Wyoming’s Office of State Lands and Investments began holding an oil and gas lease auction this week, one that’s considered one of its smallest since 2017.
The auction underscores the challenges the office (OSLI) faces with promoting a carbon-based energy program to raise revenue.
In response to some of these concerns, the smaller lease offering could be affected by a change pushed by the office to move away from a live auction process toward a sealed bid one for the first time.
These sealed bids, when opened on a specific date, award leases to the highest bidder.
Some think that this sealed-bid process could mean less transparency than previous auctions, though the state lands office believes the change could stimulate higher bids and thus generate more revenue for the state.
This change comes amid the backdrop that Wyoming has seen a precipitous drop in revenue from these auctions, nearly five times less than what the state experienced in friendlier times during the Trump administration, which had promoted oil and gas.
During the Trump years, the state of Wyoming collected roughly $95 million in bonus and rental fees, compared with a little over $19 million during the Biden years, which has exerted pressure on the energy industry with tougher clean air restrictions on carbon-based fuels.
OSLI is holding the auction through Wednesday on 121 parcels of state-owned land spanning 42,883 acres across 18 energy-rich counties.
Three Auctions A Year
Ryan McConnaughey, a spokesman with the Petroleum Association of Wyoming, said that the oil and gas industry had nominated about 19,500 of the nearly 43,000 acres offered up for lease in the auction.
“It’s a positive that the OSLI offered more opportunities than initially what was requested,” McConnaughey said. “Whether it’s regulatory and policy changes, it’s hard to compare this lease sale with another. Where we’d become concerned is if we saw a consecutive downward trend in sales.”
Still, this represents the smallest auction of oil and gas leases since 2017 when the state last held five auctions, according to data provided by the OSLI’s auction website.
The state has since held three auctions annually — once in March, again in July and finally in November.
Dianna Wolvin, who is involved in the oil and gas auction, declined to comment on how many bidders were attracted to the auction, or whether the interest was tepid on the first day.
She pointed to EnergyNet.com, an online marketplace that handles the sealed bids from bidders, to learn more about the auction process.
Just A Trickle Now
For sure, the auction this week is among the smallest in years, according to EnergyNet.com.
Wyoming has collected tens of millions of dollars over the years for rental and bonus money in the state auctions.
A mineral lease bonus is a one-time payment made to the mineral rights owner when the oil and gas lease is signed, in this case the state of Wyoming.
The dearth of land offered up this week hasn’t been seen since well before the COVID-19 pandemic, when the state’s oil and gas industry was hitting on all cylinders.
In 2017, Wyoming saw its biggest auction year with a total of $60.7 million collected in bonus and rental fees paid. In that year, the single biggest auction came on 197 parcels covering 85,822 acres in which the state received more than $29.8 million in bonus and rental fees.
And The Feds
Separate from the state auction, the U.S. Bureau of Land Management’s Wyoming office continues to move forward on its March 5 auction of federal land designated for oil and gas leasing, according to a letter from BLM Wyoming Sandra Blackburn.
That lease sale is to cover a little over 11,250 acres on one auction and 239 acres on a second scheduled later this year.
Since BLM resumed oil and gas lease auctions in the second half of last year following a BLM moratorium that began in 2021, oil and gas interests have complained that the state’s rich energy properties are being held back.
Four quarterly auctions are planned this year that represent a fraction of lease sales offered during former President Donald Trump’s administration. For instance, the leases offered this year total about 2% of one auction for more than 476,000 acres when Trump was in office.
Other lease sales in Wyoming are tentatively scheduled for July 1 and Sept. 2. A fourth quarter sale hasn’t yet been determined.
Quarterly auctions resumed last year after a federal court ordered BLM to resume lease sales after Biden halted them when he took office.
Pat Maio can be reached at pat@cowboystatedaily.com.
