Frequently Asked Questions about the state's proposed Occidental Land Purchase
In response to the great interest in the potential land and mineral purchase by the State of Wyoming from Occidental Petroleum, the Office of the Governor provides the following Frequently Asked Questions (FAQs) and answers.
Q: What does the proposed land purchase encompass?
A: The State of Wyoming is considering the purchase of roughly 1 million acres of land, and 4 million acres in mineral rights, along the Union Pacific Railroad corridor (near Interstate 80). The property is currently owned by Occidental Petroleum Corporation. This tract of land is commonly referred to as the Union Pacific checkerboard. It is interspersed with owns managed by the Bureau of Land Management (BLM). The State sees it as a rare opportunity to acquire minerals, recreation, and other types of assets in Wyoming.
Q: What are the latest developments in this sale process?
A: On May 1, the State of Wyoming entered into a contract with an investment bank to provide guidance and analysis of the potential purpose. Barclays was chosen as the investment bank.
Q: What is Occidental Petroleum Corporation?
A: Occidental Petroleum Corp or Oxy is an international oil and gas exploration and production company. Oxy has operations in the United States, Middle East and Latin America. It operates through three segments: Oil and Gas, Chemical (OxyChem) and Midstream and Marketing.
Q: How did Occidental acquire the land in the first place?
A: Occidental acquired the parcels after merging with the previous owner of the land, Anadarko Petroleum Corporation in August 2019.
Q: Why is the State of Wyoming interested in this property?
A: At this point, the State is only interested in what it would take for the State to buy the property. The Governor, Legislative Leadership, and the other four state-wide Elected Officials see this as an opportunity that should be carefully explored. Approximately 48% of the land in Wyoming is owned by the Federal Government. The land and mineral rights in this tract were originally owned by the Federal Government, but were subsequently sold to the Union Pacific Railroad (UP). UP later sold their interest to Anadarko. Occidental purchased Anadarko’s assets through a merger of those companies. To move forward, due diligence must show that this property could be a meaningful long-term investment, providing state revenues for generations to come. This purchase would also need to prove to be an opportunity to open up vast acreage to multiple-use, including grazing, recreation, public access, energy (including wind, solar, coal, oil and gas), and mineral (trona and other minerals) development. These natural resources could be developed by private companies, not the State, and provide additional revenues to the State. The purchase would have to show that this is a prudent investment, bringing in appropriate returns.
Q: Why is Occidental Petroleum Corporation exploring the opportunity to sell to the State of Wyoming?
Since this is such a large tract of land with multiple minerals and surface use, there are few potential purchasers willing to consider the entire tract. The current owner is motivated to sell assets that are not considered core to its business. Those non-core assets include: trona, sheep and cattle grazing, etc. Given current market conditions, other energy or mineral related companies might be interested in cherry-picking parts of the tract, but not the entire parcel. Other private entities might also look at buying the property.
Q: Why is there such a difference in the amount of surface and mineral acres?
A: Like many Western states, in Wyoming it is possible to own the surface and not the mineral estate, and vice versa. Over the years since Union Pacific was granted the property, much of the surface acreage has been sold off, while retaining the mineral interest. This split estate phenomenon is well known throughout Wyoming. These mineral rights are often leased to a company to explore for oil, gas, coal, trona, etc.,
Q: Why are many Wyoming citizens just finding out about this potential sale in February 2020?
A: Up until recently, there was only limited communication of general interest between Occidental and the State of Wyoming. These confidential preliminary discussions between the company and the State took place to determine if there was genuine mutual interest. Once there was a better idea of what was going to be offered and the timeline of what the parties would need to evaluate the property, the State and Occidental agreed that before going any further, the public should be notified.
This potential sale is far from a done deal. The State has to make an independent determination of the value and income potential of the complete parcel. Once that is complete, and if the purchase is determined to be a good deal for the people of Wyoming, the State could proceed to actual negotiations. Should a deal be reached, the public will be informed of what the state is buying, the purchase price, and how the State plans to pay the purchase price.
Q: What is the best way for the public to be informed and involved?
A: The actual negotiations, should the process get that far, will understandably not be public. Citizens are encouraged to contact the Governor’s office with their initial comments about the concept of the sale. Should a final deal be reached, there will be public outreach to inform the citizens of Wyoming the details of the deal.
