Oil industry to Wyoming public lands: We’re just not that into you
On June 28 and 29, the Bureau of Land Management (BLM) held its oil and gas lease sale for Wyoming for the second quarter of 2023. This was one of the first lease sales held since the passage of the Inflation Reduction Act (IRA) in August 2022, which made a number of important changes to the onshore oil and gas leasing program, and the release of a set of Instructional Memoranda that provide guidance to the BLM on how to implement the changes in the IRA until a rulemaking can be completed. Among the changes, companies must now pay a fee of $5 per acre to nominate parcels for lease and can no longer do so anonymously.
The BLM also must offer for lease 50 percent of the acres nominated across the U.S over the past year, or 2 million acres, whichever is less, in order to offer rights-of-way for renewable energy development projects on public lands. An analysis conducted by the Center for Western Priorities earlier this spring found that the BLM was preparing to offer significantly more acres for lease than the minimum necessary under the IRA.
Not only does the BLM not need to offer many of these acres for lease, the industry itself does not even want to lease them. Of the 127,015 acres the BLM offered for lease, companies bid on 69,149 acres, or just 54 percent of the acres offered — leaving 57,865 acres, or 46 percent, that were offered for sale but that no company bid on. Of the 69,149 acres that were sold, only 4,957 sold for more than $100 per acre, while 47,253 acres (68 percent of the acres sold) sold for the minimum bid of $10 per acre.
The total revenue from this lease sale will be approximately $15 million after fees and premiums. More than $5 million — one-third of the total revenue for this lease sale — will come from the sale of a single 640-acre parcel in Converse County that sold for $8,008 per acre. An additional $3 million will come from the sale of a single 760-acre parcel that sold for $4,112 per acre. In other words, more than half of the revenue generated from this lease sale will come from just two parcels, which account for just one percent of the total acres offered.
What this lease sale shows is that despite rhetoric from the oil and gas industry and its allies in Congress, actual on-the-ground demand for new oil and gas leasing in Wyoming is very low, with the vast majority of acres offered either selling for the minimum bid or not selling at all, even with the $5-per-acre fee in place for industry to nominate acres for lease. This confirms that oil and gas companies are already sitting on most of the leases that are likely to actually produce oil and gas. The latest available data shows that companies continue to sit on almost 12 million acres of unused leases and almost 7,000 unused permits to drill. The Wyoming lease sale also shows that the reforms of the IRA are working as intended — to discourage industry from nominating acres that are unlikely to actually produce oil and gas.
With this sale complete, BLM will have plenty of headroom to approve renewable rights-of-way according to the requirements of the IRA tying rights-of-way to oil and gas lease sales and can safely keep upcoming lease sales small.
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