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ND leads region in federal oil, gas leases

A worker hangs from an oil derrick outside of Williston, N.D., on July 26, 2011. More than 1 million acres _ or 75 percent _ of available federal land in North Dakota has been leased for oil and gas development. What's left of the parcels are fetching jaw-dropping prices as drillers are attempting to lay claim to almost every acre in western North Dakota to exploit oil. (AP Photo/Gregory Bull, File)

By James MacPherson

BISMARCK, N.D. (AP) — Developers have bought the oil and gas rights to about three-fourths of the available federal land in western North Dakota, pushing prices to record levels despite industry complaints that the federal permitting process is still too onerous to immediately develop the land.

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Federal oil and gas lease sales in the Dakotas and Montana totaled $64.4 million in fiscal 2013, up from $50.1 million the year before, according to the Bureau of Land Management. North Dakota, which has led the three-state region in oil and gas leases for most of the past decade, accounted for the vast majority of sales — $61.4 million — which was up from $44.3 million in fiscal 2012.

Montana tallied $2.9 million in fiscal 2013, down from $4.5 million the year before, and South Dakota fetched about $67,660, down from about $1.3 million in fiscal 2012.

The BLM offered 214,948 acres in the three-state region in fiscal 2013, with 52,542 acres leased. All of North Dakota's 8,928 acres offered in fiscal 2013 received bids, fetching a record average of $8,922 an acre, up from $2,359 an acre the year before.

BLM records show that 1,026,161 acres — or about 1,600 square miles — of federal land has been leased in North Dakota to date, or about 75 percent of non-tribal federal land. Most of the leases in North Dakota were within the rich Bakken and Three Forks formations in the western part of the state.

Teri Bakken, a BLM leasing chief in Billings, Mont., said the agency estimates it will offer about 90,000 acres for lease in North Dakota over the next two years.

"I do expect the bid-per-acre to remain where it is in North Dakota," she said.

Revenues from the oil and gas leases are shared by the federal government and the state or county where the parcels are located. The federal leases are for 10 years, or twice the amount of time companies are required to drill after obtaining leases on other lands in North Dakota.

Despite the demand for the federal development rights, only two of the 187 rigs working in North Dakota's oil patch on Monday were drilling on federal, non-tribal land.

About 90 percent of the drilling in western North Dakota occurs on private land and companies are busy solidifying those leases.

Ron Ness, president of the North Dakota Petroleum Council, said many of the leased federal parcels are adjacent to state or private acres where drilling has or will occur. But red tape has slowed the permitting process on federal lands, he said.

"It's extremely hard and burdensome to try and get a federal permit," said Ness, whose group represents hundreds of companies working in the state's oil patch.

But BLM officials say the agency is working hard to clear its permitting backlog and is progressing toward its goal, announced last year, of cutting the approval time from about 300 days to 60 days.

Paul Kelley, a BLM assistant field manager in Dickinson, said the agency has added 15 new positions boosting the agency's North Dakota workforce by about 30 percent. The agency also has utilized "strike team" members from other states to help process permits, he said.

The agency has about 462 pending drilling permits at present in North Dakota. Over the past year, the BLM has averaged about 47 permits applications a month and has cleared an average of about 40, he said.

"From what I'm seeing here, we're doing them pretty quickly," Kelley said.