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Federal oil and gas lease sales to resume Monday with fewer acres, higher rates

April 15, 2022

By MATTHEW BROWN Associated Press, Oil City Staff

CASPER, Wyo. — After a moratorium imposed shortly after President Joe Biden took office, the Interior Department announced Friday that lease sales for oil and gas drilling on federal land will resume Monday, though with fewer acres available and a higher cost to industry.

The administration was ordered last year to resume the sales by a federal judge in Louisiana. The announcement also comes amid calls by Republicans to expand U.S. crude production and rein in higher gasoline prices contributing to record inflation.

On Monday, sales notices will be announced on roughly 144,000 acres of federal lands in nine states — Wyoming, Colorado, Utah, New Mexico, Montana, Alabama, Nevada, North Dakota and Oklahoma.

Interior Department officials declined to specify which states would have parcels for sale or to give a breakdown of the amount of land by state, saying that information would be included in Monday’s sales notice.

The roughly 225 square miles on offer is about an 80% reduction from the acreage originally nominated by the industries, according to the Associated Press, and 30% less than the administration originally announced last November.

The Interior Department also announced a 50% increase in the royalty rate (from 12.5% to 18.75%), the first such increase in decades, to “ensure fair return for the American taxpayer and [be] on par with rates charged by states and private landowners,” the Interior Department said.

The department notes that the “significantly reformed” lease terms reflect the need to balance development with curbing greenhouse gas emissions while protecting wildlife and sensitive cultural areas.

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Wyoming Governor Mark Gordon issued a statement calling the announcement of lease sales “welcome,” but “long overdue.” Gordon added that the royalty rate increase and reduction in available acreage might have “a chilling effect on Wyoming companies as they prepare their bid.”

The move also drew the ire of environmentalists. Nicole Ghio with the environmental group Friends of the Earth said Biden was putting oil industry profits ahead of future generations that will have to deal with the worsening consequences of climate change.

“If Biden wants to be a climate leader, he must stop auctioning off our public lands to Big Oil,” Ghio said in an emailed statement.

American Petroleum Institute Vice President Frank Macchiarola said officials had removed some of the most significant parcels that companies wanted to drill while adding “new barriers” that would discourage companies from investing in drilling on public lands.

Lease sales and royalties that companies pay on extracted oil and gas brought in more than $83 billion in revenue over the past decade. Half the money from onshore drilling goes to the state where it occurred.

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