On December 12th, the Bureau of Land Management (BLM), under the Department of the Interior (DOI), held an auction for an oil and gas lease in eastern Utah. The sale offered 1 parcel which contained 761.36 acres for oil and gas development. The parcel sold for $118/acre, generating $92,387 in total revenue.  

The lease sale was the second of the year held in Utah, which offered only 1 parcel and was not representative of leasing trends previously observed in Utah. For example, the first Utah sale of the year, held in September, gained very little industry interest and tracks with Utah’s history of low interest and low bid revenue from federal onshore leasing. Of the 14 parcels offered that day, which encompassed more than 26,800 acres, only 3 parcels containing a combined 6,810 acres were sold, or roughly 25% of the available acres. Additionally, every leased acre was sold at the statutory minimum bid price of $10/acre.  

From FY2013 to FY2022, 31% of leased acres in Utah were sold for the old minimum bid of $2/acre and 54% were sold for less than $10/acre. Offering land with little oil and gas potential or industry interest to develop it generates little bid revenue, keeps valuable federal land from other, productive uses such as recreation or conservation, and shortchanges taxpayers.  

Over the past decade, outdated federal leasing policies have lead taxpayers to miss out on more than $742 million in potential revenue in from onshore leasing in Utah. That data comes from our recent report, Giving it Away II, which highlights the myriad of issues under the outdated federal oil and gas leasing program which was modified only last year.  

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. 

This sale was the final onshore federal lease sale of the year. This year, nearly 294,000 acres of federal land were offered for oil and gas development, of which 161,380 acres were leased.