legislature, you know, put aside $10 million for possible match money for carbon sequestration and carbon capture that could be used as a match with DOE could be used as a match with private companies.

So there will be and we're still just working on some of that because we don't have the guidance yet from the department of treasury on how those monies can be.

- Luckily will come available in may.

- I totally, I understand as well.

So we, they shouldn't be- - - I do it as well.

- That's right now May starts tomorrow but I suspect it will be, hopefully it'd be the first half of May when we get that guidance.

- Randall, have you noticed anything from other states that have either given you pause or maybe even cost for excitement that Wyoming, you know, what Louisiana or Alaska or some other carbon producing state that we can take from and learn from and utilize and work to our advantage?

- I believe so now again, while Wyoming is slightly different than a lot of states, because again so much of our energy is carbon based and we suspect it's going to be for the future.

But Alaska is very similar.

One of the things that I've enjoyed reading about Alaska as more and more companies complain about investing in fossil fuels, Alaska, and their, what I would call their giant Permanent Mineral Trust Fund is pushing back saying, all right, that means you're not gonna manage this investment.

You know, are you gonna take off the table a $10 billion investment that you could do as a company?

And I think Wyoming can do that as well.

Let's start using that if companies are serious about really divesting out of fossil fuels there's gonna be a price to pay.

If you wanna manage what we have a sizeable income.

- Wyoming has some levers there.

- Absolutely Louisiana maybe something that helps for that offshore experience.

- [Craig] There you go.

- Is how Louisiana works with the federal government on a sharing of revenues.

Now, Wyoming already has about 40, gets 48% of those but Louisiana has been particularly vocal in trying to increase their ability to share those revenues.

And Louisiana, Wyoming at this time are joined at the hip in this controversy, over the moratorium.

They're in the same boat we are, you know, companies can't move forward if they don't can have a continual supply of leases.

So it's been a joy, somewhat of a joy, seeing that Louisiana and other States are very similar to Wyoming.

- One place where that doesn't apply though Randall, is with tribal leases.

Tribals are exempt from the leasing ban, that Wyoming is feeling the effects from what does that mean to the state's energy policy?

- Yeah, well, right now there isn't a lot of oil and gas development on tribal lands.

I have to say, I believe, you know, since tribes are sovereign, so basically their own nation that they're able to move forward upon their own policies.

So I do hope that that does help Indian country to move forward on oil and gas.

But it also shows that, I don't believe that Biden administration, that main concern then was climate, because how do you be so inconsistent?

So it becomes more of, we wanna control federal lands and then where the moratorium has been most hurtful are to Western States.

And it's because of the Western States have far more federal land within their borders.

I mean, private land people are, you're going to see shift even New Mexico.

One of the converse early conversations the governor had with governor Lynn Lujan Grisham New Mexico was her concern that she was already seeing oil companies shift to Texas because they were going from federal land to private land.

So again, it doesn't appear that the real concern is climate, even though that is the concern.

Those given to us - Has this upped, the administration's focus your administration's focus, governor Gordon's administration's focus on the need to have state management over these federal lands.

- Well, I think the better cooperation, that's always that's kind of a tricky road to go down as full transfer of state lands or federal lands to the state.

You know, Wyoming has tried that several times over the years, it has never been successful.

So in the short term, what we really want is a good neighbor and the federal government has proven to be a good neighbor.

It's also proven to be the most god-awful neighbor you can have.

So we're gonna focus on the positive that we can be good neighbors - A couple other energy sectors that I wanna talk about.

Wyoming has several hydroelectric dams, most controlled by the federal government, as I understand it.

And I'd say any future there in expanding hydroelectric power generation in the state.

- Certainly should be.

I mean, again, to me, that's a great definition of renewable energy.

So yes, as we look at infrastructure projects you mentioned the health money that might be available.

We wanna see if that doesn't mean another dam or two in our future.

- Legislature had some discussion in this last session about geothermal opportunities and what it might mean to Wyoming's energy producing future.

What might it mean?

- Sure, why not?

Why would we wanna take any energy source off the table right now?

But it does need as a bit of study.

I mean, we always think about geothermal.

We normally think of Yellowstone, right?

And you know, you're not gonna be pumping into the geothermal structures of Yellowstone Park.

That's just not gonna happen, but there are other places in Wyoming where the temperature, you know, hot enough to make water boil or steam isn't that far down.

So you, I think we will see more research into what how can that be used?

You know, you have a water source, you pump it down it gets hot, it comes back up.

It turns turbines and becomes somewhat of a closed loop.

So that's certainly a possibility.

- Randall, I'm sure we'll be talking about energy for years to come, but thank you so much for joining.

- I hope we are talking about energy for years to come.

Thank you Craig.

(upbeat music) - [Male Narrator] This program was funded in part by a grant for Newman's Own Foundation, working to nourish the common good by donating all profits from Newman's own food and beverage products to charitable organizations that seek to make the world a better place.

More information is available at NewmansOwnFoundation.org.

Funding for this program is made possible in part by the Wyoming Humanities Council, helping Wyoming take a closer look at life through the humanities thinkwhy.org, and by the members of the WyomingPBS Foundation.

Thank you for your support.