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March Oil And Gas Leasing Sale Postponed In Wake Of Leasing Pause

Oil pump.
Oil pump.

Federal officials are postponing Montana’s March oil and gas lease sale, a few weeks after the Biden Administration pushed pause on new leasing to review current policy. While the oil and gas industry in Montana remains largely unaffected, the move has frustrated industry members.

One small company in Colorado spent years waiting for a parcel in Montana to come up for bid. On Friday, the Bureau of Land Management postponed its chance.

“It’s very disappointing,,” Brian Wert is with Westcliff Resources.

Wert says he and his partners have had their eye on a Powder River Basin area of Montana and Wyoming that includes both federal and private mineral rights.

“We’re not going to be able to proceed with drilling any of those prospects until the leases are offered by the two different offices of BLM Wyoming and Montana. And we don’t know how long we’re going to have to wait for that,” Wert says.

The postponed sale comes about a month after the Biden Administration's pause on new leases via executive order and a 60 day moratorium barring regional Bureau of Land Management offices from signing off on any new actions related to fossil fuels.

Existing developments can continue with approval at a higher level of the Bureau of Land Management, though Wyoming Gov. Mark Gordon said in a letter to the U.S. Department of Interior that permitting has been delayed.

In a normal year Montana is high on natural gas and crude oil consumption but low on production, according to the U.S. Energy Information Administration.

Even without the pause, new leasing on federal lands in Montana has been sluggish compared to years past and a nationwide Feb. 12 count by oil field company Baker Hughes shows Montana currently has zero oil rigs operating.

The average number of new leases BLM issued in Montana between 2015 and 2019 was roughly half the number of new leases issued between 2005 and 2009.

That’s in line with findings by Alison Gallensky with Colorado advocacy group Rocky Mountain Wild. Gallensky earlier this month published a report about new leasing using Bureau of Land Management data.

“These trends for Montana and for the whole Rocky Mountain West is showing that interest in acquiring new leases has really been going down over the last few years,” Gallensky says.

Industry experts have said the COVID-19 pandemic tanked demand for transportation fuel as people quarantined at home.

Alan Olson with the Montana Petroleum Association says the 2020 dip in oil prices is due largely to the COVID-19 pandemic. He says demand for transportation fuels was low.

“And at the same time, production was on an increase, so we ended up with an oversupply of oil,” Olson says,

And when oil prices drop, Olson says “you don’t have a lot of people going out there to lease minerals to try to develop them.”

Olson adds the pause on federal leasing could carry a financial impact for the state in the form of lost revenue. Olson says he believes the Biden Administration's hold on new leasing may last a year or more.

“We’re pretty well convinced that it’s gonna turn into a long-term pause,” Olson says.

Meanwhile, crude oil prices nationwide are recovering slowly from the pandemic. The U.S. Energy Information Administration says prices rose alongside news of the COVID-19 vaccine and it expects that trend to continue.

Kayla writes about energy policy, the oil and gas industry and new electricity developments.