Wyoming’s Lease Sale Brings In Massive Nearly $13 Million Haul … And It’s Only Day One
The first oil and natural gas federal onshore lease sale in 18 months brought in an incredible nearly $13 million in a single day showing that there is massive interest for investing in increased production.
Just over 100 parcels were auctioned today in Wyoming with around 20 more being offered in a second sale tomorrow that will take place alongside simultaneous sales in Utah, Colorado, North Dakota, Montana, New Mexico, Oklahoma, South Dakota and Nevada. These sales have been delayed time and again as the Biden administration continues to appeal a June 2021 injunction requiring the Department of Interior to hold sales.
Day one of Wyoming’s sale has already brought in nearly $12.7 million – more than all three of the state’s federal lease sales held in 2020 combined! Half of this money goes to the Federal Treasury, while the other half goes back to Wyoming to help fund critical public services and education.
|Total Winning Bids Amount
|Day 1 – June 2022
|All 2020 Sales
Quarter 1 – 2020
Quarter 3 – 2020
|Quarter 4 – 2020
As the Petroleum Association of Wyoming’s Ryan McConnaughey told EID:
“After five consecutive quarters without a lease sale in Wyoming, there is clearly pent-up demand from Wyoming producers. Given the Biden administration’s failure to hold a lease sale since 2020, Wyoming has been shortchanged an estimated $47 million in lease sale revenues. The income from this sale will be a much-needed boost to funding Wyoming’s public schools, public infrastructure and local governments.”
Today’s Sale Is Only Part of the Story
While the fact that lease sales have resumed is welcome news and an encouraging step forward, there are still major delays impacting operators’ abilities to ramp up production in Wyoming and other states. For instance, the Bureau of Land Management has yet to authorize sales that took place in Quarter 4 of 2020 under the Trump administration. In Wyoming, that’s a nearly $7 million sale that’s been in limbo for 19 months.
As McConnaughey explained:
“Once the lease auction is over, we would encourage the BLM to issue the leases auctioned in the fourth quarter of 2020 and these leases shortly after. Leases auctioned but not issued generate no income for the federal government and tie up much needed capital for producers.”
Further adding to this, last month the Biden administration settled with activist groups and agreed to re-evaluate the National Environmental Policy Act reviews for nearly all of the leases issued under the Trump administration in Wyoming and a significant number across Utah, Colorado, New Mexico and Montana. As the Wyoming Tribune Eagle explains:
“None of the leases have been vacated, but their future is uncertain. The Department of the Interior now has to reevaluate and retroactively justify more than two dozen lease sales. If it decides it can’t, or its reasoning doesn’t satisfy the court, the sales could be reversed and any existing permits revoked.”
Litigation Could Delay Benefits of Sale
This morning, a coalition of environmental activists filed a lawsuit against the Department of Interior for resuming lease sales in a move reminiscent to similar actions taken over Gulf of Mexico Sale 257 last November that ultimately resulted in the record sale being vacated.
This pending litigation will delay BLM authorizing any leases awarded this week and could ultimately result in some or all of the sales being vacated. In other words, despite lease sales resuming, states are a long way off from receiving any revenue they’ll generate and there are still a lot of challenges inhibiting the long-term investments required to truly ramp up production on federal lands.
As the Independent Petroleum Association of America’s Mallori Miller explained:
“It’s sad that this Administration can’t seem to get their footing when it comes to oil and natural gas leasing. It has been one delay after another, and now a legal challenge, which IPAA believes is unsubstantiated. The Mineral Leasing Act requires quarterly lease sales to be held. At a time with record-high gas prices and global unrest, it’s time to let American oil and natural gas producers get back to business on federal lands. Ensuring future federal leasing and production will not only help with oil and natural gas supplies but will also help fund state and local governments as well as returning large receipts to the federal Treasury.”