DNR plans to auction off oil and gas lease rights

The Michigan Department of Natural Resources (DNR) will offer state-owned oil and gas lease rights to more than 108,000 acres in 23 counties at a May 8, 2012 auction in Lansing.

Oil and gas lease auctions routinely occur twice a year, once in the spring and once in the fall. Proceeds from state-owned mineral lease rights go toward the purchase of land for public use, the maintenance and upgrade of state and local parks, or the care of state fishery and wildlife habitat. Oral bids may be submitted by individuals of legal age (18 years old or older), or by a partnership, a corporation, or other legal entity qualified to do business in Michigan.

Prospective bidders should be prepared to submit proof of their status at the time of registration. The total bonus for all lease rights that receive successful bids must be paid at the time of check-out. The bonus is the amount bid for the privilege of leasing. Prospective bidders who do not have an established credit rating through prior leasing of state-owned minerals must pay at least one-half of the total bonus bid by cash, certified check, cashier's check, or money order. A credit rating may be established by filing three letters of reference -- one must be from a bank -- with the DNR Minerals Management Section.

Leasing mineral rights is the first step a company takes in exploring for oil and gas. A lease from the DNR does not by itself grant permission to drill a well. If a lessee chooses to pursue development of the oil and gas rights, separate written permissions -- including a drilling permit from the Department of Environmental Quality (DEQ)-- must be obtained prior to drilling. When oil and gas rights are leased, that does not automatically mean a well will be drilled. The drilling of a well does not always find commercial amounts of oil or gas.

The DEQ's Office of Oil, Gas and Minerals regulates the drilling and completion of oil and gas wells. The DEQ enforces a comprehensive set of regulations designed to protect Michigan's resources from potential negative impacts from drilling and completing wells.

Included in the May 8, 2012 offerings are state-owned oil and gas lease rights in the Yankee Springs Recreation Area in Barry County. All of the offerings in Barry County have been classified for leasing as "Nondevelopment." Nondevelopment leases do not allow for drilling or development on the surface of the land.

Detailed information regarding location of the nominated parcels can be found by clicking here or by calling 517-373-7663.