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New Mexico BLM Lease Sale Sets Permian-Driven Records

With opponents peacefully protesting, the U.S. Bureau of Land Management (BLM) held a record-breaking $145.6 million oil/natural gas lease sale on Thursday in Roswell, NM.

This was a sale that was rescheduled from July 20, and it set new highs for a single parcel, bid-per-acre, and average bid-per-acre, according to BLM.

Thursday's auction involved 36 federal leases covering 13,876 acres in southeast New Mexico's Lea and Eddy counties, part of the resurgent Permian Basin and including BLM's Pecos District Office. The total revenues included rental and administrative fees.

The sale averaged a record-breaking $10,489/acre, according to a BLM spokesperson in Roswell. "One parcel broke total bid-per-parcel and bid-per-acre records," she said.

Environmentalists from three organizations -- WildEarth Guardians, Food & Water Watch, and the Center for Biological Diversity -- said some of their members came from throughout the state to urge the Obama administration "to defend the climate and American public lands" by following their plea to "Keep It in the Ground."

The environmentalists claimed responsibility for causing BLM to abruptly relocate the July 20 lease sale from Santa Fe to Roswell. "Across the country, people are demanding protection of our land, water and climate by keeping fossil fuels in the ground," said Rebecca Sobel, a senior campaign official with WildEarth Guardians.

Sobel told NGI on Friday that although BLM reaped record revenues, the public is paying "way more for these oil/gas leases. [Our] conservative estimate on climate costs associated with the carbon emissions that would result from development of these leases is more than $170 million, which doesn't factor in all the public health costs."

On a national basis, the Keep It in the Ground advocates have continued to target and disrupt BLM lease sales. The agency said it is considering taking some sales online beginning later this month (see Daily GPI, Aug. 30). In other federal agency lease sales the online approach has appeared to stymie protesters (see Daily GPI, Feb. 12; March 9).

"We had a small group of protesters, and they could not have been more respectful," said the BLM spokesperson. "They presented their case with their signs and protest, but they did not interrupt the sale."

In the lease sale, Birmingham, AL-based Energen Corp. set new records, bidding $35,500/acre for a total of $77.2 million on parcel No. 15, which encompasses 2,160 acres in Lea County. This high per-acre bid exceeded the previous record of $34,000/acre set in 2014 at a BLM Montana auction.

The per-parcel price of more than $77 million shatters the previous record of $27.9 million set in 2004 for a parcel in a BLM New Mexico sale.

Record revenues from the sale, along with the 12.5% royalties collected from any future production on those leases will be shared between the federal government and the state of New Mexico on a 52-48% basis, respectively. New Mexico stands to receive nearly $70 million from Thursday's auction ($69.9 million), according to BLM.

BLM's oil/gas leases are awarded for a period of 10 years and for as long thereafter as there is production in paying quantities. The leases carry various environmental conditions, including when drilling can occur or restrictions on surface occupancy, and once an operator proposes exploration or development activity on the BLM lease-issued land, further environmental analysis is required.

BLM manages more than 245 million acres of public land, primarily in 12 western states, including Alaska.

For insights on the Permian Basin shared by the producers most active in the play, check out NGI’s latest special report, Permian Basin: ‘The Mother Lode.’

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