The Highlights:

• Third federal oil & gas sale in Utah this year.
• In total, 34,596 acres of public land were offered and leased, all at below market rates.
• The sale had an average bid of $124 per acre, with individual leases selling for between $16 and $1,402 per acre. More than 1/3 of the acres were leased for less than $25 per acre.
• TCS estimates taxpayers will lose $116 million in royalty revenue from future production on these leases.

On September 22, the Bureau of Land Management (BLM) offered and leased 34,596 acres of public land in Utah for oil and gas development at the recently reduced federal royalty rate of 12.5%. The result is an estimated $116 million in lost royalty revenue over the life of these leases.

This sale adds to mounting losses. TCS estimates that taxpayers have already lost more than $1.5 billion in projected royalty revenue from leases sold since July 4, 2025, when the FY2025 reconciliation law reduced the federal onshore royalty rate to 12.5%, below what states and private landowners typically charge.

Lease Sale Results:

Utah is the nation’s fifth-largest producer of oil and fourth-largest producer of natural gas from federal lands. Over the last decade, companies have produced $10.7 billion worth of oil and gas from federal lands in Utah. Despite this, taxpayers failed to receive the full value of those publicly owned resources because federal leasing terms were set at below-market rates.

Today’s sale offered and leased 35 parcels, totaling 34,596 acres. Competitiveness varied widely, with parcels selling between $16 and $1,402 per acre. 75% of the acres leased were in Uintah County, the state’s largest producer of oil and gas. Land in Uintah County received a higher average bid of $157 per acre compared to land in Grand or Emery County ($20 and $24 per acre, respectively).

Below-Market Royalty Rates Waste Millions in Taxpayer Revenue

Unfortunately for taxpayers, all parcels leased today were leased with a 12.5% royalty rate, shortchanging taxpayers from the revenue that will be generated when oil and gas is produced from these leases.

Leasing decisions are driven by development potential and market conditions. Operators lease where there is strong development potential. Historic leasing data supports this claim. Across the country, average bids at competitive auctions were actually higher under the 16.67% royalty rate that was in place in 2023 and 2024 ($978 and $2,149 per acre, respectively) than they had been during the preceding decade under the lower 12.5% rate ($379 per acre from 2013-2022). The same pattern holds true for federal leases sales in Utah. The three auctions held in the state under the higher 16.67% rate had a combined average bid of $55 per acre, which was higher than the $41 per acre average over the preceding decade.

The current 12.5% royalty rate is far below the higher rates charged by states—including Utah, which imposes a minimum royalty rate of 16.67%. Other states with significant oil and gas deposits, including Texas and New Mexico, charge rates of 18.75 to 25%.

According to from TCS, taxpayers lost $643 million under the 12.5% rate over the last decade in Utah alone. Since roughly half of federal royalty revenues are shared between the federal treasury and states, Utah taxpayers lost out on $321 million over the last decade and could lose $58 million more from today’s lease sale. This funding would have supported public schools, infrastructure, and other local priorities.

The Bureau of Land Management estimates that the parcels leased today could yield 35 million barrels of oil and 105 billion cubic feet of natural gas over their productive lifetimes. Based on the White House Office of Management and Budget FY2026 price projections, which are used to estimate federal royalty revenue from onshore leases, that production could be worth roughly $2.8 billion. At the 12.5% royalty rate, federal and state taxpayers would receive a combined $349 million in royalty revenue, roughly $116 million less than what would have been received under a 16.67% rate.

Lowering Financial Assurance Requirements Increases Taxpayer Risk

After production ends, oil and gas producers operating on federal land are required to plug their wells and reclaim surrounding sites. To guarantee that cleanup of these potentially hazardous and environmentally harmful sites is paid for, producers must post a bond before drilling begins. If a company cleans up, the bond is returned. If a company abandons its wells or goes bankrupt, the bond is forfeited and used to help cover reclamation costs. BLM currently accepts two types of bond coverage: bonds for an operator’s wells on an individual lease, with a minimum of $150,000, and bonds covering all wells owned by an operator within a state, with a minimum of $500,000.

This June, BLM proposed to lower minimum bond requirements to their decades-old minimums: $10,000 for an individual lease and $25,000 for all wells in a state. In 2023, these inadequate minimums lead to an average bond coverage of just $3,873 per well — just 5% of the average cost of reclamation. If outdated bonding requirements return, TCS estimates that the federal government would hold only $32 million in financial assurances for the 8,327 oil and gas wells producing on federal lands in Utah, leaving taxpayers exposed to approximately $559 million in potential future liabilities. Without adequate safeguards, the leases issued today could add to growing liabilities.

Proposed federal requirements stand in sharp contrast to requirements for oil and gas operators on state land. In June 2026, Utah adopted a new system for calculating blanket bond amounts, raising minimum statewide blanket bond requirements to between $200,000 and $5 million — 8 to 200 times more coverage than BLM’s proposed $25,000 minimum amount for statewide bonds. Wells on federal land, which may sit less than a mile from wells on nonfederal land, are not less expensive to reclaim. Yet BLM has proposed dramatically lower financial assurance requirements, putting taxpayers at greater risk.

Modernized Leasing Terms Support Responsible Development, Generate Revenue, and Protect Taxpayers

Oil and gas developed on federal lands belongs to the American people, and leasing terms should ensure taxpayers receive a fair return from the development of these valuable resources.