BILLINGS, Mont. (AP) — Energy companies bid more than $22 million to secure drilling rights on about 110 square miles (285 square kilometers) of public lands in the western U.S. on Thursday, during the first onshore oil and natural gas lease sales since President Joe Biden took office.
Leases on about 90 square miles (233 square kilometers) went unsold in the U.S. Bureau Land Management online auctions that included parcels of federal lands in seven states.
Oil and gas produced from the leases will be subject to a royalty rate of 18.75%. That’s up from 12.5% and the first royalty increase since the 1920s.
About 200 square miles (518 square kilometers) of federal lands had been offered for lease in eight western states. Most of those sold were in Wyoming, where companies paid more than $13 million for parcels totaling about 105 square miles (272 square kilometers).
A planned sale in Utah for a single, 160-acre (65-hectare) parcel did not happen and there was no immediate explanation from federal officials.
The auctions came as federal officials try to balance efforts to fight climate change against pressure to bring down high gas prices.
Biden faces calls from fellow Democrats to do more to curb fossil fuel emissions that are heating the planet, even as he’s being pushed by Republicans to expand U.S. crude production.
Critics of the leasing program pointed to unsold parcels in Wyoming, Colorado, Montana and Nevada as further evidence oil companies have enough leases and drilling permits already stockpiled to last them for years.
“It is apparent that the calls from oil and gas CEOs for more drilling on public lands were just a distraction as they aim to maximize their profits,” said Pegah Jalali, an environmental policy analyst at the Colorado Fiscal Institute.
But with several prior lease sales still tied up in court challenges from environmentalists, some companies had concerns going into the sale that they might not be able to drill on leases they acquired, said Ryan McConnaughey, vice president of the Petroleum Association of Wyoming. Those worries could have dampened interest in the latest sale, he said.
“They still haven’t issued leases from 2020,” McConnaughey said. “They paid upfront and if they can’t get to those leases, they can’t produce from them. That’s a huge tie up of capital resources.”
Oil production increased in the U.S. in recent months, but it’s still well below pre-pandemic levels. Companies have been hesitant to expand drilling too quickly because of uncertainty over how long high prices will continue.
Biden suspended new leasing just a week after taking office in January 2021. A federal judge in Louisiana ordered the sales to resume, saying Interior officials had offered no “rational explanation” for canceling them.
The government held an offshore lease auction in the Gulf of Mexico in November. A court canceled that sale before the leases were issued.