A quiet meeting room in Reno provided more evidence last week that petroleum geologists see strong potential in eastern Nevada.
The Bureau of Land Management generated $1.98 million in bids for oil-and-gas leases on 54 parcels of government-owned land during a 90-minute auction.
That’s more than 10 times the amount that the BLM generated in its last auction of oil leases in the same area.
And more notably, the properties that BLM put up for auction are barely on the outskirts of northeast Nevada territory where Houston’s Noble Energy is putting $130 million into a closely watched exploration program on more than 350,000 acres of leases.
In last week’s sale, the BLM was offering the right to explore for oil and gas on properties south of Ely. It put up for auction leases on 178 parcels — a total of 303,333 acres in White Pine, Lincoln and Nye counties.
As Lacy Trapp, whose day job puts her to work as a land-law examiner for BLM, auctioned the leases, only 54 of the parcels drew any interest from the approximately 10 groups of bidders.
But when bidders were interested, they were really interested.
The highest-priced lease — $135,044 for a 2,547-acre lease in Nye County — was won by Housing Int. LLC of Belvedere, Calif.
Strong bidding competition for the parcel — occasional whispers or shared glances among members of bidding teams, a quick flash of a yellow plastic paddle to indicate a bid — came from White Wolf Land Service of Bakersfield and Denver’s Hawkwood Energy.
The highest bid per acre — $54 — came from Denver’s Contex Energy on a 983-acre lease, also in Nye County. Bidding on all the leases started at $2.
Between them, Contex, White Wolf and Hawkwood accounted for about 60 percent of the dollar volume of last week’s sale. Contex and White Wolf specialize in assembly of land packages for others to drill. Hawkwood is an exploration and development outfit that’s focused on exploration in challenging geology.
Not all of the bidders were working on their own accounts, but they were close-mouthed about who they were representing.
It’s been about 15 months since the BLM auctioned leases in the area south of Ely. That sale in 2012 generated $194,828 in lease payments on 20 parcels that totaled 32,328 acres.
Lorenzo Timble, a geologist with the BLM in Nevada, said the federal agency wasn’t surprised at the strong showing in last week’s auction.
Railroad Valley, the state’s primary oil-producing region, is on the southern end of the area covered by last week’s event. And Pine Valley, the second-largest oil region in Nevada, is not far away along the Eureka-Elko county line southwest of Elko.
The high-profile exploration activity by Noble Energy extends across a swath of leases that runs from northeast of Elko to almost due south of the city.
The company has told federal officials that it plans to drill as many as 20 wells about 21 miles south of Elko — that’s in the area of Jiggs and the Huntington Valley — over the next couple of years.
Meanwhile, Gray Fox Petroleum Corp., a small, publicly held outfit in Dallas, said last week it plans an exploration program on 32,723 acres in the Butte Valley 50 miles north of Ely.
But the company had only $6,289 on its books at the end of September, according to a filing with the Securities and Exchange Commission, and it’s looking for money to finance the exploration work.
The next big test of the appetite for oil leases in eastern Nevada will come on April 15, when the BLM has scheduled an auction covering federal lands in the Elko area — smack in the heart of recent interest.
