A U.S. Bureau of Land Management auction of 25 oil and gas leases in Northeast Utah received mostly minimum bids of just $2 an acre a day after oil prices collapsed due to the impact of the spreading coronavirus outbreak.
The sale representing 32,713.76 acres (13,238.79 hectares) drew total bids of $237,559.60, according to energy marketplace EnergyNet, which conducted the online sale. The average bid per acre offered was $7.26.
A single, unknown bidder walked away with 13 of the leases. BLM Utah said it will issue a statement about the sale later on Tuesday.
The sale comes as North American oil and gas producers are contemplating here spending and drilling cuts on investor concerns about profitability with crude prices now almost half what they were in January.
Three of the parcels in Tuesday’s sale received no bids, and just four sold above the minimum price.
The highest bid was $501 an acre for a 240-acre parcel that was protested by the owner of the Sundog Airport, which sits within the lease parcel. BLM rejected the protest, saying the lease included a notice regarding the airport and that all development would be reviewed for conflicts.
All 25 parcels were in Uintah County, the state’s largest natural gas producer.
Eight environmental groups lead by the Southern Utah Wilderness Alliance jointly protested the sale of all 25 parcels due to the area’s poor air quality. The U.S. Environmental Protection Agency in 2018 declared an area in Uintah County in violation of federal ozone standards. The standard was exceeded again last year.
BLM offices will hold five more oil and gas lease sales later this month in states including Wyoming and Colorado.
Reporting by Nichola Groom; Editing by Marguerita Choy