March 11, 2025 - It was a good legislative session for fossil fuel producers in Wyoming, as well as those who want to produce carbon dioxide for enhanced oil recovery.

Lawmakers passed House Bill 75, “Coal severance tax rate,” which reduces the severance tax rate for surface-mined coal from 6.5% to 6% — an effort that proponents hope will help coal producers weather declining markets and potentially reinvest in Wyoming mining operations. 

Another measure, Senate File 17, “Carbon dioxide-enhanced oil recovery stimulus,” creates a $10 million fund to support enhanced oil recovery — the process of pumping carbon dioxide underground to produce more oil and natural gas. Companies that qualify for the federal 45Q tax credit can apply for up to $10 per metric ton — paid out of the Wyoming account — for carbon dioxide used in enhanced oil recovery.

Senate File 18, “Enhanced oil recovery-severance tax exemption,” would have reduced the severance tax rate on oil from 6% to 3% if tied to practices that capture, store or reuse carbon dioxide, reducing state revenue by $2.1 million in 2027, $4.5 million in 2028 and potentially more in following years, according to the bill’s fiscal note. But the committee-sponsored bill didn’t survive the Senate.

Lawmakers also considered adding a $10 million appropriation to a yet-to-be-named developer to build a new coal power plant, which would produce electricity and capture the carbon dioxide byproduct — a greenhouse gas — for use in enhanced oil recovery. 

“The one problem that we have is finding enough carbon dioxide for enhanced oil recovery,” Green River Republican Scott Heiner told his colleagues during the session. “The [carbon dioxide] pipeline is fully constricted, fully at capacity right now. So in order to do enhanced oil recovery, we need more carbon dioxide.”

Before press time, the Enhanced Oil Recovery Institute clarified there is currently an adequate supply of commercial carbon dioxide for the oil industry in Wyoming. But there remain many oilfields in the state and surrounding region that make good candidates for carbon dioxide-enhanced recovery, and interest among developers is forecasted to increase.

“The question has always been, if [Wyoming’s carbon dioxide supply] suddenly isn’t enough, should we not be looking at other source options?” Enhanced Oil Recovery Institute Director Lon Whitman told WyoFile.

The appropriation was added to the budget bill and then SF 17, but the floating amendment was withdrawn when the Wyoming Energy Authority agreed to dedicate $10 million to the effort via the Energy Matching Funds program.

Some lawmakers, fiscal hawks and conservation groups, however, mounted opposition to the measures, questioning the efficacy of giving handouts to industries that base production and jobs more on changing market conditions than taxes and incentives. Wyoming municipalities, some noted, will take a major revenue hit as a result of the 25% property tax reduction that was signed into law this month. Reducing the coal severance tax adds another $10 million revenue hit to accounts that support Wyoming schools, roads and other vital public services.

“The reason that we do [mineral severance taxes] is because [coal, oil and natural gas are] a finite, one-time resource,” Baggs Republican Sen. Larry Hicks said regarding HB 75. “We have an obligation to future generations, that they should derive some of the benefits of the wealth we’re accumulating now.”