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BLM to Test Online Lease Auctions

The Bureau of Land Management (BLM) is borrowing a page from eBay to test an online platform that could replace the traditional oral auctions for oil and natural gas lease sales.

BLM's Colorado state office will host a pilot project at an auction scheduled Sept. 9-17 to evaluate the potential savings and benefits to federal officials. The parcels now are available to view online.

The model used by BLM is based mostly on eBay's online system, said BLM's Greg Shoop, who is managing the pilot project. In traditional BLM auctions only one parcel at a time is auctioned -- and a bidder has to be at the auction site. Using the online system, all of the parcels could be viewed and bid on for a longer period of time, Shoop said.

The site, to be managed by Amarillo, TX-based EnergyNet.com, allows prospective bidders to see the parcels and register to bid. There also is to an online tutorial at the site, Shoop said.

"The system will be an interactive, online auction website," said BLM. "Bidders will register on the site, be assigned a bidder number and place bids on listed parcels." Information on the sales parcels is provided in a format similar to the current Notice of Competitive Lease Sale and available online for at least 60 days before the beginning of the bidding period.

Similar to other online auctions, BLM bidders would be able to place both standard and optional proxy bids once the auction opens. With the auction scheduled to close at a specific time on a specific date, participants would be able to place a single proxy bid and monitor the auction's progress remotely.

EnergyNet.com, which has conducted online oil and gas leases since 1999, developed the system to ensure the security of bidding and payments by requiring bidders to sign a "commitment to pay," through the use of the pay.gov electronic payment system. Telephone support is to be provided during the auction.

Once the first online auction is completed, BLM may recommend an amendment to the Mineral Leasing Act to allow for Internet lease auctions on a permanent basis. If the amendment is made, BLM would incorporate the Internet lease auctions into its National Oil and Gas Lease Sale System to be used by other BLM offices.

"If the pilot is successful, the BLM believes oil and gas leasing will be opened up to a broader audience, and there could be significant cost savings for the BLM and the [Department of] Treasury," an official said. "It is expected that lease sale participants will enjoy some cost savings, too, as they will not have to travel to the site of the oral auction in order to participate."

The first set of parcels will be available to bid on Sept. 9, and a second set will be available beginning Sept. 10. The leases available may be viewed at www.blm.gov/leasingpilot/.

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