Sale of New Mexico public land to oil and gas nets $8M, despite opposition during Covid-19

The federal government made about $8.2 million from a sale of public land to the oil and gas industry in New Mexico, Texas and Oklahoma.

The sale was held by the Bureau of Land Management on Aug. 26 and 27 and offered 113 parcels on about 48,778 acres of land in the three states.

About 45,405 acres of the sale were from the BLM’s May lease sale which was postponed along with 2,866 new acres offered for the August sale.

On Aug. 26, the new acreage generated about $1.3 million with the highest bid per acre at $1,401 and the highest bid per parcel at $896,640.

The next day saw the sale’s highest bid per acre at $21,512 for a 120-acre parcel in Eddy County to Federal Abstract Company.

That same parcel also received the highest bid per parcel for a total of about $2.6 million.

Overall, the second day of the sale which offered the parcels postponed from May generated about $7 million.

BLM leases are awarded for 10-year terms and as long after the term that the land generates oil and natural gas.

If activities on the land results in oil or gas production, revenue from royalties paid to the BLM is shared with the states.

States receive about half of the royalties, per a statement from the BLM.

“The BLM’s policy is to promote oil and gas development if it meets the guidelines and regulations set forth by the National Environmental Policy Act of 1969 and other subsequent laws,” the statement read.

“The sales are also in keeping with the America First Energy Plan, which is an all-of-the-above plan that includes oil and gas, coal, strategic minerals, and renewable sources such as wind, geothermal and solar, all of which can be developed on public lands.”

But New Mexico environmental groups questioned if the state’s taxpayers were truly getting their fair share of the profits and the value of public land.

Opponents of the oil and gas production on public land argued the lease sales should be postponed indefinitely amid the Covid-19 pandemic and subsequent downturn in the fossil fuel industry.

The price per barrel of domestic oil continued to stagnate between about $42 and $40 per barrel, well below the $50 to $60 pre-pandemic price range, per data from Nasdaq.

Meanwhile New Mexico’s count of active oil and gas rigs fell dramatically during the health crisis from an average of 114 in March when the pandemic first spread to the state to an average of 46 in August.

Texas’ average rig count also fell during the pandemic from an average of 394 in March down to 105 in August.

During the downturn in production and lower price environment, President of Conservatives for Responsible Stewardship David Jenkins said the industry was able to acquire public land for much less than it was worth.

He said the current downturn in the market let to a lower market value for the land, compared with recent years when production boomed in the Permian Basin.

The administration of President Donald Trump, Jenkins said, was more interested in providing land to the industry that conserving natural resources.

“At this latest sale, oil companies were able to scarf up leases for a tiny fraction of what they would normally go for, denying New Mexico and the American taxpayer anything close to a reasonable return,” Jenkins said.

“Such dismal results are predictable, given the Trump administration’s baffling inability to read and respond to market conditions. This sale ended up being nothing but a massive give away to oil companies—one that comes at the expense of every other American and our national public lands.”

Judy Calman, director of policy for Audubon Southwest argued the health crisis could lead to delays in environmental oversight and public input and the BLM should delay future land sales until the pandemic subsided.

She also worried much of the land offered in the sale was near wildlife corridors and other areas of concern.

“It’s outrageous that the BLM continues to hold oil and gas lease sales each quarter in the middle of a pandemic,” Calman said.

“Not only do some of these areas overlap critical habitat for birds and game species which will be irreparably harmed once developed, the COVID crisis is also causing delays and sometimes outright halting of enforcement of environmental laws, as well as impeding the public’s ability to participate in agency decision-making.”

And Phil Francis, chair of the Coalition to Protect America’s parks contended the sale could threaten sensitive areas such as Carlsbad Caverns, which provides a unique wildlife experience for visitors but also supports karstic aquifers that supply much of the region’s groundwater.

“This jeopardizes not only animal migration and critical species habitat, it puts the irreplaceable natural and cultural resources at Carlsbad Caverns itself at risk,” Francis said.

“Leasing public land for oil and gas drilling on the doorstep of our national parks is never okay, but continuing to hold lease sales during a pandemic, when the ability of the public to comment on these sales is hindered, is completely unacceptable.”

Robert McEntyre, spokesman for the New Mexico Oil and Gas Association responded that oil and gas companies purchasing land during the market downturn would put them in a stronger position to produce oil and gas when the market recovers.

He said this would result in taxpayers getting a better return on the land than if the sales were postponed.

“Developing our federal resources is not only good for New Mexico, it allows companies to create significant revenue for the state. Ensuring the BLM holds regular lease sales is important to our economy and our future,” McEntyre said.

“Historically, these assets produce the most return over several years, not necessarily right up front when the lease is sold. The federal government will receive an adequate return over several years.”