Record-Breaking Auction: US Earns Almost $80M from Oil and Gas

The United States recently held its first oil and gas drilling rights sale on federal lands since President Joe Bidens climate change legislation. This auction, which attracted significant attention resulted in bids totaling over $78 million for leases in New Mexico and Kansas.

Image by Ratfink1973 from Pixabay

It marked only the second federal auction since President Biden took office in 2021. Previously the administration had tried to pause federal oil and gas leasing to evaluate environmental and climate impact. However, the Inflation Reduction Act passed last year made it necessary to hold some auctions if renewable energy projects made federal rights of way available.

Nineteen parcels were offered in New Mexico covering 3,300 acres (1,335.5 hectares). Online auction platform EnergyNet reported that they received bids amounting to almost the entire high bid total at $78.77 million - an accomplishment indeed! 

A single 280-acre parcel located in Eddy County drew the highest bid of $16.2 million at a cost of $57,901 per acre - the highest price per acre among all parcels sold at auction.

The Interior Department also provided 26 parcels totaling 6,800 acres in Cheyenne County, Kansas; eighteen garnered bids leading to a combined total of $70,800; two were not sold at their minimum price of $10 per acre set by law before the enactment of the Inflation Reduction Act.

New Mexico is America's second largest oil-producing state with crude oil production levels approximately twenty times higher than those of Kansas last year as reported by U.S Energy Information Administration; all parcels within it are located within Permian Basin —America's most productive oil patch. Sale terms align with requirements stipulated under the Inflation Reduction Act including increased royalty rates from 12.5% to 16.67% and a minimum bid starting at $10 per acre rather than the previously required minimum bid rate of $2 per acre.

Recently, after analyzing a sales document from U.S.Bureau Land Management(BLM), it's been estimated that Kansas' land can yield roughly around1.53 million barrels of oil and 16.66 thousand cubic feet(mcf) of natural gases while Alaska reportedly could produce about 3.2 million barrels of oil and 18.61 mcf of some types of gases from their acreages. 

However, having learned about this acquisition, various environmental organizations have filed their protests urging the BM to cancel the sale, because they have strong reservations that the Biden administration has overlooked the impact of greenhouse gas emissions which might cause considerable damage to our environment. 

On the other hand, an Interior Department spokesperson did not reveal their views regarding these protests. What do you think about this situation? Feel free to add your feedback in the comments section below!

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