Bonus bids totaled $1,858,062 at the Bureau of Land Management’s May 30 bi-monthly oil and gas lease sale in Billings.
Access Resources, Inc. of Denver, bid $358,400 for leasing rights on a 640-acre parcel in McKenzie County, North Dakota. The highest per-acre bid was $1,100 from Headington Oil, Ltd Partnership of Dallas, Texas for a 40-acre parcel in Williams County, North Dakota.
Of the 55 parcels offered, 21 were in Montana, 26 were in North Dakota and 8 in South Dakota. All of the North Dakota and South Dakota parcels received bids as did 19 of the Montana parcels. Prior to the sale, a protest was filed concerning two of the offered parcels. Leases on the protested parcels will be withheld until the protest is resolved.
Receipts from federal oil and gas leases are shared with the state or county where the lands are located. All leases are issued for a 10-year term.
Leasing and development of oil and gas resources on federal mineral estate is a multi-step process that develops over numerous years. The first step is development of a land use plan which incorporates a Reasonably Foreseeable Development (RFD) scenario for oil and gas. The RFD is a long-term projection of oil and gas exploration, development, production, and reclamation activity and is used to help determine appropriate land use. The BLM or United States Forest Service (USFS) develops the land use plan with the help of the cooperating agencies (such as counties, state agencies, and other federal agencies) and the general public. The BLM and USFS are mandated by law to make decisions concerning the availability of federal mineral resources for leasing. The land use plan determines what areas are open to leasing with standard resource protection stipulations, what areas are open with additional specific resource protection stipulations and what areas are closed to leasing.
The next step is market-driven. To meet consumer demand, industry nominates parcels it is interested in leasing. Provided the nominated lands are in areas that are available for leasing as determined by the land use plan, these parcels are then offered for lease at auctions that the BLM holds every other month. Parcels are leased to highest bidder with the appropriate resource protection stipulations attached.
The final step is the drilling and development of leases. Prior to actual drilling and development, industry must submit their plans for drilling which incorporate the lease stipulations. The BLM analyzes the proposals in accordance with the National Environmental Policy Act and other applicable laws. The proposal is also reviewed to determine if it is in conformance with the well spacing set for that area by the state oil and gas regulatory agency. Based on the analysis, conditions of approval may be attached to the approved permit to provide additional resource protection beyond the lease stipulations. As development continues, it is monitored to ensure continued compliance with the land use plan.
The BLM and the USFS are continually updating land use plans. Oil and gas leasing decisions are one of many land use allocations completed as part of a land use plan. The BLM encourages the public, interested organizations, and local, state, and federal agencies to become involved in its planning process. Information on the BLM’s land use planning efforts can be found at http://www.blm.fov/mt/st/en/prog/planning.html