The Highlights

• Second federal oil & gas lease sale in North Dakota this year and the state’s largest since 2018
• First federal oil & gas lease sale in South Dakota since 2019, with the 800 acres offered receiving $10/acre minimum bids.
• In total 8,989 acres of public land offered and leased at below-market rates
• TCS estimates taxpayers will lose $7.4 million in royalty revenue from future production

On April 28, the federal government leased 8,989 acres of public land in North Dakota and South Dakota for oil and gas development at the recently reduced federal royalty rate of 12.5%. The result is an estimated $7.4 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 billion in projected royalty revenue from leases sold since July 4, when the One Big Beautiful Bill Act (OBBBA) reduced the onshore royalty rate to 12.5%—below what states and private landowners typically charge.

Today’s sale offered 21 parcels of public land in North Dakota—totaling 8,189 acres—and 2 parcels in South Dakota—totaling 800 acres. All available land was leased.

North Dakota has been the third-largest producer of federal oil and fourth-largest producer of federal gas over the last decade (FY2016-2025). Lease sales in the state have been consistently competitive and oil and gas development generates important revenue for federal and state taxpayers.

In contrast, there is little federal leasing in South Dakota. As of the end of FY2025, there are only 99 active federal leases in the state, containing just 42,000 acres. This is the first auction in the state since 2019. From 2009 to 2019, not a single lease sale in South Dakota received an average per acre bid above $100.

Leasing decisions are driven by development potential and market conditions. Competitiveness in today’s sale varied widely. Parcels in North Dakota sold for between $101/acre and $10,006/acre. The two parcels in South Dakota both sold for the legal minimum bid of $10 per acre. Operators lease where there is development potential—a factor that is highly dependent on the specific parcels of land offered in a sale.

Competitive, market-based royalty terms do not deter industry interest nor production decisions. The lower royalty rate did not make these leases more competitive. It simply reduced future royalty revenue. In North Dakota alone, taxpayers lost an estimated $1.2 billion in revenue from FY2013 to FY2022 under the 12.5% rate. With record-high production across the U.S., losses will continue or even grow worse. Because revenue is shared between the federal treasury and states, North Dakotans also lose funds for schools, infrastructure, and other local priorities. While production is much lower in Montana, outdated rates from FY2013 to FY2022 still cost state and federal taxpayers $110 million and allowed thousands of acres of public land to be locked into nonproducing leases, preventing other uses.

The Bureau of Land Management estimates that the parcels sold today could yield 2.3 million barrels of oil and 5.7 million cubic feet of natural gas over their lifespan. Based on the White House budget office’s 2026 price projections—used to estimate federal royalty revenue from onshore leases—that production could be worth roughly $178 million. At the 12.5% rate, taxpayers would receive about $1.6 million each year, roughly $7.4 million less than we would under a 16.67% rate.

Oil and gas developed on federal lands belong to the American people, and leasing terms should ensure these resources aren’t given away for less than they’re worth.