HELENA — Companies are set to bid on eight parcels of Montana’s public lands as part of an oil and gas lease auction scheduled for June.
In Montana, the Bureau of Land Management put up parcels for bid in Fallon, Powder River, Richland, and Roosevelt counties. The majority of those parcels are in Powder River County. BLM considered putting up an additional six Powder River County land parcels but decided against it because the acres were within, or next to, the pronghorn migratory corridor.
After a record drought in summer 2021, Montana’s pronghorn population declined by about 22 percent. The BLM said waiting will allow time for more data collection on pronghorn movements in the area. Some of the parcels in Powder River also had notable sage-grouse habitat.
The leases allow companies to hold the land for mineral development, however it does not give companies authority to drill an exploration well. To extract oil, companies will have to get further approval from BLM. The Powder River parcels are the most likely to be developed for oil and gas extraction, according to a BLM environmental assessment of the parcel sale. The Powder River parcels are surrounded by a handful of successful oil fields dating back to the 1960s.
The lease offering will be the first onshore sale of public oil and natural gas leases under President Joe Biden’s administration. BLM also announced an increase of the royalty rate to 18.75 percent for the leases sold this year, which is about a 50 percent increase from the previous rate of 12.5 percent. The new federal royalty rate is closer to Montana's royalty rate of 16.67 percent. For leases on private land, royalty rates range between 12 to 25 percent.
Existing federal oil and gas leases in Montana produced about $1.9 million in rental income and bonus bid payments between 2016 and 2020. The federal government takes 51 percent of that revenue, while the rest goes to Montana. The state distributes about 25 percent of the revenue it collects to the local governments in the counties with the parcels.
If the eight parcels are leased, BLM projected a revenue of about $42,000 for Montana and about $14,600 for local governments over the 10-year period.
"Honestly, we don't see a lot of oil and gas extraction in Montana these days," said Al Nash, spokesperson for BLM's Montana and Dakotas' state office.
The sale of parcels in Montana and the Dakotas will be small compared to the sales in many other states, Nash said.
A 30-day public protest period will end at 4:30 p.m. on May 20. People can submit protests on the offered parcels electronically. Emailed protests will not be accepted.
Protests can also be sent by mail to:
Bureau of Land Management
Montana/Dakotas State Office
Branch of Fluid Minerals
5001 Southgate Drive
Billings, MT 59101
Or faxed: (406) 896-5292
The parcel auction will be on June 28 and can be accessed at www.energynet.com.
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