Feds net $240 million selling oil & gas leases in FY11

The federal government raked in $240 million by leasing public lands for oil and gas exploration during the fiscal year that ends this Friday — with much of the revenue coming from the booming Bakken formation.

North Dakota alone was responsible for $104 million of the public oil and gas leases sold in fiscal 2011, according to an analysis released today by the Western Energy Alliance, an industry group.

Wyoming was also a popular destination for gas producers, thanks to the Niobrara Shale formation in the southeastern part of that state. Overall, energy companies shelled out $66 million snapping up 218,000 acres in the state, though that represented a 15 percent decline over the revenue in fiscal 2010.

Kathleen Sgamma, director of government and public affairs for the Western Energy Alliance, said the revenues show continued interest in developing the region.

“The Bakken and Niobrara formations are contributing lease revenues that help to reduce government deficits today, while holding the promise of future development and production,” Sgamma said in a statement. “High value lease sales in these areas indicate industry interest and the potential for significant new government revenue.”

Overall the Bureau of Land Management sold 452,434 acres in the western states of Colorado, Montana, New Mexico, North Dakota, Utah and Wyoming during fiscal 2011 — a decline of 214,456 acres, or 32 percent, from the previous year.

In Colorado, 4,392 acres were up for grabs, compared to 52,594 in fiscal 2010. However, the Bureau of Land Management hopes to sell nearly 42,000 acres during an auction of Colorado oil and gas leases in November.

“These numbers clearly show there is interest in producing from public lands in the Rockies, but the government is constraining access,” Sgamma said. “Without access to public lands, oil and natural gas companies will not be able to achieve the full job and economic growth potential of the West.”

Matthew Garrington, deputy director of the Checks and Balances Project, noted that the current stats reflect changes in drilling activity in the region. With natural gas prices low and oil prices high, more companies are turning their attention to extracting shale oil from private land.

“What we’re really seeing happening is a shift in where drilling is occurring based on economics,” Garrington said. “Oil prices went through the roof, so it shouldn’t be surprising that production has moved to shale oil plays.”

Garrington noted that rig activity is nearing a 20-year high, even if much of that activity is on private land. “We’re seeing record levels of drilling activity right now,” he said.

According to the Bureau of Land Management, 2010 was the second-most productive year for natural gas production on record, with 3 trillion cubic feet extracted from public lands. The BLM also reported that more than 114 million barrels of oil were produced from public lands managed by the agency in fiscal 2010, the highest in 13 years.

The bureau attributes some of the decline in offered acreage as a result of declining industry expressions of interest — the first step in planning for lease sales. BLM plans sales based on industry nominations, and a drop in the nominations generally decreases the final amount of parcels and acres that are put on the auction block.

The agency also has instituted a number of changes designed to ensure that leased public lands are more immune from legal challenges by environmentalists and others. Administration officials have noted that while the acreage offered for sale may be lower than in previous years, the parcels offered for sale have been more fully evaluated and are less likely to be protested. For instance, in fiscal 2010, just 665 of the 1,636 parcels offered for leasing were protested, compared to 1,108 of the 3,389 in fiscal 2008.