The state’s efforts to acquire federal lands in the fossil-fuel-rich Powder River Basin continue, despite a failed attempt to swap the state-owned Kelly Parcel in Teton County for such property. Instead of a swap, the State Board of Land Commissioners, made up of the state’s top five elected officials, narrowly approved an agreement last week to sell the 640-acre Kelly tract to the federal government for $100 million so it can be folded into Grand Teton National Park. Three commissioners — Gov. Mark Gordon, Treasurer Curt Meier and Auditor Kristi Racines — declined proposed amendments to include a potential trade for federal Powder River Basin properties. Superintendent of Public Instruction Megan Degenfelder and Secretary of State Chuck Gray voted against the sale, in favor of a swap for federal minerals in the Power River Basin. However, the same five elected officials also serve as the State Loans and Investment Board. That body, on the same day, voted unanimously to continue negotiations with the Bureau of Land Management to either buy federal Powder River Basin properties using proceeds from previous state land sales or consider a potential swap with other state-owned lands. From fragile nighthawk eggs to views of the rugged summit of the Grand Teton, this 640-acre state school trust parcel near Kelly in Grand Teton National Park holds significant natural resource values. (Angus M. Thuermer Jr./WyoFile) The state and the federal governments have vastly different approaches to public lands management, at least in part because of Wyoming’s constitutional mandate to prioritize the revenue-earning potential of its 3.4 million acres of “school trust lands” in support of K-12 schools. Proponents of the Kelly Parcel sale, which has been in the works for some 15 years, champion the move, primarily, to avoid state-approved development of the property to fulfill its duty to maximize revenue from school trust lands. By selling the property, the state will instead earn an annual $6.4 million from the proceeds of the $100 million sale, according to Treasurer Meier — both fulfilling the mandate to maximize revenue, while preserving the wild and scenic qualities of the park, which is itself a cash cow for the state.  Proponents also rallied behind the sale for the tract’s uncalculable value in becoming a part of Grand Teton National Park where the landscape is part of a rare, scenic and protected ecosystem that supports recreation, wildlife and billions of dollars in tourism — a value best realized under the ownership of the Department of Interior, they say. Though not part of the pending Kelly Parcel sale, there are also valuable resources in the arid plains of the Powder River Basin in northeast Wyoming, albeit subterranean — coal, oil, natural gas and uranium ore. A lot of those minerals are managed by the U.S. Bureau of Land Management.  An aerial view of a Powder River Basin oil site in 2024. (Dustin Bleizeffer/WyoFile courtesy of Ecoflight) There’s an old adage that goes something like this: The beauty of western Wyoming is above ground, while the beauty of eastern Wyoming is underground. “They’re both very valuable,” Degenfelder told WyoFile. Coveting the Powder River Basin After the State Board of Land Commissioners tabled the Kelly Parcel deal last year, Degenfelder coordinated with Gordon to assemble a task force to examine prized federal tracts in the Powder River Basin — primarily to exploit oil.  The group includes Degenfelder, Auditor Racines, Gordon’s Policy Director Randall Luthi and Wyoming Office of State Lands and Investments Interim Director Jason Crowder. They work closely with longtime Wyoming oil and gas professionals Andrew Finley and his former business partner Jimmy Goolsby, who serves on the Wyoming Oil and Gas Conservation Commission, according to Degenfelder.  Despite being best known for its massive trove of coal deposits, which also sparked a coalbed methane gas boom in 2000s, the task force is focused on the continuing oil play in the basin, Degenfelder said. The Powder River Basin is the state’s largest source of oil production, accounting for more than 60% of the state’s crude output, according to the Wyoming State Geological Survey.  There’s “huge” potential to boost oil production in the Powder River Basin even further, according to Goolsby. It’s an oil play that will last for many years, he said, and generate a lot of tax revenue for the state. In fact, producers pushed for a 5,000-well program with the U.S. Bureau of Land Management in the region. The development was approved but still faces legal challenges. Despite the court battles, oil and gas giant Anschutz Exploration Corp. recently inked a deal to buy out Powder River Basin oil and gas interests from two other top producers in the region. This graph depicts Wyoming crude oil production, revealing Campbell and Converse counties as top producers. (Wyoming State Geological Survey) But for all the oil potential in the Powder River Basin, the region’s biggest hurdle is the fact that the federal government manages a lot of the mineral estate on behalf of the entire American public — not just Wyoming. Today’s conventional production