The U.S. on Thursday held its first sale of oil and gas drilling rights on federal lands since passage of President Joe Biden’s landmark climate change law, attracting more than $78 million in high bids for leases in New Mexico and Kansas.
The federal auction was just the second to be held in New Mexico, the nation’s second-largest oil-producing state, since Biden became president in 2021.
Biden’s Interior Department had attempted to suspend federal oil and gas leasing to study its environmental and climate impacts, but the Inflation Reduction Act that passed last year requires some oil and gas auctions if federal rights of way are offered for renewable energy projects.
The 19 offered parcels on 3,300 acres (1,335.5 hectares) in New Mexico garnered 99.9% of the high bid total of $78.77 million, according to sale information available on the online auction platform EnergyNet.
The highest price paid for a parcel was $16.2 million for 280 acres in the state’s Eddy County. It was also the auction’s highest price paid per acre at $57,901.
The Interior Department also offered 26 parcels on 6,800 acres in Cheyenne County, Kansas. Just 18 of the Kansas parcels attracted bids, yielding a combined $70,800. All but two of those parcels sold for the minimum price of $10 an acre.
The names of the winning bidders were not disclosed.
New Mexico crude oil production was about 20 times higher than that of Kansas last year, according to the U.S. Energy Information Administration. The New Mexico parcels offered were all located in the Permian basin, the nation’s most productive oil patch.
Terms of the sale reflect new IRA requirements including royalty rates of 16.67%, up from a prior 12.5%, and bids starting at $10 an acre compared with $2 an acre before passage of the law.
The development potential of the parcels in Kansas is estimated to be 1.53 million barrels of oil and 16.66 thousand cubic feet (mcf) of natural gas, according to a U.S. Bureau of Land Management (BLM) sale document.
In New Mexico, the acreage is projected to produce 3.2 million barrels of oil and 18.61 mcf of gas.