Q: Are there existing commitments to complete negotiations?
A: No. Either the State of Wyoming or Occidental could terminate interest at any time.
Q: Is there a hard deadline to complete negotiations?
A: No. However, both the State and Occidental are attempting to make a decision in the next few months.
Q: Is the State Legislature involved in this potential purchase?
A: The Governor is committed to continue to work with the Legislature through the process.
Q: Should the State purchase the property, can it be a profitable investment?
A: If the appraisal and evaluation process determines it is not a profitable investment, the Governor will not move forward. It is likely the energy and mineral potential of these lands are the best candidates for a positive rate of return. Currently, much of the oil, gas, coal, and trona are under lease, meaning that Occidental is receiving royalties from the production of these materials. Should the sale occur, the State of Wyoming would receive those royalties. The same would be true for rental payments from wind and solar installations, if any, currently being paid to Occidental. It is not the intent of the State of Wyoming to become an actual operator of any of the assets. The State of Wyoming will NOT operate oil or gas wells, or any mines.
Q: What interest would the affected counties have in this potential sale?
A: Should the purchase occur, Wyoming would own surface acres within the affected counties. Normally, states do not pay property tax to the counties. Thus, counties could see a decrease in revenue. However, should the purchase occur, it is the Governor’s intention that the State would pay all taxes that Occidental had been paying to the counties. Thus, the counties would remain whole.
Q: If the purchase occurs, how will the state manage these lands and minerals?
A: The state, through the Board of Land Commissioners currently manages millions of surface and mineral acres throughout Wyoming. Since this purchase is also being viewed as an investment, further discussions will occur to determine if this property will be managed under a different portfolio through the State Land and Investment Board and Board of Land Commissioners. The five state-wide elected officials (Governor, Secretary of State, Treasurer, Auditor and Superintendent of Public Instruction) make up both of these boards. They will continue to be responsible for the overall management of all state lands and minerals.
Q: What could this potential purchase mean for outdoor recreation?
A: Adding 1 million acres of surface within the federal checkerboard holdings may open up broad stretches of our land for hunting and outdoor recreation.
Q: How could this potential purchase impact the state’s revenue picture? What is the potential of revenue from trona?
A: At this time, it appears the major income possibilities are from energy and minerals. There are varying amounts of coal, oil, and gas in the identified tract. If preliminary information from news reports is correct, existing royalties from trona production constitute the majority of the mineral revenues. Trona is a feedstock for a variety of consumer products. This land encompasses the largest naturally occurring trona deposit in the world, with thousands of years of reserves.
Q: What could this potential purchase mean for wind and solar resources in Wyoming?
A: Some of the state’s best prospects for wind development are located in the corridor where this land is located. In addition, many solar companies are looking at property within the corridor. Should Wyoming be an owner of more of these lands, the state could potentially provide additional input on promotion and site selection for these projects.
Q: Should this purchase occur, how would this affect current land and mineral owners other than Occidental Petroleum?
A: Right now, those private owners work with the Federal Government, State Government and a large corporation. Should the purchase occur, the State Government would be on a more equal footing (area-wise) with the Federal Government and private owners will have State Government as a partner when seeking permits from the Bureau of Land Management.
Q: How will Wyoming be sure the title for the lands it purchases are clean and marketable?
A: The chain of title on this asset is very simple relative to the issues on mineral ownership and split estates in the rest of the state. The lands were granted by President Lincoln in 1862 to the railroad and then sold in 2000 to an oil company. In 2019, those lands were acquired by the current owner, Occidental Petroleum Corp. Land and mineral title experts will be consulted to determine the status of all properties being considered.
Q: Why should Wyoming own more land? Is it not better to leave these lands in private hands?
A: The Governor is very aware of the concerns surrounding State ownership of additional lands. He believes that this is certainly worth the policy debate. He also believes, should this purchase occur, that it will be important for the State to be an accessible good neighbor, dedicated to the principles of multiple use of public land.
Q: Who will be doing the actual negotiations of this potential land purchase?
A: Under the leadership of the Governor, the responsibility to negotiate the purchase would be left to the Board of Land Commissioners and/or State Loan and Investment Board, comprised of the state’s top five elected officials with final approval by the State Legislature.
Q: What is the Governor’s stance on this purchase?
A: Governor Gordon believes it is important to carefully and thoroughly evaluate the potential purchase.