The Bureau of Land Management (BLM) has begun a one-month scoping process to take comments on potential oil and natural gas lease sales across parts of Nevada and Utah.

The Interior Department agency is reviewing potential auctions for up to 35 parcels in Nevada totaling 63,604 acres and 18 parcels in Utah totaling 31,808 acres.

The lease sales, if approved, would include updated fiscal provisions authorized by the Biden administration’s Inflation Reduction Act (IRA). The provisions require minimum bids of $10/acre for all offered parcels, an increase from the $2 minimum set in 1987. 

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Royalty rates would increase to 16.67% from the previous minimum of 12.5%. In addition, rental rates would be $3/acre for the first two years, $5 for years three through eight, and $15 in years nine and 10. Prior to the IRA, rental rates originally set in 1987 were $1.50/acre for the first five years and $2/acre for each year thereafter.

BLM also updated the policy guidance to implement the IRA provisions, which include the right to refuse anonymous nominations for land to be sold at auction and prioritizing leasing near existing drilling developments and away from protected lands. The update also tightens the rules that govern permit extensions to drill.

More Oversight Imminent?

According to the analyst team at ClearView Energy Partners LP, the updated guidance incorporates the IRA changes, but it also imposes “new strictures that we consider more discretionary in nature.” Analysts also think new regulatory proposals “appear imminent.”

The White House Office of Management and Budget earlier this month completed a regulatory review of the BLM’s federal lands waste prevention rule, which includes methane controls. The BLM’s updated guidance, and “green-leaning data points,” reinforced the ClearView analyst team’s expectations that Interior’s Bureau of Ocean Energy Management may soon finalize an updated oil and gas offshore leasing program.

“On their own, we continue to regard these tighter terms as likely to diminish operator interest, all other things being equal,” the analysts said. The BLM :could potentially structure leasing maps that restrict acreage to parcels that might appeal less to bidders, perhaps because they are less prospective and/or further from sites of existing production.”

The guidance indicates that BLM plans to cancel any expressions of interest, or EIOs, pending for three years or more because “the longer it takes to offer a parcel on a lease sale, the more likely it is that the interest in the parcel may diminish,” it said.

“In short, by making the denominator smaller instead of making the numerator bigger, the administration may be looking for a way to keep green energy moving while minimizing federal oil and gas leasing,” the ClearView analysts said.