U.S. to Auction Drilling Leases in Utah
Posted on: Tuesday, 4 April 2006, 18:00 CDT
By PAUL FOY
SALT LAKE CITY - Bidding by oil-and-gas players could intensify at a government auction next month when drilling leases will be offered on 440,000 acres of public land in Utah.
The auction set for May 16 will rank as the largest government lease sale ever in Utah.
The stepped-up leasing reflects a soaring market demand for oil and gas, new technology that makes it easier to find and drill deeper for petroleum, and a rich oil find in central Utah that's driving speculative bidding.
The Southern Utah Wilderness Alliance accused the Bush administration of rushing to open more public lands for drilling to buoy domestic energy supplies. The Utah Petroleum Association counters that drilling can be done in a responsible manner.
"Clearly, market demand is going up," Adrienne Babbitt, a Bureau of Land Management spokeswoman in Salt Lake City, said Tuesday. "Last year, Utah consumed 155 billion cubic feet of gas, and we exported another 300 billion feet of gas."
Together, that was enough natural gas to heat 4 million homes over a year.
Demand for crude oil is equally strong. World oil prices rose Monday by 11 cents to $66.74 a barrel on the New York Mercantile Exchange. The rise was attributed to an uncertain outlook for supplies out of Iran and Nigeria.
The previous largest BLM auction in Utah was a quarterly lease sale in September 2004, when 357,000 acres were put out to bid.
The leasing frenzy in Utah broke out last May after news that a tiny Michigan company discovered what could be a huge oil field in central Utah. That pushed starting prices of $2 an acre to as much as $1,250 an acre in the region.
Wolverine Gas & Oil Corp. is pumping oil as fast as it can near Sigurd, 130 miles south of Salt Lake City, after tapping a single oil deposit believed to contain 100 million to 200 million barrels of oil.
Other companies are joining the rush to tap wells in central Utah, betting that the complicated geology is hiding a lot more oil, Babbitt said.
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On the Net:
http://www.blm.gov
Source: Associated Press/AP Online
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