In an effort to modernize its oil and gas program, the Bureau of Land Management (BLM) said it will conduct lease sales online beginning next month.
Congress provided BLM with authority to conduct online lease sales as part of the National Defense Authorization Act for Fiscal Year 2015 (NDAA), which amended the Mineral Leasing Act, according to the agency.
"Prior to that amendment, the Mineral Leasing Act authorized Federal onshore oil and gas lease sales only by oral auctions," BLM said. "As result, the BLM's existing regulations referred only to oral auctions. Today's rule modifies those regulations to make clear that, as provided by the NDAA, either internet-based or oral auction procedures are permissible."
The decision to move to internet lease sales was based on the results of a successful online auction pilot BLM conducted in Colorado in 2009.
"Based on the results of that pilot, the BLM estimates that internet-based auctions could increase aggregate lease sale revenues by about $2 million a year," the agency said. "The BLM believes that online sales have the potential to generate greater competition by making participation easier, which has the potential to increase bonus bids."
BLM's Eastern States Office will hold the first auction under the new authority on Sept. 20, and the agency is evaluating other opportunities to hold additional online sales. The rule does not change the eligibility requirements to participate in lease sales or the competitive auction style employed by the BLM. Leases will still be awarded to highest bidders based on a sequential and ascending bid auction system.
The Sept. 20 lease sale will be conducted by online bidding only. BLM plans to offer 14 parcels encompassing 4,398 acres of Federal mineral estate in Kentucky and Mississippi.
The announcement comes just days after the Bureau of Ocean Energy Management (BOEM) conducted Western Gulf of Mexico Lease Sale 248 online (see Daily GPI, Aug. 24). The internet-only lease sale appeared to stymie anti-drilling protesters, who have marred several recent BOEM and BLM lease sales (see Daily GPI, Feb. 12; March 9).