Bureau of Land Management Holds Lease Sales in Nevada and North Dakota

4,451 acres of federal land leased for oil and gas development.

On December 5^th, the Bureau of Land Management (BLM), under the Department of the Interior (DOI), held auctions for oil and gas leases in Nevada and North Dakota. The sale in Nevada offered 4 parcels, totaling 3,498 acres, while the North Dakota sale offered 12 parcels totaling 3,650 acres. Between the two states, 7,148 acres were offered for sale.

The lease sale in Nevada was the second of the year. During the first competitive lease sale of 2023, there were no bids on any of the acres offered in Nevada. This continued a trend we highlighted in our recent report Gaming the System II, which demonstrates that federal oil and gas leasing has been lackluster in Nevada for more than half a century.

The auction held in North Dakota was the third of the year. During the first sale, 14 parcels covering 5,672 acres of federal land were sold for an average bid of $2,646/acre. The second sale of the year was larger, offering 8,061 acres across 19 parcels for an average bid price of $303/acre. Both sales were above the 2016-2020 average winning bid price of only $125/acre.

The two sales had very different results. In Nevada, poor results continued, with only one parcel receiving a bid. That one parcel, totaling 800 acres, received a bid of $10/acre, the statutory minimum bid; resulting in just over 10 thousand dollars in revenue which will be split between Nevada and federal taxpayers. In North Dakota, where there’s comparatively high production of federal oil, all acres offered were bid on, generating more than $7.7 million in revenue for North Dakota and federal taxpayers. The average winning bid in North Dakota was $2,106/acre, which is lower than the first sale of the year, but higher than the second sale and significantly higher than the 2016-2020 average winning bid.

Federal oil and gas lease sales held in 2023 included important reforms made in the Inflation Reduction Act (IRA), including:

• A federal onshore royalty rate of 16.67% (raised from 12.5%)
• Rental rates of $3/acre for the first 2 years, $5/acre for years 3-8, and no less than $15/acre for years 9-10 (raised from $1.50/acre for years 1-5 and $2/acre for years 5-9)
• Minimum bid of $10/acre (raised from $2/acre)

The BLM recently proposed a new leasing rule that would codify the fiscal reforms made in the IRA and implement other needed changes, such as improving oil and gas bonding requirements. Additionally, the rule would help direct leasing to appropriate locations and increase processing fees, allowing the BLM to cover the cost of administering the federal oil and gas program.

These sales were the penultimate of the year, with one sale remaining on December 12^th in Utah. So far this year, more than 293,000 acres of federal land have been offered for oil and gas development of which 160,619 acres have been leased.