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FOX 13 News 360: How drilling bans are affecting Utah industries

Posted at 10:33 PM, Feb 28, 2021
and last updated 2021-03-01 17:22:28-05

UINTAH BASIN, Utah — When then-presidential candidate Joe Biden made the declaration during the Democratic presidential debates that he’d end drilling on federal land, oil and gas companies had already been stockpiling leases to do so.

They knew that throughout his political career, now-President Biden believed banning new drilling on federal land was a key to reducing carbon emissions.

The president has so far followed through with his campaign promise, imposing a 60-day moratorium on new oil and gas leases and new drilling on federal land.

Biden's declaration of "no more drilling" sent chills down the spines of many Utahns who live in the oil and gas-rich Uintah Basin.

READ: Utah politicians criticize Biden decision to suspend energy leases on federal lands

They've been through boom and bust cycles before.

But this time, it's different.

Eric Weldon works for Weldon Construction, a three-generation family business based in Vernal.

Almost 60 percent of the land in Uintah County is owned by the federal government, and 85 to 90 percent of Weldon Construction projects depend on the oil and gas industry.

But as one of his first acts in office, Biden halted any new oil and gas leases, as well as any new drilling, on federal land.

"Certainly it's troubling when, with the stroke of a pen, we have such sweeping policy changes," said Rikki Hrenko-Browning, the president of the Utah Petroleum Association.

Betty's Cafe on Main Street in Vernal has been an iconic gathering place for decades. But with a reduced demand for oil during the pandemic, Dave Everett says the town is in bad shape.

"People are liquidating. Trucks, snowmobiles, motorcycles, all of these things they could afford prior when they were employed in the oil industry," said Everett, a longtime server at Betty's and a Vernal city councilman.

The divide between Washington, D.C. and rural America has been historically wide, especially when it comes to land issues. In this graph, the red indicates land owned by the federal government.

"[Politicians] are making decisions that are life-altering, that are changing people's whole entire way of life and living and their families," Everett said, "and they don't know. They don't have a clue."

Democratic state Rep. Joel Briscoe of Salt Lake City favors renewable energy sources and has been following the transition for years.

"One thing Americans appreciate is paying a lower bill," Briscoe said. "Energy produced by solar and wind is cheaper, in many instances."

It also produces fewer carbon emissions once constructed.

The renewable energy industry in this country is booming. Prior to the pandemic, at the end of 2019, Utah ranked 25th in the nation for the number of people employed in clean energy.

In fact, the Provo metro area was fourth in the nation per capita.

But Briscoe admits, there aren't a lot of oil wells being drilled in Provo.

"Which is why we have to open our arms and our pocketbooks to make sure that we have a solid plan in place, and don't stint in helping our friends and neighbors and our brothers and sisters make this transition over years," he said.

However, Hrenko-Browning says transitioning to a job in renewable energy isn't so straightforward.

"I don't know that you can replace an oil and gas job quite as easily as we've been hearing from some administration officials," she said. "When you look at wages, for example, oil, gas and mining have the highest wages in the state, neck and neck with I.T, above financial services, and certainly above a solar panel installer."

University of Wyoming Professor Tim Considine studied the economic impact of the moratorium on eight western states, including Utah.

"If the oil and gas companies can't drill, they're not going to buy local services," he pointed out — something that would effect contractors like Weldon Construction and all the shops and businesses where oil and gas workers spend their money.

But that's not all.

Considine says drilling also correlates strongly with the state's budget — which supplements everything your tax dollars pay for, including police, fire, schools, libraries and conservation districts.

"A lease moratorium or a drilling ban can have some big impacts on state finances by reducing tax revenues — from severance taxes, ad valorem taxes, and the state share of federal royalties," he said. "All being affected by a revenue shortfall."

Even if you don't live or work in the Uintah Basin,the entire state benefits from these industries.

In 2018, oil and gas production paid $46 million in property taxes. Federal disbursements of fees attached to leases brought an additional $150 million.

That's almost $200 million in a single year.

In announcing the moratorium on new leases and new drilling on federal land, Biden said the reason he was doing so was to protect the environment.

READ: Biden signs three executive orders aimed at tackling climate change

But a moratorium on drilling only reduces the supply of oil and natural gas, not the demand.

"It's unlikely to effect the demand for oil overall, because there are a lot of substitutes for federal oil," Considine said.

Oil from federal lands made up just 8 percent of the total U.S. oil production in 2019.

The moratorium only affects new leases and new wells on federal land. Companies with current permits to drill can continue to do so, but those permits will eventually run out. And when they do, experts say billions of dollars in investments and future revenues will be lost, and the surrounding communities will lose millions in tax revenues.

Rep. Blake Moore, the Republican freshman congressman for Utah's First Congressional District, represents the Uintah Basin.

Everyone he talks to in that region asks about the transition away from oil and natural gas.

"When you talk about a potential shift to clean energy being the dominant source, it's the process in which we go to get to that point. What jobs are going to be created? How can we make sure to sustain living wages? You have to have that as the key part of it," he said.

Moore sits on the House Committee on Natural Resources and is trying to build relationships.

"Let the process take place. See where the plan is and adjust, and hopefully influence it as best we can," he said. "We simply don't have the infrastructure to switch everything to solar and wind. It's just not possible."

Gov. Spencer Cox and 16 other governors sent a letter to Biden last week, asking that he rescind the executive order halting all new leases and all new drilling on federal land, and outlining the potential damage to rural Americans if he doesn't.

But no one is holding their breath.

READ: Cox 'disappointed' in Biden decision to pause new oil and gas leases

Evans Family Media runs the local radio station 105.5 KLCY.

"What we're not used to is an attack by our own federal government. And that's what we're feeling right now with these series of these executive orders that are targeting families,” Steve Evans said.

With the downturn in oil demand brought on by the pandemic, Vernal's unemployment rate is already almost twice that of the rest of the state.

"We're going to survive this. We're a very resilient group of people out here," Evans said.

A public-private partnership is already giving Uintah Basin residents some options.

"Our goal is to help diversify and give a second form of income other than the oil and gas industry," said Lori Haslem, the director of the Innovation Hub in Vernal.

The new Innovation Hub provides a collaborative office atmosphere at very little cost. Anyone can use it.

It is clear that both sides in this issue are sincerely concerned about their way of life and viewpoints, and there is no question each wants the best result.

Despite not being able to depend on clean energy as a sole source of our electricity, technology is advancing, and a shift will eventually come.

FOX 13's Bob Evans also held a live Q&A session after the report aired: