The Bureau of Land Management (BLM) recently announced it will conduct an oil and gas mineral lease auction of two Wayne National Forest (WNF) parcels totaling 345 acres on March 22. This will be the fifth online mineral auction of WNF acreage since December 2016. To date, BLM has leased 2,396 acres in WNF, which have yielded more than $8 million.
Could this next sale take the figure at the bottom right of the above chart over $9 million? It’s certainly possible given the history of the previous sales — which would be great news for WNF communities.
As EID has previously highlighted, roughly 20 percent of the monies generated by these auctions stay at the local level and help fund schools and other essential government services. For instance, the first two WNF sales generated $1,515,110 for 12 Appalachian counties in Ohio, according to federal officials. Ohio counties will likely receive their portions of the September and December 2017 sales this year, and will also reap the benefits of their portion of the upcoming March sale in the near future as well.
However, locals say they want more of the lease sales going back to the local communities. That’s why Ohio Congressman Bill Johnson has developed legislation which could more than double what local Ohio communities currently receive, as EID reported last month.
How Much Will the March Sale Yield?
Time will tell but one thing is for sure — the competitive online auction sales that have taken place are a great example of how the marketplace determines the value of the respective parcels up for bid. As you can see on the map below, some parcels/acres of the WNF went through the competitive online auction and received higher bids than others.
Why is that?
As we have reported time and time again, the WNF is not contiguous. Rather it is a patchwork of federal lands and minerals that spans across 12 Ohio counties. While both federal and private minerals are found below the surface of WNF, it is only the federal minerals available for these BLM lease sales. The value of the federal minerals is determined by where they are located both from a geologic and strategic perspective. If, for example, an oil and gas operator has already leased a contiguous area of land adjacent to the Wayne, the operator may only have interest in certain specific parcels of federal minerals to complete their drilling programs in an effort to maximize economic efficiencies and reduce potential environmental impacts and surface disturbance. Typically, a unit is about a square mile (640 acres). Ohio law imposes spacing requirements between wells and from each well to the boundary of the unit, as you can clearly see in the map above.
With federal minerals spread out all over the Marietta Unit of the Wayne National Forest, adjacent private minerals have been held hostage for development, leading landowners of this adjacent property to plead for the federal government to conduct these lease sales.
Like all leasing of oil and gas minerals, at the end the day the market determines how much oil and gas operators feel specific parcels are worth from a development perspective, and that’s ultimately reflective in the final sales. We won’t know until March 22 the verdict of this upcoming sale, but the fact that the sale is happening is great news and it’s certainly encouraging that the BLM continues to move these sales forward.