A very important thing happened on August 30th of 2016, The Bureau of Land Management (the administrators of the National System of Public Lands for the U.S. Department of the Interior) exercised its ability to offer competitive bidding of oil and gas leases online. I know, super exciting. Here I will tell you how to participate in these oil and gas leases on federal lands with the intention of making money and protecting the environment!
A Little Background Info
The BLM has been leasing public lands for oil and gas exploration since 1920 (at least, that’s when they were allowed to start), and has brought in a significant amount of money that has been put to good use. There are two ways to lease nominated parcels, competitive and non-competitive. Competitive leasing until now has required someone physically present at the auction location for the district where the parcel is located, auctions usually being held each quarter in each district. Any adult U.S. citizen can obtain a lease.
Why Move Online?
#NoNewLeases Yes, hashtags are affecting the real world now. Public opinion, fueled by social media, even resulting in protests has lead to some lease sales being delayed or canceled as a result of protesters. Ever heard of “out of sight, out of mind”? By moving the auctions online the BLM is able to minimize the disturbances and carry on with its business.
How YOU Can Participate
You could get a lease. As our society and economy stand currently, we need oil and natural gas. It isn’t just about electricity and gasoline in cars, it’s about plastic and Vaseline in which to put sand… And this is a big revenue source for the federal government, it isn’t going away any time soon.
A Few Things to Know First
The money, look at the fee schedule and make sure you are prepared for the ten year commitment having a fedal ease could be (it could even be longer!). But just as importantly, you cannot take a lease with the intention of not producing on it. Most leases are not produced, but they are taken with the intention of being explored by either the lease holder, a partner of the lease holder, or someone to which the leaseholder markets their interest. When one person takes an oil and gas lease and then someone else wants to produce those minerals they either work together as Working Interest Partners, or the first party will assign the lease to the second party, getting some up-front payment and/or retaining a royalty.
So What Do I Do?
I once had an oil and gas lease in North Dakota where the landowner had specified that the lease could not be assigned to Koch Industries, any of its subsidiaries, or another company owned by either of the Koch brothers. You could take a lease where someone else will want to drill and assign it to them with some “strings attached” in the form of clauses in the assignment, such as requiring the use of eco-friendly fracking fluids, mandating that surface owners and residents within a certain radius of drilling operations must be notified of potentially disruptive activities beforehand, or maybe even stating that the leased lands can be included in a drilling unit but that a well cannot be drilled on it directly. Adding stipulations like this won’t be easy, and will require you lose out on some (maybe a significant amount) of the bonus or residual income, but it is doable.
Besides, you’d be doing this to protect the environment and make the world a better place, right?