method relies on horizontal drilling, reaching two miles or more from a drill site. Those logistics require putting together contiguous mineral lease holdings that inevitably involve some portion of BLM-administered property. That means extra years of pre-operational surveys and an increasingly expensive and complex set of federal hoops before a drillbit can chew dirt. “This is probably the most lightly tapped potential in the United States,” Goolsby told WyoFile. “But I do know that companies have left the Powder River Basin just because they don’t want to deal with the feds.” If the state can acquire federal property and piece together contiguous 1,280-acre tracts, operators would save money and more quickly boost oil production under the state’s permitting programs, according to Goolsby. “What it will do is, acreage that’s worth, say X-number of dollars, will be worth X-plus dollars if there’s no interference with federal land,” Goolsby said. Also, he added, the taxes and royalties earned from the production would go directly toward Wyoming school funding. This graph depicts Wyoming’s top oil producers. (Wyoming State Geological Survey) So far, the group has identified about 100,000 acres of yet-to-be-drilled BLM-administered lands in the Powder River Basin, mostly scattered from southern Campbell County and throughout Converse County, according to Degenfelder. The strategy has been to begin with federal property already on the BLM’s potential “disposal” list to piece together contiguous drilling operations, then negotiate with the federal government for some properties that are not on the disposal list. “That’s been the methodology that we’ve used — trying to have a good-faith effort to come together with BLM on what they’re already getting ready to dispose, but also recognizing and telling them, ‘Look, we need full spacing units to make this a reasonable deal,'” Degenfelder said. The process, even if a proposed purchase or land-swap deal doesn’t come to fruition, will be public, Degenfelder said. The group has made some maps available and is coordinating with the BLM to develop more maps and other information available to the public. “It’s not like we’re hiding any secrets,” Degenfelder said. Energy connections Degenfelder, who leads the task force, is no stranger to the Powder River Basin or the state’s coal, oil and natural gas industries. She’s also aware of concerns among the public about a potential conflict of interest over her family’s role in the state’s oil and gas industry and her history of employment with energy companies. “It’s a bit offensive and really disappointing,” Degenfelder told WyoFIle, “because I’m not looking to have any conflicts of interest.” A sixth-generation Wyomingite, she learned a lot about the oil and gas business from her father Steven Degenfelder, who serves as land manager for Casper-based Kirkwood Oil and Gas. After earning her bachelor’s degree at the University of Wyoming, she earned a master’s degree in Beijing, China, with a thesis “focusing on the elasticity of demand between coal and natural gas,” according to her most recent bio.  Wyoming Superintendent of Public Instruction Megan Degenfelder testified for a subcommittee of the U.S. House Committee on Education & the Workforce on Oct. 19, 2023. (Screenshot courtesy of U.S. House subcommittee stream) She served as a government and regulatory affairs manager for Cloud Peak Energy, a former coal operator in the basin, from 2014 to 2017 and was listed as a registered lobbyist for the company. The company filed for bankruptcy and sold to Navajo Transitional Energy Co. in 2019. She also served as government and regulatory affairs manager for Morningstar Partners Oil and Gas for a short period after leaving Cloud Peak, according to the nonprofit, nonpartisan government transparency group Open The Books.  Degenfelder is proud of her prior work in energy, she said, and has laid out her cards in her biographies and her state-required conflict of interest disclosures. She noted that when an issue came before the State Board of Land Commissioners involving Kirkwood Oil and Gas — where her father works — she recused herself. “There is no conflict of interest,” Degenfelder said, adding “I don’t think that’s fair. [My father] hasn’t seen a single map or a single nothing. “There’s been no involvement from my family or Kirkwood or anything to that extent,” she added. For his part, Goolsby said he sold his interest in Goolsby, Finley and Associates LLC years ago, and would not participate in the task force’s efforts if it was anything other than legitimate and transparent. “I would be extremely disappointed if that wasn’t the case,” he said. BEFORE YOU GO… If you learned something from this article, pay it forward and contribute to WyoFile. Our work is funded by readers like you who are committed to unbiased journalism that works for you, not for the algorithms. RELATED Top Wyoming officials OK Kelly Parcel sale to Grand Teton in 3-2 vote Wyoming Legislature’s two chambers OK ‘Kelly Parcel’ sale to feds for $100M The post Wyoming looks to acquire federal land in Powder River Basin for oil play appeared first on WyoFile .