Critics Say BLM ‘Doing Bare Minimum’ For Wyoming Oil And Gas Lease Auctions

Critics of oil and gas lease auctions held by BLM want more federal land offered for sale, with one Wyoming industry representative saying the agency is just “doing the bare minimum” required to favor green polices.

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Pat Maio

March 07, 20244 min read

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An oil and gas lease auction held this week by a federal land management office in Wyoming reflects a national picture taking shape to rebalance the supply and demand of energy-rich land offered to industry for drilling.

The trend has evolved in recent years as clean energy advocates have largely gotten their way on these land lease sales.

Critics of the auction process held by the U.S. Bureau of Land Management in Wyoming want more valuable federal land offered up for lease. In fact, that’s what they’ve requested — or nominated — for lease in the auctions when BLM has asked for “expressions of interest.”

However, supporters of the current auction process like the status quo and cite a 2-year-old federal law that addresses clean air and other green policies coming out of today’s government.

The auction held Tuesday by the BLM Wyoming office shows that oil and gas interests in the Cowboy State bid on 11,738 acres of federal land, which makes up about 90% of the total acres offered for lease.

The higher percentage is a shift from a year ago when only half bid on available leases.

That Federal Law

Driving the trend is the nearly 2-year-old federal law, called the Inflation Reduction Act, that effectively reduces the total number of acres offered in auctions to better match demand with supply, said Aaron Weiss, deputy director of the Center for Western Priorities in Denver.

“The Inflation Reduction Act’s reforms are working as intended,” Weiss told Cowboy State Daily.

The federal law made significant changes in promoting clean energy power at the expense of carbon-based fuels. In the area of oil and gas leasing reforms, the federal law boosted royalty rates, the minimum bids for oil leasing and the rental rates for oil leases if oil companies didn’t drill on their leased land.

In previous auctions, BLM offered more acreage than what the industry drilled on, allowing industry to assemble huge portfolios, a trend noted by Weiss.

“Now these sales are being rightsized, instead of like last year where only half of the leases were selling through auctions,” he said.

In the same period a year ago, industry successfully bid on roughly 54% of acreage offered by the BLM’s Wyoming office. This equates to 69,149 acres successfully bid on in the auction out of 127,015 offered.

Ryan McConnaughey, a spokesman for the Petroleum Association of Wyoming, said that the BLM Wyoming office’s first quarter lease sale is “a perfect example of the BLM doing the bare minimum required under the Inflation Reduction Act.”

McConnaughey said that more needs to be done by the BLM to stimulate bidding.

“Despite the strong headwinds against the industry from the Biden administration, Wyoming’s oil and gas operators continue to nominate and purchase oil and gas leases,” he said. “The fact that more than 90% of the total acreage offered was sold shows that the BLM should be working to reduce the 1 million-acre backlog.”

The industry has a beef with this backlog and thinks BLM has ignored its desire to bid on these lands after they nominated them for lease.

Industry claims that BLM is holding back on this land rich in energy and estimates a backlog of 1 million acres in deferred status, meaning BLM is doing nothing with it.

In terms of nominations, Weiss said that interest in new leasing is still exceptionally weak compared to before the Inflation Act.

BLM Holds Back

Across the United States, industry nominations fell from a peak of 4.7 million acres in 2019 to just 95,000 acres last year, said Weiss about data compiled by his group.

“That's a 98% drop in industry interest,” he said.

In Wyoming, companies nominated 32,000 acres for leasing over the last year, and 83,000 acres across the country during that same period.

Weiss estimates 35,000 acres in Wyoming eligible for future leasing, though another 35,000 acres have been deferred in Wyoming, mostly because of sage-grouse conflicts or low potential for production.

Those sage-grouse acres are unlikely to become eligible unless the bird population starts to rebound, Weiss said.

In Wyoming, nominations by industry to bid on BLM land following the Inflation Reduction Act have totaled 7,400 acres in 2022, 26,500 last year, and 6,300 to date in 2024.

Weiss said that the fall in sales this year reflects “the collapse in industry interest in new nominations.”

Since companies are nominating so much less land, BLM is offering less in the lease sales.

“The agency is doing a good job meeting demand,” Weiss said. “That's a huge turnaround from last year, when BLM was offering far more than drillers wanted, and large amounts of land were selling non-competitively or not selling at all.”

Pat Maio can be reached at pat@cowboystatedaily.com.

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Pat Maio

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Pat Maio is a veteran journalist who covers energy for Cowboy State Daily.