Oil & Gas News

Final BLM lease sale of the year nets $7 million

Wyoming Pooling, oil and gas

By: Camille Erickson – Casper Star-Tribune – An oil and gas lease sale held last week in Wyoming by the Bureau of Land Management raised nearly $7 million.  About 70% of the parcels available in the fourth quarter sale received bids. The sale started Tuesday and ended Thursday.  The leased parcels cover over 165,000 acres of public land.

All nominated parcels included in the sale fall within the sage grouse habitat. Several conservation groups have protested the selection.  Though the bureau did not open up parcels falling within core, or priority, sage grouse habitat, it opened up deferred parcels in general sage grouse habitat.

Energy companies interested in leasing federal land for drilling can typically nominate and then bid on parcels during quarterly lease sales. Once a company secures a lease, it must then obtain permits and often complete environmental reviews before breaking ground.  The bureau usually hosts the competitive lease sales in March, June, September, and December.

But the COVID-19 pandemic, federal court battles, and tough market conditions have postponed and scaled down multiple lease sales this year.

Half of the money collected by the federal government during the quarterly auctions, as well as mineral royalties associated with leases, flow back to the state.  But oil and gas lease sales in Wyoming brought in just $11.7 million from sales this year. In 2019, bids brought in roughly $140.9 million. This year’s total sales were 92% lower than last year’s.  This month’s sale did have some of the lowest returns, in terms of bids and acres sold, compared to other sales held during the Trump administration’s tenure. The average bid this week came in at about $41 an acre.

Conservatives for Responsible Stewardship, a national organization advocating for the environment, have called on the federal government to reform the leasing process to ensure more returns for taxpayers.

“Today’s dismal lease sale results in Wyoming were entirely predictable, and they underscore the Trump administration’s stubborn refusal to acknowledge the most basic market realities,” David Jenkins, president of Conservatives for Responsible Stewardship, said in a statement. “Conducting lease sales during this pandemic-burdened economy and rock bottom oil prices is foolish in the extreme—a bargain-basement giveaway of our public lands that robs taxpayers and undermines our long-held multiple-use principles.”

Meanwhile, the Petroleum Association of Wyoming expressed concern over the future of oil and natural gas development on federal land. President-elect Joe Biden has nominated Rep. Deb Haaland, an opponent of fracking, for the Department of Interior. The department would have the authority to institute changes to oil and gas lease sales. Given this and ongoing discussions about potential policies banning or limiting fracking on federal land, PAW said December’s lease sale was more important than ever.

“We welcome the lease sales as an investment in Wyoming communities, schools and workforce for the future,” Ryan McConnaughey, communications director for the association, said in a written statement. “The oil and natural gas industry is the second-largest revenue source for the federal government after the IRS. Given the current economic climate, it would be shortsighted to cut off a critical source of funding for the federal government and a significant driver of the economy at a time when so many people are struggling.”

The BLM announced last month it would also move ahead in holding next year’s first sale in March, where it will offer 141 parcels covering 244,086 acres of federal land, with many in general and priority sage grouse habitat management areas.

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