Montana Reports Record Setting $1 Million Oil and Gas Lease Sale

The Montana Department of Natural Resources and Conservation and the Office of Governor Greg Gianforte announced this week a record-setting $1.2 million oil and gas lease sale, and all of the money will go to Montana public schools.

KGVO News spoke to Trevor Taylor, Minerals Manager Bureau Chief for the trust lands division at the DNRC.

“We had one of our larger sales that we've had since I'd say about 2014, where we received a $1.187 million off the sale of just 36 tracks,” said Taylor. “So that's been a significant increase for us and kind of good to see that. Two things have happened with our department recently that had a pretty big impact. One was we switched our auction format to an online auction, so that has helped in promoting more competitive bidding for our tracts. The other thing that's changed is the higher oil prices. So between the both of those, I think it's certainly created an environment to help bring in higher bid prices.”

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Taylor described where the leases are located.

“Most of our leases, that’s 22 out of the 36 are in Rosebud County,” he said. “It's really not a place that we seen a lot of development in the past. So that's interesting for us because I think with these higher prices, we are seeing some more encouragement to go outside of the standard areas such as the Bakken to explore.”

He explained the process taken to bid on the oil and gas leases.

“Typically when we see nominators for our sales, those would be agents or companies that bid on behalf of oil and gas production companies,” he said. “They'll come to the sale or bid online for other companies and then transfer those leases over to the name of those companies. They have 10 years to drill under their lease terms, so it's hard to say when they actually might drill but if they don't drill within 10 years and drill a productive well, then they do lose their leases.”

Taylor said all the monies from these lease sales will go to help fund Montana’s public schools.

“This sale all of the revenues generated will go towards common schools,” he said. “This will help support the kindergarten through 12th grade public schools in the state. Essentially what trust lands do is through all of our state lands is that we generate revenue for different trusts, and just by chance all 36 of these tracts happen to be on common school lands. In other cases, they might be University of Montana trust lands or MSU trust lands.

The next oil and gas lease sale taking place in June has 179 nominated tracts. Details on the sale and oil and gas leasing can be found on the DNRC website.