(Reuters) – The U.S. on Thursday held its first sale of oil and gas drilling rights on federal lands since passage of President Joe Biden’s landmark climate change law, attracting more than $78 million in high bids for leases in New Mexico and Kansas.
The federal auction was just the second to be held in New Mexico, the nation’s second-largest oil-producing state, since Biden became president in 2021.
Promontory Exploration LP of Midland, Texas and Devon Energy Corp (DVN.N) of Oklahoma City were the auction’s top spenders, each picking up leases in New Mexico.
Biden’s Interior Department had attempted to suspend federal oil and gas leasing to study its environmental and climate impacts, but the Inflation Reduction Act that passed last year requires some oil and gas auctions if federal rights of way are offered for renewable energy projects.
The 19 offered parcels on 3,300 acres (1,335.5 hectares) in New Mexico garnered 99.9% of the high bid total of $78.81 million, according to sale information published by the U.S. Bureau of Land Management.
The highest price paid for a parcel was $16.2 million by Devon for 280 acres in the state’s Eddy County. It was also the auction’s highest price paid per acre at $57,901. It was Devon’s only parcel purchased in the sale.
Promontory Exploration secured six leases for a combined $18.2 million. Other winners of New Mexico leases included Pride Energy Company of Tulsa, Oklahoma, Legion Production Partners LLC of Denver and Federal Abstract Company, which bids on behalf of other companies.
The Interior Department also offered 26 parcels on 6,800 acres in Cheyenne County, Kansas. Just 18 of the Kansas parcels attracted bids, yielding a combined $70,800. All but two of those parcels sold for the minimum price of $10 an acre.
All but one of the Kansas leases sold went to Murfin Drilling Company of Wichita. The remaining lease was sold to Red Oak Energy Inc.
New Mexico crude oil production was about 20 times higher than that of Kansas last year, according to the U.S. Energy Information Administration. The New Mexico parcels offered were all located in the Permian basin, the nation’s most productive oil patch.
Terms of the sale reflect new IRA requirements including royalty rates of 16.67%, up from a prior 12.5%, and bids starting at $10 an acre compared with $2 an acre before passage of the law.
Several environmental groups filed protests that sought cancellation of the sale by BLM. Among other concerns, they said the Biden administration had failed to analyze mitigation efforts to address the impact of greenhouse gas emissions from development of the parcels.
An Interior Department spokesperson would not comment on the protests.