Disappointing Returns from Wyoming Oil and Gas Lease Sale

AnalysisDisappointing Returns from Wyoming Oil and Gas Lease SaleThe sale offered a total of 210 parcels comprising nearly 321,000 acres and though most were leased, bid revenues fell short for taxpayers.

Energy & Natural Resources,  | Analysis
Sep 18, 2019  | 2 min read | Print Article

The Bureau of Land Management (BLM), an agency within the Department of the Interior responsible for overseeing the federal oil and gas program, held a lease sale on September 16, 17 offering up federal land in Wyoming for oil and gas development. The sale offered a total of 210 parcels comprising nearly 321,000 acres and though most were leased, bid revenues fell short for taxpayers.

Despite leasing over 250,000 acres of federal lands in Wyoming, the sale generated just $7.8 million in bonus bid revenue, or roughly $30 per acre, on average. That level of bidding was the second lowest of any federal oil and gas sale in Wyoming in the last three years, and a fraction of the bids received in the lease sales held earlier in the year.

2019 Wyoming Lease Sales
Date Total High Bids Acres Sold Avg. Bid/Acre
9/17 $7,843,019 263,667 $29.75
6/25 $21,811,532 186,014 $117.26
3/19 $11,668,732 95,869 $121.72
2/25 $87,049,226 526,697 $165.27

 

Of the 263,667 acres leased in the September sale, 83,069 – or roughly one third – were sold for the statutory minimum acceptable bid of $2/acre. The large portion of minimum-bid leases was a driving factor in the low average bid for the sale and demonstrates how BLM policies reduce the fiscal return from oil and gas leasing.

The $2/acre minimum bid was originally set as a temporary floor in 1987 but has remained on the books ever since. Legislation intended to increase the return from the federal oil and gas program was recently introduced in the House Natural Resources Committee and would raise the minimum bid to $5/acre and index it to inflation. Had that rate been in place for the Wyoming sale, taxpayers could have earned $300,000 more in bid revenue.

The BLM plans to hold its next lease sale for parcels in Wyoming in December.