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OIL AND GAS

Final state lease auction of 2021 confirms lowest annual revenue in years

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Drilling rig

A Trinidad Drilling rig leased by Chesapeake Energy bores a natural gas well in Converse County north of Douglas. 

Wyoming’s third oil and gas lease sale of the year grossed roughly $418,000, bringing the state’s leasing revenue to a final total of $1.3 million for 2021.

The state received successful bids on 89 of the 155 available parcels, which spanned about 34,000 of 57,000 leasable acres, the Wyoming Office of State Lands said Thursday.

Ranked eighth among crude oil-producing states, Wyoming has the second-highest share of oil production on federal lands. The triannual state lease sales are entirely separate from the quarterly federal sales overseen by the Bureau of Land Management (BLM). The state relies on revenue from both types of leasing to fund a number of programs, including education.

The Office of State Lands estimates that just over $400,000 from Wednesday’s sale will be added to the state’s K-12 fund — a significant drop from previous years.

Amid the Biden administration’s nearly year-long moratorium on federal oil and gas leasing, which is set to end in early 2022, the state has continued to lease non-federal land for oil and gas development. It saw the lowest state lease sale revenue in more than a decade during the 2021 fiscal year, according to the October CREG report, with revenue dipping further through the end of the calendar year.

Oil demand has recovered more rapidly from its 2020 lows than production, which continues to chart a slow return to pre-pandemic levels as oil markets remain volatile.

The Nov. 3 sale generated less revenue than the nearly $600,000 earned in July, but more than the $259,000 earned in March. Year-over-year, November leasing revenue was down more than $1 million in 2021.

In total, revenue from the state’s 2021 lease sales fell 73% compared with 2020, 86% compared with 2019 and 95% compared with 2018.

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