Trump administration set for its last auction of U.S. oil drilling rights

[January 14, 2021]  By Nichola Groom

(Reuters) - The Trump administration on Thursday will offer the oil and gas industry a final chance to secure federal acreage before the inauguration of President-elect Joe Biden, who has pledged to ban new drilling on public lands.

The U.S. Bureau of Land Management will auction 37 parcels on 6,851 acres in New Mexico, Texas, Oklahoma and Kansas through the online auction site EnergyNet. Most of the parcels are in New Mexico overlaying parts of the sprawling Permian Basin, the world's biggest oil field.

The auction will reveal the level of demand for new leases from an industry facing an uncertain future for drilling on federal lands, weak prices and depressed demand for fuel due to the economic effects of the coronavirus pandemic.

Federal drilling auctions, a critical part of President Donald Trump's "energy dominance" agenda to maximize domestic production of fossil fuels, have garnered increasingly weak interest this year due to the health crisis and the prospects of a new U.S. president keen to fight climate change.

Biden has said he would halt new oil and gas leases on federal lands and waters, but he has not laid out a method or timeline for realizing that goal.

A study  by the state of Wyoming last month found that such a ban would cost eight Western states $8.1 billion tax revenue and $34.1 billion in investment in the next five years.

Pump jacks operate at sunset in Midland, Texas, U.S., February 11, 2019. REUTERS/Nick Oxford/File Photo/File Photo

But auctions in Wyoming, Utah and other states last month attracted sparse bidding, and major oil companies failed to show up entirely for last week's first ever sale of drilling leases in the Arctic National Wildlife Refuge.

Environmental, community and taxpayer groups have criticized the administration for holding oil and gas lease sales at a time of low prices, saying they are not generating adequate returns.

"This lease sale is being conducted under an antiquated system, which prioritizes the bottom line of oil and gas companies instead of New Mexico taxpayers," James Jimenez, director of the non-profit New Mexico Voices for Children, said in a statement.

BLM officials did not immediately respond to a request for comment.

(Reporting by Nichola Groom; Editing by David Gregorio)

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