CHEYENNE, Wyo.— Low prices for oil and natural gas have dampened petroleum developers’ enthusiasm to lease federal and state land in Wyoming for oil and gas drilling.
A federal oil and gas lease sale in Cheyenne this week netted the least revenue of any sale since the aftermath of the Great Recession. A state oil and gas lease sale in March also had weak results.
Looking ahead to the next state sale in July, the Wyoming Office of State Lands and Investments is evaluating whether it’s prudent even to offer some of the better state lands at what could prove to be discount prices, Assistant Director Jason Crowder said.
“It’s likely there will be less, or different, lands that may not bring as much money even in a good market,” Crowder said Thursday.
Tuesday’s U.S. Bureau of Land Management auction of the right to drill BLM land in Wyoming brought in $688,000. The last time a BLM lease sale in Wyoming brought in that little was August 2009 with $651,000.
Federal lease sales take place each February, May, August and November, and in recent years, have brought in multi-millions to tens of millions. A BLM lease sale in February netted $8.5 million and one in 2013 almost $34 million.
The federal government splits the revenue with Wyoming.
Not only were the combined bids and rental fees from Tuesday’s BLM sale low, the $21-per-acre bid was the lowest since August, 2009, when the average bid per acre was $17. Recent average bids peaked at almost $605 per acre in August 2013.
The March auction of state oil and gas leases brought in $949,000, with bids averaging about $18 per acre. The previous state sale in November brought in almost $3.5 million, with bids that averaged more than $48 per acre.
The leasing slowdown accompanies a slowdown in drilling. The number of active oil and gas rigs in Wyoming, as reported weekly by the oilfield services company Baker Hughes, has fallen to lows unseen since the late 1990s.
For leasing to pick back up, oil and gas prices will need to be high enough to justify drilling again.
“It’s going to be largely reliant on the industry and what they feel prudent business decisions will be,” Crowder said.
After falling below $50 a barrel, oil prices have been recovering. This week, they were up around $60 but still far below last year’s prices above $100.
Natural gas prices at the Opal Hub in western Wyoming have been around $2.50 per million British thermal units, down from around $4.50 a year ago.
This article was written by Mead Gruver from The Associated Press and was legally licensed through the NewsCred publisher network.