The Highlights

• Third oil and gas lease sale in North Dakota this year and the state's largest since 2010.  

• In total, 27,290 acres of public land were offered and leased for oil and gas development, all at below market rates.  

• The sale had an average bid of $4,751 per acre, with individual parcels selling for between $10 and $10,402 per acre. 

• Taxpayers may lose $45 million in royalty revenue from future production on these leases.  

On July 14, the federal government offered and leased 27,290 acres of public land in North Dakota for oil and gas development at the recently reduced federal royalty rate of 12.5%. Based on projected production, taxpayers stand to lose an estimated $45 million in royalty revenue over the life of these leases.

This sale adds to mounting losses. TCS estimates that taxpayers have already lost more than $1.4 billion in projected royalty revenue from leases sold since July 2025, when the onshore royalty rate was reduced to 12.5—below what states and private landowners typically charge.

Today's auction was the largest federal oil and gas lease sale in North Dakota since 2010. Over the last decade, leas sales in North Dakota offered an average of roughly 3,000 acres for oil and gas development. Today's sale offered more than nine times that amount.

Results from Today's Lease Sale  

Leasing decisions are driven by development potential and market conditions. Competitiveness in today’s sale varied widely, with parcels selling for between $10 and $10,402 per acre. 88% percent of the land offered and leased was located in McKenzie County, the state’s largest producer of federal oil and gas. Parcels there were the most competitive and leased for an average bid of $5,166 per acre. By comparison, the 2,600 acres leased in Billings County—which produces significantly less federal oil and gas—sold for an average bid of $1,200 per acre.

Competitive, market-based royalty terms do not deter industry interest or production decisions. In fact, average bids in North Dakota were slightly higher under the 16.67% royalty rate (roughly $2,200 per acre) than under the previous 12.5% rate (roughly $2,000 per acre). The same is true nationwide. Average bids in 2023 and 2024  ($978 and $2,149 per acre, respectively) exceeded the average bid of $379 per acre from 2013 through 2022.

Lowering royalty rates does not significantly impact leasing or development trends, but it does shortchange taxpayers by reducing future royalty revenue. In North Dakota alone, taxpayers lost an estimated $1.2 billion in royalty revenue from FY2013 through FY2022 under the 12.5% rate. With record-high production across the U.S., those losses will continue and could grow. Because royalty revenue is shared between the federal treasury and states, North Dakotans also lose funding for schools, infrastructure, and other local priorities. 

Using Bureau of Land Management data of county-level production levels, the parcels leased today could yield 14.4 million barrels of oil and 27.4 billion cubic feet of natural gas assuming 10 years of active production. Based on the White House Office of Management and Budget’s FY2026 price projections, which are used to estimate federal royalty revenue from onshore leases, that production could be worth roughly $1.1 billion. At the 12.5% royalty rate, taxpayers would receive about $134.5 million in royalty revenue, roughly $45 million less than we would under a 16.67% rate.

Oil and gas resources developed on federal lands belong to the American people, and leasing terms should ensure those resources are not sold for less than they are worth. Offering more land for lease without ensuring a fair return for taxpayers locks in revenue losses for years to come.