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Despite sagging market, firms still snap up most parcels at BLM oil and gas lease sale

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Glenrock Boom

The sun sets behind an oil pump outside the town of Glenrock last month. The Bureau of Land Management collected millions from the first quarterly public land sale of the year in Wyoming.

Oil and gas developers placed bids on nearly 72,000 acres of public land in Wyoming during this year’s first quarterly lease sale Tuesday, with about 72 percent of available leases receiving offers, according to results posted on the digital marketplace EnergyNet.

The bureau offered 105 parcels covering about 118,292 acres of federal land, with several leases clustered in Sweetwater County. About 26 percent of available leases sold for the minimum $2-an-acre bid. But a 40-acre parcel in Converse County went for as much as $1,102 an acre. The Bureau of Land Management has not released the final sale results.

Wyoming is one of the leading producers of oil and gas on public land in the country, with the BLM managing millions of acres of minerals. But this year’s initial lease sale came at an uncertain time. Energy market losses have roiled Wyoming operators in recent weeks amid a global price war and coronavirus outbreak. As a result, oil prices have plummeted and investors have ditched energy shares.

West Texas Intermediate, the U.S. benchmark for oil, hovered at $23.36 per barrel Monday, with the realized price in Wyoming falling even lower, at $18.27.

Despite these conditions, this month’s sale sold a similar proportion of available parcels as the sale in the final quarter of 2019, though the volume of acreage leased this quarter was significantly less.

Wyoming will also see some return from the auction. The state receives about half of the funds made through federal lease sales. Last year, it brought $117 million back into the state’s coffers.

“The Petroleum Association of Wyoming is pleased to see the BLM moved forward with the scheduled sale of natural gas and oil leases in line with its multiple-use mandate,” Ryan McConnaughey, communications director for the Petroleum Association of Wyoming, said in a statement. “Several of these parcels went for nearly $1,000 per acre, well above the $2 per acre minimum. In today’s climate, this is an indicator that companies still believe investing in Wyoming is prudent.”

In addition to lease payments, oil and gas companies must pay production taxes to the state and county where production takes place, as well as federal mineral royalties. A portion of royalties paid by companies for extracted minerals also flows back to the state. In 2018, oil and gas production brought in $1.39 billion to the state, according to the Petroleum Association of Wyoming.

The Wyoming Game and Fish Department submitted recommendations to the bureau before the sale to defer four parcels overlapping with critical mule deer habitat. After initially considering 125 parcels, the BLM removed from auction four whole parcels and parts of 12 others to protect big game and sage grouse from being disrupted by development. 

But several conservation groups found the amendments insufficient. Statewide lease sales have garnered opposition from conservation groups and some landowners who think the Trump administration’s energy dominance strategy has sparked a race to claim thousands of public acres in sensitive habitats at the expense of the environment and the public.

“This reckless oil and gas leasing in Wyoming is putting our wildlife and access at risk,” John Rader, a conservation advocate with the Wyoming Outdoor Council, said on Monday. The Wyoming Outdoor Council filed a formal protest against leasing the 105 parcels for this year’s first sale. The BLM declined to make changes and dismissed the protest.

Rader said the parcels offered in March fell in both sage grouse core habitat and cold water fisheries. In addition, development on some leases offered would disrupt the state-protected Red Desert to Hoback and Baggs mule deer migration corridors.

“The BLM has a responsibility to manage public lands for multiple use, but this administration is prioritizing oil and gas development over everything else,” Rader continued. “They are not respecting the balance of uses — the working landscapes — that Wyoming people have stood up for time and again.”

According to Brian Rutledge, director of the Sagebrush Ecosystem Initiative for the National Audubon Society, in the past three years, at least 2.5 million acres offered for lease by the federal government fell in sage grouse habitat. The National Audubon Society also joined other environmental groups in protesting the sale this month.

“Instead of playing roulette with whether leased lands will be developed, the Trump administration should focus on protecting Wyoming communities whose well-being is inextricably linked to the health of the greater sage-grouse and iconic sagebrush country,” Rutledge said.

Sale drums up new criticism

Meanwhile, in the days leading up to lease sales across the West, Conservatives for Responsible Stewardship and Taxpayers for Common Sense urged the BLM to put the brakes on the next four online auctions due to depressed market conditions and what the groups considered the likelihood of poor financial returns for the public.

Giving up land to oil companies with little ability to drill denies the public access to the land for recreational use, the groups explained in a news release last week.

But McConnaughey, of Wyoming’s Petroleum Association, disagreed.

“Leases are not land sales, they offer only temporary rights to produce minerals, and they open the door to much needed jobs for Wyomingites and future revenues to the state and federal government through sales, payroll, ad valorem and severance taxes, as well as federal mineral royalties,” he said.

McConnaughey also stressed that operators hoping to develop on public land that includes sage grouse core habitat or mule deer migration corridors must follow several state and federal regulations.

Despite the protests, BLM sales in Wyoming, Nevada and Montana went forward Tuesday as planned. An overwhelming majority of the bids occurred in Wyoming.

Follow the latest on Wyoming’s energy industry at @camillereports


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Energy and Natural Resources Reporter

Camille Erickson covers the state's energy industries. She received her master's degree at Northwestern University's Medill School of Journalism. Before moving to Casper in 2019, she reported on business and labor in Minneapolis, Chicago and Washington.

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