BLM Plans to Offer 334,000 Acres in August Lease Sale
Utah BLM Director Henri Bisson joined with other state and county leaders in a press conference on Friday to discuss the economic benefits of oil and gas development in Utah and BLM's upcoming August 15 oil and gas lease sale.
The state has seen dramatic increases in leasing and development on federal lands since 2003, with market prices and discovery of new reserves in the central portion of the state fueling interest in historically non-producing areas. BLM has had three record-breaking sales in the past two years, and last year nearly 700 wells were drilled in the state compared to 378 wells drilled in 2002.
Bisson discussed the role the BLM plays in oil and gas development and how development benefits local economies. He said that the Rocky Mountain region is the largest on-shore natural gas reserve in the lower 48 states.
Federal lands managed by the Department of the Interior account for one-third of all coal, oil, and natural gas reserves.
"With demand for natural gas expected to increase 50 percent over the next 20 years and oil consumption expected to increase 30 percent, leaders of our country and state are highly interested in how to meet these future demands," said Bisson. "Utah is in a prime position to meet these demands - BLM's Vernal Field Office has the largest number of conventional oil and gas wells in the bureau, and new discoveries in central Utah hold new promise."
LaVonne Garrison, Assistant Director for Oil and Gas with the Utah School and Institutional Trust Administration directed her remarks to how leasing of BLM lands benefits the state's funding for schools and other programs.
"SITLA was organized to manage lands held in trust by the State of Utah for the benefit of 12 beneficiaries, the largest of which is the public school system," said Garrison. "Since our lands are primarily islands within the sea of federal lands in Utah, we are directly affected by BLM's actions. SITLA supports BLM for enabling responsible energy development by leasing areas for continued in-fill and new exploratory drilling."
Sevier County Commissioner Ralph Okerlund also supported BLM's decisions to offer lands for lease in the central portion of the state.
"Sevier County has seen significant economic benefits from the leasing and development of oil and gas resources on federal lands. Part of leasing revenues that the State receives are granted to the counties for transportation and other programs."
Production royalties were $179 million dollars and leasing revenues hit $36 million dollars in 2005. Half of these revenues are shared with the state. In addition, oil and gas development brings jobs and other kinds of tax revenues to Utah.
According to a report by the Utah Energy Office, the drilling of a typical well in the Uintah Basin adds approximately 15 jobs and $360,000 in additional personal income.
The August lease sale will include 334,000 acres across the state, but typically in historically non-producing areas. Prior to a wildcat discovery near Richfield in 2004, BLM had rarely received nominations by the industry for oil and gas parcels in central Utah. Since then, Utah BLM has leased nearly a million acres in its central Utah field offices.
Obtaining leases from federal, state, and private land owners is critical for companies looking to explore for new resources. Before investing in costly seismic surveying or exploratory drilling, it's important to have the mineral rights secured.
Nearly half of the parcels in this lease sale are in the Cedar City field office, an area that has seen little development. Iron County Commissioner Dennis Stowell said they are very supportive of leasing, and potential new development in their area. The area is a part of a 'central overthrust belt' that has more difficult geology to pinpoint oil and gas reserves.
BLM offers lands that have been nominated by industry, only after extensive environmental reviews to determine conformance with land use plan and consideration of any new information on other issues such as wildlife, recreation, cultural resources, water quality, among many others. When necessary, BLM applies stipulations to protect other resources or may not offer the parcels at that time. Originally, industry nominated 563,000 acres.
Some parcels were nominated on BLM lands in the vicinity of Arches National Park. BLM conducted a viewshed analysis using topographic mapping techniques, to determine the visibility of potential development on those parcels. From this visual analysis, BLM determined that any drilling and development activities on parcels four miles or more from key observation points could be shielded by topography and loss of visual acuity at that distance. For this reason, BLM deferred the parcel that was within four miles of Delicate Arch. In addition, nine parcels were eliminated and three parcels were partially eliminated from this sale because of new information regarding bighorn sheep lambing areas and migration corridors in the Arches area.
As with other sales, BLM will also offer lands that are near the Green River. BLM is only offering lands for oil and gas leasing if they have appropriate set backs from the river. With the topography of this area, these setbacks will prevent development from being seen from the river way, and inaudible after the wells are in place, if development does occur.
The offering is still subject to an administrative protest period. The protest period ended on July 31 and the BLM anticipated receiving protests from various interest groups including environmental groups. The BLM conducts an extensive environmental review of each parcel being offered and places special stipulations on areas of environmental sensitivity.
Oil and gas lease sales are conducted on a quarterly basis and are mandated by law. In 2005, Utah produced 303.6 billion cubic feet of natural gas - enough to heat approximately four million homes for one year. Utah consumes approximately half of its natural gas, making it a net exporter to other states in the region. Since 2002, the average bid per acre for a lease has grown from $10.25 to $113.70 in the state.