On December 10th, the Bureau of Land Management (BLM), under the Department of the Interior (DOI), held an auction for oil and gas leases on federal land in Wyoming. The sale offered 51 parcels, totaling 60,427 acres, of which 31,940 acres were leased. This was the last and largest federal oil and gas lease sale of 2024.

In Tuesday’s sale, nearly 32,000 acres of federal land were leased for oil and gas development at an average bid of $343/acre. This average bid is significantly higher than the average bid per acre of $170/acre from lease sales in Wyoming between FY2016 and FY2020, before Congress and the DOI implemented important reforms that will help taxpayers get a fair return on federal land and the resources extracted from it.

Wyoming is the country’s second largest producer of federal oil and natural gas, surpassed only by the state of New Mexico. This is the fourth federal lease sale in Wyoming this year, resulting in a combined 52,291 acres of federal land leased for oil and gas development in the state. The average bid per acre in every auction in Wyoming this year more than doubled the FY2016 to FY2020 average in the state.

In total, the BLM offered 114,500 acres of federal land across the U.S. at auction for oil and gas development in 2024 and sold leases to more than 77,000 acres. These leases come with terms that reflect critical reforms enacted by Congress in 2022 and codified by the DOI in April 2024, including:

• A federal onshore royalty rate of 16.67% (raised from 12.5% and now in line with state rates)
• Rental rates of $3/acre for the first 2 years, $5/acre for years 3-8, and no less than $15/acre for years 9-10 (raised from $1.50/acre for years 1-5 and $2/acre for years 5-9)
• Minimum legal bid of $10/acre (raised from $2/acre)

• Updates to bonding rates set in 1960 to better reflect market rates and protect taxpayers from future cleanup liabilities
• Directing leasing to appropriate locations, making sales more competitive

These reforms will better protect taxpayers from future reclamation costs and generate more revenue for federal and state taxpayers.

Prior to recent reforms, federal and state taxpayers in Wyoming—since leasing revenue is shared between the federal government and the state—lost billions of dollars in forgone revenue from outdated leasing fees and were forced to shoulder costly reclamation liabilities from orphaned oil and gas wells in the state. From FY2013-2022, taxpayers received $7.3 billion in revenue from oil and gas royalties under the old royalty rate of 12.5%, a rate far below what the federal government charges in federal waters (18.75%) and what Wyoming charges on state land (16.7%). If the current royalty rate of 16.7% had been applied to oil and gas production over this period, taxpayers would have received an additional $2.4 billion in revenue.

Old, inadequate minimum bonding requirements also burdened taxpayers with mounting liabilities. Using the average cost of well reclamation in Wyoming, TCS estimated that federal bonds for active oil and gas wells in Wyoming in FY2022 would have failed to cover the full costs of reclamation, leaving taxpayers to cover $87.5 million in potential future costs.

Recent reforms to the federal onshore oil and gas leasing system are an important step in securing a fair return for taxpayers and ensuring we are not left with long-term liabilities.