BLM Oil and Gas Lease Sale Sets Record for California

The Bureau of Land Management in California received a record $2700 per acre bid at a recent oil and gas lease sale held in Sacramento. Overall, the lease rights for 31 parcels totaling 19,620 acres were sold competitively for over $723,292 at the sale. Under federal law, 50 percent of the revenues collected are returned to the states where the oil and gas activity occurs.

The oil and gas lease rights for twenty-two parcels totaling 12,843 acres were in Kern County, four parcels equaling 2,490 acres were in San Luis Obispo County, three parcels totaling 4,285 acres were in Santa Barbara County, one 160 acre parcel was in Merced County and one parcel of 42 acres was in Ventura County. The new leases will be issued for a period of 10 years for each of the parcels.

Thirty-two parcels were offered for oil and gas leases through an oral auction at the Federal Building on Cottage Way in Sacramento, June 14. Bidding began at $2.00 per acre for each parcel. The average bid per acre was $35.16. The total acreage offered was 19,780 acres in the five counties. One parcel remains available for 'noncompetitive' leasing.

BLM Field Manager Ron Huntsinger said some of these parcels involve what is referred to as "split-estate" lands, where BLM leases the subsurface mineral estate owned by the U.S. under private lands. Such situations are not unusual, with more than 58 million acres of split estate nationwide, many dating back to transfers under homesteading laws. Huntsinger emphasized that surface landowner, as well as the oil and gas lessee/developer have clearly defined rights, responsibilities and opportunities in each phase of the leasing and development of oil and gas resources.

The BLM reviews every parcel nomination for lease to ensure that each parcel conforms to the land use plan, which has been developed with broad public input. The initial term for a federal oil and gas lease is 10 years, but production can extend the lease period. Successfully bidding on and acquiring the oil and gas lease gives the lessee or operator the right to enter and occupy as much of the surface as is reasonably required to explore, drill, and remove the oil and natural gas resource on the leasehold. However, this right is not absolute. The BLM works to encourage coordination and cooperation among all parties that have rights and responsibilities in split estate situations.