PHASE II: Leasing
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Competitive LEASING

The Federal Land Policy and Management Act (1976)
The Mineral Leasing Act (1920)
The Federal Onshore Oil and Gas Leasing Reform Act (1987)




The Federal Onshore Oil and Gas Leasing Reform Act (1987)



The Mineral Leasing Act (1920)
Onshore Oil and Gas Order Number 1 (rev. 2007)


 The Federal Land Policy and Management Act (1976) 


The Mineral Leasing Act (1920)

A parcel of public land, identified as 'open' for leasing, now nominated for leasing

Oral bids on leases offered are taken at open auction, in this case, at a hotel/conference center

Nothing changes on the ground when a lease is issued.Nothing changes on the ground as a result of a lease being issued.


Once a parcel is leased, a rental fee is due.  The annual rental rate is $1.50 per acre for the first five years and $2.00 per acre each year thereafter. Rent is due whether the lease is in production or not.  Royalties are paid on all oil and gas produced.  The Federal government shares royalties with state governments.

Parcels in areas identified as open for leasing in an RMP may be nominated for leasing.

Anyone can nominate lands by sending a written expression of interest to the BLM State Office for the area where the lands are located.  

Nominated parcels are not automatically placed on sale.  The BLM reviews each nomination to ensure that parcels are, in fact, available and that stipulations from the RMP are attached before the lease is placed on sale.   

Leases are sold at competitive auction.  
By law, each BLM State holds lease sales quarterly. Sales are more frequent in States where the number of nominated parcels is high.  Lease sales are open to the public and are announced in advance.

Bidders often enter bonus bids, which in areas with high potential, can reach into the millions of dollars.

The successful bidder obtains the right to explore and drill for, extract, remove, and dispose of deposits of oil and gas (except helium) found on the lease.  Leases are valid for 10 years or as long as there is at least one producing well.

Exploring, drilling, extracting, removing and disposing must cause no more disturbance to the surface or to other resources than is necessary.

The BLM's mandate to manage federal lands for multiple use — described in the Federal Land Policy and Management Act of 1976 (FLPMA) — give the agency responsibility for ensuring that no activity it authorizes unduly or unnecessarily degrades the lands.

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Last updated: 10-20-2009