The Biden administration keeps offering public land in Wyoming to oil and gas companies. They’re still not interested.

Dec 11, 2023

By Aaron Weiss

New analysis of lease sales finds a tiny fraction of parcels brought in almost all the revenue

Despite claims from Wyoming politicians that the Biden administration is “at war with American energy,” a new analysis by the Center for Western Priorities finds that in 2023, oil and gas companies didn’t bother to bid on nearly half of the acres of public land the Biden administration offered for drilling in Wyoming.

In 2022, the Inflation Reduction Act (IRA) overhauled America’s oil and gas leasing system, raising the minimum bids and rental rates that oil and gas companies pay to taxpayers for the privilege of extracting publicly-owned resources. The IRA left the oil and gas industry in the drivers’ seat when it comes to leasing public lands, effectively requiring the Bureau of Land Management (BLM) to offer leases on at least half of the acres nominated by drillers in any given 12-month period.

Under the new law, the Interior department has now held three oil and gas lease sales in Wyoming, in JuneSeptember, and November 2023. The auctions offered up nearly 230,000 acres of national public land and brought in more than $30 million in revenue.

closer look at the numbers, however, reveals that oil and gas companies had tepid interest in almost all of the land the industry itself nominated for leasing and that nearly all of the revenue from the auctions came from a miniscule portion of the acres offered. Far from a war on oil and gas, the 2023 lease sales suggest that the oil industry has already leased the vast majority of public land in Wyoming that is ever likely to produce oil, and very little unleased land in the state is of serious interest to oil and gas companies.

By the numbers

Even though almost every parcel that was offered for lease was nominated by oil and gas companies, drillers didn’t even bother to bid on about half of the acres BLM offered. Even as BLM offered fewer and fewer acres in subsequent sales, interest in the acres offered did not increase significantly. Keep in mind the public land included in these lease sales is largely chosen by the oil and gas industry itself, and if drillers nominate more acres for leasing across the West, BLM is legally required to offer at least half of them at auction.

Of the acres that received bids, three out of every five sold for the minimum bid of $10 per acre, meaning only one company was interested in the parcel. Almost 80 percent of the acres BLM offered didn’t sell at all or sold for the minimum bid. This shows how little overall interest there is in new competitive leasing in Wyoming.

As industry interest in leasing has waned this year, the revenue to taxpayers has declined. The most recent auction, in November 2023, brought in a quarter of the revenue of the previous lease sale. Furthermore, while the statistical average bid for leases this year was $874 per acre, the median bid was just $21, meaning an equal number of bids fell above or below $21 per acre. That gap between the average and median shows that the revenue is heavily skewed by a small handful of parcels that oil and gas companies find valuable, while the vast majority of public land leased by drillers has negligible value.

In both the second and third quarter lease sales, the ten parcels that brought in the most revenue covered less than four percent of the acres offered for lease, while bringing in more than 80 percent of the revenue. In the most recent lease sale, a single parcel covering just 720 acres brought in $2.6 million, or nearly 80 percent of the revenue from the entire lease sale.

Across 2023, the 20 parcels that brought in the largest bonus bids represented 84 percent of the lease sale revenue, while covering just 3.5 percent of the acres BLM offered for lease. (8,000 acres out of 230,000 acres offered.)

The big picture

Even though oil and gas companies drive the lease nomination process, they’re not interested in spending money on most of the acres they nominate. That’s because the vast majority of public land in Wyoming that will ever produce oil and gas has already been leased.

As of the 2022 fiscal year (the most recent data available), oil and gas companies were sitting on 3.8 million acres of leased but non-producing land in Wyoming — half of the acres the industry had under lease. As of September 2023, drillers had nearly 2,000 approved but unused permits to drill in Wyoming — land that is ready to produce oil, but where companies are not bothering to drill.

In light of those massive numbers, it’s unsurprising that there’s such little interest in new leasing in Wyoming. With nearly eight million acres already under lease, oil and gas companies nominated less than 140,000 new acres for leasing this year. And as the auction results show, only a tiny sliver of that is land that’s valuable enough for drillers to spend real money to lease.

What this means for Wyoming’s future

The Bureau of Land Management is currently updating its land use plan for the Rock Springs field office, a process that has drawn ire from Wyoming politicians. Wyoming Governor Mark Gordon said the Biden administration has “put its foot on the neck” of his state. A state lawmaker claimed the plan was the worst disaster in American history, affecting “more people than the Civil War, Pearl Harbor and 9/11 combined.”

In reality, the 1,350 page proposal covers 3.6 million acres of national public land in Southwest Wyoming, 1.8 million acres of which are already leased to oil and gas companies. BLM’s preferred version of the plan would prioritize migration corridors for elk, deer, and bighorn sheep through the Red Desert, while still honoring all existing oil and gas leases and allowing new oil and gas leasing on 1.4 million acres of public land. That’s ten times more land just in one field office than the oil and gas industry nominated for new leasing this year across the entire state.

It’s hard to see how a plan that leaves so much land open for future leasing could be a disaster for Wyoming’s oil and gas industry when that industry is nominating so little land for new leasing today and not even bidding on half of what the BLM puts up for auction.

The bottom line is that drillers know where the oil is in Wyoming. They’ve been doing this for decades. They’ve already leased nearly every acre of land that is ever likely to produce oil — and the numbers prove it.

Featured image: BLM Wyoming