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BLM Postpones New Mexico Lease Sale for Permian Until Sept. 1

The New Mexico office of the Bureau of Land Management (BLM) said it has postponed an oil and gas lease sale of Permian Basin property scheduled for Wednesday until early September on the grounds that it wants to provide adequate public notice of the sale.

The BLM said 36 parcels in the southeast corner of the state that cover 13,876 subsurface acres of federal minerals will be auctioned from the Roswell office on Sept. 1. Thirty parcels in Lea County totaling 12,644 acres will be auctioned, as will six parcels in neighboring Eddy County totaling 1,232 acres.

BLM spokeswoman Donna Hummel told NGI's Shale Daily that the agency usually holds its lease sales at its state headquarters in Santa Fe, but on June 26 officials posted an announcement to the agency's website stating the sale originally scheduled for Wednesday would be held in Roswell instead. She said the change was made in part to give the public in the southeast part of the state, who may not be able to travel to Santa Fe, the opportunity to observe a lease sale.

Other reasons for moving the sale included holding the auction near the location of the actual parcels being auctioned, and that the local office in Roswell supported holding the auction there.

"There's nothing precluding us from moving [a lease sale], in this case to southeast New Mexico, where the parcels are located, to help the public better understand how a lease sale works," Hummel said Monday. "That was our decision. The only reason we're postponing it is because there was a sense that not everyone who seems interested at this moment in time was aware that change of location had been made.

"There's nothing to hide. It was just one of those things where we decided to give adequate notice to everyone, including those that don't generally monitor our web page."

Several environmental groups, many of whom subscribe to the "Keep It In The Ground Movement," claimed credit for forcing the BLM to change the date of the auction. WildEarth Guardians claimed the change was made "in the wake of public pressure" and alleged only oil and gas producers were notified of the change in venue from Santa Fe to Roswell.

"Postponing this lease sale is a start, but cancelling it altogether is really what needs to happen," said WildEarth spokeswoman Rebecca Sobel. "The Obama administration has leased 10 million acres. Industry holds leases that will last for decades. Not another acre should be leased under this controversial program."

Eleanor Bravo, spokeswoman for Food & Water Watch, added the BLM "must continue to be held accountable to include the public in their actions with what are supposed to be public lands. We will no longer tolerate secret deals."

Hummel dismissed the environmental groups' claims that they forced the delay. "They like to take credit, but our responsibility is keeping bidders, employees -- and for that matter, protesters -- safe and secure, but most importantly having a successful sale," she said. "Just to be absolutely clear, we want to be transparent. There are no issues with moving this sale. We made the decision to postpone for five weeks and still hold the auction with all of the parcels in Roswell."

BLM said the oral auction is begin at 9 a.m. at the Roswell Convention and Civic Center, 912 North Main St., in Roswell. Only oral bids will be accepted, and the minimum acceptable bid is $2/acre. Leases will be awarded for a period of 10 years, as long as oil and gas are being produced in paying quantities from the lease.

According to BLM’s Ross Klein, a natural resource specialist, the parcels being auctioned are prospective to the Wolfcamp and Bone Spring formations in the Delaware sub-basin of the Permian. Those plays, he said Monday, "are the two dominant formations being targeted by operators."

Last week, Baker Hughes Inc. reported that four rigs were added in New Mexico (see Shale DailyJuly 15). Analysts with Wood Mackenzie also found that Permian Basin projects in the Wolfcamp need an average of around $39/bbl to be commercially viable, while in the Bone Spring development hinges on prices averaging $37/bbl (see Shale DailyJuly 13).

Eddy and Lea counties are two of 11 counties in New Mexico and Texas that are considered the range of the dunes sagebrush lizard (DSL). In 2012, the U.S. Fish and Wildlife Service declined to add the DSL to a list of animals protected by the federal Endangered Species Act after regulators in both states agreed to minimize the impact from oil and natural gas development on the lizard's habitat (see Shale DailyJune 18, 2012).

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