Changes in federal oil and gas rules coming to Montana in 2023, upping royalties and squeezing noncompetitive sales

A makeover of federal oil and gas leasing rules, including an end to noncompetitive sales, will take root in Montana next year with an expectation that legally required quarterly lease sales resume.

The Bureau of Land Management recently issued guidance for how leases will be handled under new laws created by the Inflation Reduction Act. One issue key for Montana will be an end to noncompetitive leases, the kind that go off at bargain-basement prices and often yield no production. BLM is also increasing royalty rates to 16.67%, identical to the Montana rate. The previous federal royalty rate was 12.5%.

The new law also requires that renewable energy leases be part of the quarterly sale regimen.

An oil well pumps on the outskirts of Bainville along U.S. Highway 2.

CASEY PAGE, Billings Gazette

For years, conservation groups have called for an end to noncompetitive leases, which come about after a parcel nominated for leasing receives no bid. After there are no takers, the parcels are then leased out for less than $1.50 an acre annually. The companies holding paper to the land

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