A recent oil and gas lease sale in Wyoming netted just over $27,000, a stark contrast to the state’s historical norms for oil-rich land sales, E&E News reports.
This diminished outcome reflects a shift in industry dynamics, with developers showing decreased interest following regulatory changes implemented by the Biden administration.
The Bureau of Land Management (BLM) offered four leases in Wyoming on Wednesday, but only two were purchased. This marks a significant downturn in activity compared to previous years. The administration has increased fees and regulations for drilling on public lands, part of a broader effort to reduce fossil fuel development and associated environmental impacts.
“This is probably the new normal for oil and gas lease sales,” said Sarah Stellberg, a staff attorney with Advocates for the West.
Stellberg noted that the changes have affected the industry’s approach.
Industry leaders, like Peter Wold, co-owner of Wyoming-based Wold Oil Properties, argue that the new fees and regulations are discouraging developers. Wold believes the Biden administration is indirectly trying to curtail fossil fuel production through these measures.
Wednesday’s sale is indicative of broader industry challenges, including moderate oil prices and increased regulatory hurdles. Wyoming’s Powder River Basin, where some leases were located, faces additional challenges due to its distance from key oil pricing hubs and limited pipeline access.
Chuck Mason, an energy expert from the University of Wyoming, said the current oil price of around $70 per barrel isn’t enough to drive a significant increase in drilling activity.
Despite the recent slowdown, the state has seen considerable interest in the Powder River Basin in past years. However, much of the prime drilling acreage has already been leased, complicating efforts for new developers to establish large-scale projects.
The recent lease sale follows ongoing changes in federal oil policies, including a pause on new oil leases in 2021 and subsequent regulatory updates under the Inflation Reduction Act, which introduced higher royalty rates and increased cleanup requirements.
