General Oil and Gas Leasing Instructions
The BLM generally issues two types of leases for oil and gas exploration and development on lands owned or controlled by the Federal government -- competitive and noncompetitive.
Congress passed the Federal Onshore Oil and Gas Leasing Reform Act of 1987 requiring that all public lands available for oil and gas leasing be offered first by competitive leasing. The BLM may issue noncompetitive leases only after the agency has offered the lands competitively at an auction in which the lands do not receive a bid.
The maximum competitive parcel size is 2,560 acres in the lower 48 states and 5,760 acres in Alaska outside of the National Petroleum Reserve-Alaska. The BLM issues both competitive and noncompetitive leases for a 10-year period.
BLM State Offices conduct lease sales quarterly when parcels are available for lease. Each State Office publishes a Notice of Competitive Lease Sale (Sale Notice), which lists parcels to be offered at the auction, usually 45 days before the auction. This notice is posted in the National Fluids Lease Sale System and by the State Office that administers the sale. The Sale Notice specifies lease stipulations applicable to each parcel. The BLM may conduct lease sales in-person or through internet-based auctions.
Lands offered in the Sale Notice come from three sources:
- Lands identified by informal expressions of interest from the public;
- Lands included in offers filed for noncompetitive leases; or,
- Bureau motion, or lands identified by the BLM.
The successful bidder must submit a properly executed lease bid form, which constitutes a legally binding lease offer. The bidder must also pay an administrative fee, equal to the first year's advance rental ($1.50 per acre or fraction thereof), and not less than a $2-per-acre minimum bonus bid. The balance of the bonus bid must be paid within 10 working days from the last day of the auction.