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Interest growing in South Dakota leases Number of acres leased by state flat the past decade, but dramatic increase this year Wayne Ortman Associated Press Writer
The interest that companies are showing in exploring South Dakota’s public lands for oil and gas is something Bryce Healy easily explains.
“Just go to the gas pump,” said Healy, commissioner of the state Office of School and Public Lands.
A recent auction of oil and gas leases on 65,800 acres managed by Healy’s office generated almost $240,000 for the public school fund.
There’s a minimum $2 per-acre bid on the leases. One 640-acre tract in Harding County was leased for $136 per acre.
“In recent history — the last 10, 15 years at least — that would be a (per-acre) record,” Healy said May 10.
The number of acres leased by the office had been flat the past decade, but there’s been a dramatic increase in interest this year, Healy said.
The rising price of crude oil and recent production cutbacks by the Organization of Petroleum Exporting Countries is driving the interest in oil and gas exploration, according to Healy. Companies nominate lands Companies nominate public land they’d like to explore. The Office of School and Public Lands compiles the requests and periodically schedules a public auction.
The selected parcels are offered in open bidding. A company interested in a certain spot may find itself bidding against one or more companies. Competitive bidding often occurs if there are productive oil or gas wells near the area being leased, Healy said.
At the most recent auction, AB Production of Denver leased nearly 33,000 acres in Harding County. Springfield Oil Co. of Hot Springs leased 18,020 acres in Hughes County, and Energy West Production of Denver leased 13,437 acres in Stanley County, Healy’s office said.
There’s no requirement that companies that get a mineral lease do any exploration, but the five-year lease expires if there’s no oil or gas discovery, said Mary Jo Joens, oil and gas lease agent in Healy’s office.
Companies pay a rental fee of $1 per acre each year of the lease until oil or gas is discovered, Joens said.
“Then, in lieu of the rental fee, they start paying a royalty. That would hold that lease as long as there is a producing well, which could be indefinitely. We have some that go back to the ‘50s,” she said.
About 80 percent of the lease income is earmarked for K-12 public education, Healy said, with other lease income going to schools under authority of the Board of Regents.
The office oversees mineral leases on 5.2 million acres of state-owned land. A little over 200,000 acres is tied up in mineral leases. The lease acreage was as high as 600,000 in 1980 and as low as 100,000 in the late 1990s, Joens said.
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