Auction of BLM oil leases

Oil exploration companies greeted the latest opportunity to lock up land in Nevada with a yawn.

The Bureau of Land Management last week sold oil and gas leases on 96 parcels in the state a total of 207,731 acres and drew total bids of $741,220.

About half the 194 parcels that BLM put up for auction didn't draw any interest from a small group of potential bidders.

Pacer Energy Acquisitions LLC of Gillette, Wyo., accounted for much of the leasing action as it was the winning bidder on 92 of the 96 parcels that were leased. It won all of those parcels at the minimum bonus

bid of $2 an acre.

The priciest bid a bonus of $6 an acre was paid by Makoil Inc. of Las Vegas on a 162-acre parcel. Makoil operates about three dozen wells in Nye County.

In June, when oil prices were escalating rapidly, the BLM auction drew a bid of $575 an acre on one property, and oilmen bid $453,675 for the rights to explore another.

Even in September, when oil prices were beginning to decline, exploration companies bid $53 an acre for a lease in Nye County.

Gary Johnson, the BLM's deputy state director for minerals management, said bidding at the agency's auctions each 90 days follow the trend of oil prices closely and last week's auction was no different.

The bonus bid amounts from the oil and gas lease auction are split 50-50 between the federal government and the state. In last week's auction, the bonus bids totaled $416,154.

The 10-year leases offered by BLM require an annual rental of $1.50 an acre for the first five years and $2 an acre after that. If a lease begins oil and gas production, the federal government collects a 12.5 percent royalty.

But few of the properties end up in production.

The state Division of Minerals has issued all of 11 drilling permits for oil and gas production this year, compared with 15 during 2007.

Production from oil wells in Nevada has run about 38,000 barrels a month this year. In October, the state was home to 76 producing wells most of them in Nye and Eureka counties.