The Highlights

• Third federal oil and gas lease sale in Wyoming this year
• 151,756 acres of public land were offered for oil and gas development in Wyoming. 114,389 acres were leased, all at below-market rates.
• The sale had an average bid of $715 per acre, with individual leases selling for between $10 and $8,000 per acre. 16,400 acres were leased at the legal minimum bid of just $10 per acre
• Taxpayers will lose $50 million in royalty revenue from future production on these leases.
• 37,000 acres will now be available to be leased noncompetitively—outside of competitive auction and without paying even the $10 per acre minimum bid.

On September 9 and 10, the Bureau of Land Management (BLM) offered 151,756 acres and leased 114,389 acres of public land in Wyoming for oil and gas development at the recently reduced federal royalty rate of 12.5%. The result is an estimated $50 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 $1.4 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:

Wyoming has been the second largest producer of federal oil and gas over the last decade. However, lease sales in the state regularly generate less revenue than other high-producing states like New Mexico. Over the last decade, Wyoming lease sales received an average bid of just $180/acre compared to the nationwide average of $500/acre.

The two-day sale offered 120 parcels, totaling 151,756 acres, and leased 87 parcels, totaling 114,389 acres. Competitiveness varied widely, with parcels selling for between $10 and $8,000 per acre. The highest bid was received for a 120-acre parcel in Converse County, the state’s largest producer of federal oil. 12 parcels totaling over 16,400 acres sold for the legal minimum of $10 per acre, while 37,000 acres received no competitive bids at all.

Below-Market Royalty Rates Waste Millions in Taxpayer Revenue

The sale’s $715 per acre average bid was competitive compared to the state’s average over the last 10 years, indicating strong operator interest to acquire these leases. Unfortunately for taxpayers, taxpayers will be shortchanged when any oil and gas is produced from these leases—every parcel sold today, and in all recent sales, was leased with a 12.5% royalty rate.

Leasing decisions are driven by development potential and market conditions. Companies bid in competitive lease sales under both the higher 16.67 percent royalty rate and the lower 12.5 percent rate. In fact, average bids across the country were higher in 2023 and 2024 under the higher rate ($978 and $2,149 per acre, respectively) than they had been during the preceding decade ($379 per acre from 2013-2022).

The same nationwide trends are true in Wyoming. Average bids in the state were higher in 2023 and 2024 under the 16.67% rate ($245 and $483 per acre, respectively) than they had been during the preceding decade ($163 per acre from 2013-2022). The lower royalty rate did not make these leases more competitive. It simply reduced the future royalty revenue.

According to a new report from TCS, taxpayers lost $4.2 billion under the 12.5% rate over the last decade, 2016-2025, in Wyoming alone. Since roughly half of federal royalty revenues are shared between the federal treasury and states, Wyoming taxpayers lost out on more than $2 billion in funding that would have supported public schools, the highway and county road fund, cities and towns, the University of Wyoming, capital construction projects, and the state’s budget reserve account. As the second largest producer of oil and gas, these losses are likely to continue to grow.

The Bureau of Land Management estimates that the parcels leased today could ultimately produce 7.3 million barrels of oil and 181 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 $1.2 billion. At the 12.5% royalty rate, taxpayers would receive about $152 million in royalty revenue, roughly $50.8 million less than we would receive under a 16.67% rate. And even this is a conservative estimate; our analysis uses a 10-year productive lifetime, but BLM anticipates these leases may have an average lifetime of 30 years.

Noncompetitive Leases Generates Little Return While Blocking Other Land Uses

The 37,368 acres not leased from the sale will become eligible for noncompetitive leasing as early as tomorrow. Under this process, parcels are awarded to the first applicant willing to pay an administrative fee, set by BLM at a minimum of $75 regardless of acreage, plus the first year’s rent. No competitive bid is required. This process, repealed by Congress in 2022, was reinstated in 2025 and enables companies to bypass market competition entirely.

Noncompetitive leasing generates little return for taxpayers. Leases issued noncompetitively generate less revenue and are significantly less likely to ever enter production. According to BLM, only 1 percent of noncompetitive leases issued nationwide begin producing during their primary lease term. The Government Accountability Office found that noncompetitive leases generate five times less revenue than competitively leased land.

Nonproducing leases block other uses of federal land that could generate greater value for taxpayers, including recreation, conservation, and the development of other mineral and energy resources.

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 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, DOI proposed to lower minimum bond requirements to their decades-old minimums. In 2023, DOI reported holding an average bond coverage of $3,873 per well, covering just 5 percent of estimated reclamation costs. If outdated bonding requirements return, the federal government would hold only about $101 million in financial assurances for the 26,020 oil and gas wells producing on federal lands in Wyoming, leaving taxpayers exposed to approximately $1.7 billion in potential future liabilities. Without adequate safeguards, the leases issued today could add to growing liabilities.

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.