The Bureau of Land Management (BLM) in Wyoming is trying to trim a two-year backlog of natural gas and oil leases and plans to issue 145 leases auctioned two years ago that have been held up by environmental protests. However, a federal auction held last Tuesday may only add to the backlog.

Since June 2008 groups have protested all but 74 of 1,435 gas and oil leases offered by BLM's Wyoming office, said spokeswoman Mary Wilson. The recent auction was no different; groups protested almost all of the 76 leases offered.

BLM continues to generate revenue, but the state is not seeing any of it until the protests are resolved and the parcels awarded. In Tuesday's auction BLM generated almost $3.6 million for leasing rights and rental fees on 75 of 76 parcels. Nearly half of the bid and rental receipts are to go to the state.

Bids ranged from the federally mandated minimum of $2/acre to a high bid of $430/acre; a parcel with the highest bid, for $423,600, was awarded to Denver-based Contex Energy Co. However, with protests to review, most of the newly awarded leases aren't expected to be issued anytime soon.

Many of the latest protests center around parcels auctioned in northeast Wyoming where the Newcastle Field Office is completing amendments to the resource management plan to account for concerns about sage grouse, a candidate species for Endangered Species Act (ESA) protection.

In addition to concerns about sage grouse habitat, groups have protested some leases' proximity to big-game habitat as well as citizen-proposed wilderness areas. Some also are concerned about drillers' likely contribution to greenhouse gas (GHG) emissions.

The delays are a thorn in the side of not only energy interests but also Wyoming Gov. Dave Freudenthal (D), who urged Interior Secretary Ken Salazar last January to expedite BLM's review of the protested leases. Freudenthal estimated then that the protested leases amounted to around $26 million in uncollected state revenues.

"Schools, Main Street businesses and other important public and private sector services are potentially at risk in the absence of clear guidance from the department," Freudenthal wrote.

BLM postponed issuing the leases that were protested in the 2008 sale until the U.S. Fish and Wildlife Service ruled on whether to list the sage grouse under the ESA. However, federal officials in March precluded listing the sage grouse because of other higher priority species. That allowed BLM to move forward on some of the protested leases.

However, of the 213 leases offered at auction two years ago, 43 are to remain deferred because of concerns about sage grouse impacts, Wilson said. Producers that bought the leases may receive a refund or await further analysis on the parcels.

BLM plans to evaluate the remaining disputed leases, which are worth an estimated $90 million, in chronological order according to when they were sold. The agency is vetting each disputed lease using new screening criteria implemented earlier this year.

The criteria, which was developed in collaboration with the Wyoming Fish and Game Department, evaluate whether a proposed lease is in a state-designated sage grouse "core habitat" area and, if so, whether the parcel is located on prime habitat and within a large enough swath of leasable land. BLM also is considering the leases' impacts on possible GHG emissions and whether they were in citizen-proposed wilderness areas.

In the agency's protest evaluation letter, BLM Wyoming Deputy State Director Larry Claypool said it was premature to conclude that leasing parcels in core sage grouse areas would harm sensitive species because operators have to obtain additional permits to begin development.

"Issuing an oil and gas lease does not cause immediate surface-disturbance," Claypool wrote. "The lease may never result in drilling or surface-disturbing activities, especially when ESA is concerned. There is great uncertainty as to whether, when and where a well would be drilled on a lease."

Several leases are within the state's designated core sage grouse areas, but the lease parcels are reviewed by the state's Game and Fish Department and the governor's office before they are auctioned, said Freudenthal deputy chief of staff Ryan Lance.

"All in all, we're pretty excited that they are starting to move leases again," Lance said. "We're comfortable with the deferrals as long as they are time-limited to correct the deficiencies."

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