BLM Hosts First Federal Oil, Gas Lease Sale in Over a Year

BLM Hosts First Federal Oil, Gas Lease Sale in Over a Year

CHEYENNE — Governor Mark Gordon notes that federal law requires the Bureau of Land Management (BLM) to hold quarterly oil and gas lease sales. Since January 2021, that schedule has yet to be followed. Last week the BLM held its first sale in over a year. In addition, this is the first sale conducted under new requirements, including an increased minimum bid, a nomination fee, an increased royalty rate of 16.67 percent and the elimination of noncompetitive leasing. 

Congress amended the Mineral Leasing Act in 1987 and required the BLM to hold quarterly oil and gas lease sales in each state when lands are available for leasing. The BLM adhered to the law for over three decades until President Biden took office. Under Governor Mark Gordon’s direction, the State challenged the Biden Administration’s new policy to deviate from this practice in court. That suit remains pending before the United States District Court for the District of Wyoming.

“While I am pleased that a sale has occurred, it comes with the recognition that this is not even a quarter of a loaf. Quarterly lease sales have not been held, and the additional costs to Wyoming oil and gas producers have a chilling effect on the ability of producers to bid,” said Governor Mark Gordon. “The fact that our producers participated to the degree they did is a credit to the Wyoming oil and gas industry. Their efforts mean Wyoming will continue to provide energy for the Nation, even though they do so with increasing pressure from Washington, DC, to give up.”

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The BLM estimated the overall lease sale netted $14.7 million in Wyoming, approximately $1.8M more than the 2022 sale. Initially, over 250,000 acres were proposed. However, that number was reduced to just over 127,000 acres–a drastic reduction in available acres for leasing bids. Forty-nine parcels did not receive any bids. In prior years, many of these parcels could have been sold through the noncompetitive bid process, providing additional revenue for the state. Without this program, the state does not receive any income. 

The higher mandatory fees required by the Inflation Reduction Act mean higher fuel prices at the pump. Since Wyoming receives 48 percent of royalty rates, bonus bids and rental payments, the State will receive more revenue due to the increased federal fees, which comes at a cost to consumers and the oil and gas economy.

The Wyoming oil and gas industry has yet to regain the number of drilling rigs or employees it had in 2019. The number of drilling rigs for 2023 has hovered around 20, slightly more than half of the number in 2019. This sale shows that the onerous federal requirements contribute to the slow recovery. Gas production continues to decline.