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U.S. Goes Ahead With Oil, Gas Lease Sales Despite Price Crash

Rig

Despite calls for immediate suspension of oil and gas drilling lease sales on federal land amid slumping prices, the U.S. will hold lease sales this week in four states, Reuters reported on Tuesday. 

The Bureau of Land Management (BLM), part of the Department of the Interior, has slated for Tuesday and Thursday lease sales in four Western states: Montana, Nevada, Wyoming, and Colorado, according to the tentative schedule of BLM.   

Conner Swanson, a spokesman for the Department of Interior, did not reply to a Reuters request for comment, but had said last week that the lease sales on federal land were “being evaluated on a case-by-case basis.”

In Wyoming, BLM Wyoming has proposed to offer 105 parcels in the March 2020 quarterly oil and gas lease sale. Those parcels total about 118,219 acres, BLM Wyoming says, noting that the state is one of the top U.S. energy producers on public lands. In 2018, BLM Wyoming raised nearly US$117 million through oil and gas lease sales.   

Typically, a total of 48 percent of lease sale revenues go to the state, while the remainder goes to the U.S. Treasury, the BLM said. Lease sales are one of the pillars and critical contributors to the Trump Administration’s America-First Energy Plan. 

However, the sharp drop in oil prices over the past week has had some organizations concerned that the U.S. taxpayer will not be getting a fair return on oil and gas leases. 

Last week, conservative and taxpayer groups called on the U.S. Administration to suspend lease sales on our public lands for the rest of the year amid the current oil glut, depressed prices, and systemic fiscal weaknesses in the leasing process.  

“In this environment, it is impossible for the American taxpayer to expect anywhere near a fair return on oil and gas leases. This is due to more leases selling at the minimum bid amount, or worse, at the even lower non-competitive lease rate. Just last week, the administration held a lease sale for public lands in Utah where nearly 90% of acres sold received the minimum bid of $2 per acre. In addition, oil produced during a depressed market brings in fewer royalties,” nonpartisan budget watchdog Taxpayers for Common Sense (TCS) and Conservatives for Responsible Stewardship (CRS) said in a statement. 

By Tsvetana Paraskova for Oilprice.com

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