As the federal fiscal year comes to a close Friday, oil and gas leasing activity in the Rockies states declined markedly, according to the Denver-based Western Energy Alliance (WEA), a trade association for more than 400 exploration and production (E&P) companies. With the exception of North Dakota, all Rockies states leasing activity has declined since 2008, WEA said.
Lease parcels offered on federal lands have declined 70%, acreage by 81% and revenue by 44% over the past three federal fiscal years, said WEA, noting that the trend runs counter to its “Blueprint for Western Energy Prosperity,” a white paper touting the need for greatly increased E&P activity on federal lands as a means of reducing the nation’s foreign oil imports.
WEA officials did acknowledge “a few bright spots” — principally related to the Bakken formation in North Dakota and Montana, and the Niobrara in Wyoming. “North Dakota leasing, while surpassing 2008 only by 416 acres, garnered $104 million in revenue, up 112%,” WEA said. In Montana, lease acreage offered dropped 58%, but revenue was up 119%.
In Wyoming, WEA said the federal Bureau of Land Management (BLM ) had its most profitable sale ever, generating $49 million in August. Despite this, overall 2011 revenues were down 33%. At a time in which the federal government is trying to slash deficits, the producers are urging the government to offer more lease sales on federal lands.
“The Bakken [Shale] and Niobrara formation are contributing lease revenues that help to reduce government deficits today while holding the promise of future development and production,” said Kathleen Sgamma, WEA director of government and public affairs. “High-value lease sales in these areas indicate industry interest and the potential for significant new government revenue.”
Sgamma said that now that BLM has worked through a new set of leasing policies, WEA is hoping the upcoming 2012 fiscal year will see a lot more acreage offered for lease. She argued that if BLM can more closely align with the E&P industry it could result in greater job creation and economic stimulus throughout the West.
Declines in leasing in recent years have meant jobs and revenue opportunities have been lost in the Rockies, according to WEA. Colorado BLM offered a “shockingly low” four parcels this year; Utah offered 17, the group said.
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