Federal oil and gas lease parcels are once again in the offering in Wyoming after several quarterly sales were nixed in recent years.
The Bureau of Land Management plans to conduct three quarterly competitive lease sales this year after suspending its First Quarter sale, as well as a total of seven quarterly sales in 2021 and 2022.
Federal law requires the agency to offer oil and gas lease parcels on a quarterly basis each year, but President Joe Biden issued a moratorium on the program in 2021. The federal government was forced to resume sales after a series of legal challenges. But the return to regular lease sales has come in fits and starts, and now the program includes higher minimum bid amounts, royalty and rental rates mandated by the 2022 Inflation Reduction Act.
“Finally having lease sales coming quarter after quarter is a nice change from what we’ve seen from the administration in the past, even if it took the Inflation Reduction Act requirements to do so,” Petroleum Association of Wyoming Vice President and Director of Communications Ryan McConnaughey said.
However, those IRA reforms make federal minerals less attractive to developers, McConnaughey added. That’s a particular concern in Wyoming where the federal government owns most of the mineral estate. And there’s still concern that some parcels could be stripped out of the pending lease sales. “We’ll have to wait to see what the final details are,” McConnaughey said.
Some of the parcels considered in upcoming sales are within priority greater sage grouse habitat, and those should be removed, according to Wyoming Outdoor Council Public Lands and Wildlife Advocate Meghan Riley.
“It’s the same with big-game and crucial winter range,” Riley said. “There’s thousands of acres proposed in that sort of habitat as well, and that’s also habitat we think is more important on the landscape than oil and gas development.”
Though the agency’s environmental review and public comment periods for the Second Quarter lease sale are complete, there’s still an opportunity to modify details or even remove some parcels from the Third Quarter and Fourth Quarter lease sales based on public comment, according to the BLM.
“BLM will use input from the public to help complete its review of each parcel and determine if leasing of these parcels conforms with all applicable laws, policies, and land use plans,” the agency stated in a press release.
Lease sale details
Combined, the three federal oil and gas lease sales planned for Wyoming this year tentatively include a total 371 parcels spanning approximately 392,834 acres, according to BLM planning documents.
The agency plans to post its finalized environmental assessment for the Second Quarter lease sale “within the next couple of weeks,” Wyoming BLM Public Affairs Specialist James M. Fisher said. Once posted, members of the public may protest specific parcels or the entire sale, he added.
That sale, planned for June, includes 209 lease parcels encompassing some 251,087 acres.
The Third Quarter lease sale is planned for sometime in September, according to BLM planning documents. The agency issued a draft environmental assessment March 10, kicking off a 30-day public comment period that ends April 10. The sale could include up to 115 oil and gas lease parcels for a total 95,419 acres, according to BLM.
To learn more about the BLM’s analysis or submit a comment regarding the Q3 lease sale, visit this BLM website.
The Fourth Quarter lease sale is tentatively scheduled for December. Wyoming BLM initiated a “public scoping” comment period March 17 with a comment deadline of April 17. That sale tentatively includes 47 lease parcels spanning 46,328 acres.
For more information about the proposed Q4 lease sale, and to submit a comment, visit this BLM website.
This year’s federal oil and gas lease sales in Wyoming will be the first to include reforms to the program via the Inflation Reduction Act. Minimum bids have increased from $2 per acre to $10 per acre, royalty rates from 12.5% to 16.67% and rental rates increased from a range of $1.50-$2 per acre to $3-$15 per acre.
The IRA reforms also include, for the first time, a royalty on all vented or flared methane gas from federal lands — often a byproduct of oil and natural gas production.
The changes are long overdue, according to the Wyoming Outdoor Council. Increasing the minimum bid requirement, for example, will help prevent “speculative leasing” — a longtime concern in Wyoming and across the West, Riley said.
“Speculators can tie up public land that has little to no potential for oil and gas, just to pad their portfolio,” she said. The increased minimum bid requirement “can help keep speculative leasing at bay just by raising the bar of entry just enough that companies might think twice about whether a parcel is really worth it.”
The oil and gas industry, as of September 2021, held more than 9,600 onshore federal oil and gas permits while the BLM was still processing 4,400 additional permit applications to drill federal parcels under contract — more than enough to support robust drilling programs, according to a November 2021 Interior Department report. Industry officials insist they need a surplus of permitted federal lease parcels to fund drilling programs, but the practice threatens to prioritize future drilling over other uses for those public lands, according to the Interior.
“When land is under contract for potential oil and gas activity, the shared public lands cannot be managed for other purposes, such as conservation or recreation,” the Interior stated.
Whether increased costs will curb speculative leasing remains to be seen, and the IRA reforms — implemented as administrative guidance — could be rolled back. Conservation groups complain that the Interior is hesitating to push for rulemaking to codify reforms into law. Thirty-one organizations and conservation groups signed a February 2023 letter to the Interior urging the agency to finalize the rulemaking process.
“Completing this rulemaking is of paramount importance, both to ensure durable, holistic reform and to avoid discrepancies between codified regulations and the law,” the letter states.
The Petroleum Association of Wyoming strongly supports comprehensive reforms of the federal oil and gas leasing program, McConnaughey said, insomuch as they speed up the leasing and permitting process rather than create new obstacles for the industry. Settling environmental and human health parameters in the program can only provide more certainty for an industry that must budget both time and money on uncertain outcomes.
“Leasing reform and permitting reform is necessary,” he said. “It’s taking far too long to get from the leasing stage to the development stage.
“Nobody is arguing that the industry should have carte blanche authority to operate wherever it wants, whenever it wants,” McConnaughey added. “But I think [reform] needs to be common sense restrictions that actually make sure that on-the-ground development is happening while the necessary conservation requirements are being implemented.”
CORRECTION: This story has been corrected regarding the extent of leasing reforms via the Inflation Reduction Act. —Ed