Sale shows excitement continues over Niobrara oil

Results of yet another big-money state lease auction show there's still plenty of excitement about the potential for oil drilling in eastern Wyoming.

Wednesday's oil and gas lease auction brought in $13.3 million for the state. That's on top of a $42 million special lease auction in July and a record $46 million auction in May.

All three sales smashed the previous record, dating to the 1980s, of about $8 million, said Harold Kemp, assistant director of the Office of State Lands and Investments.

Can Wyoming keep the ball rolling? Interest in tapping the Niobrara Shale oil remains high, but there's not much state land left to lease in the hottest areas.

The latest sale included fewer parcels in southeast Wyoming, which has been the epicenter of the land rush.

"My sense is that folks have gotten everything they can at least from state government," Kemp said Friday.

This week's sale was smaller than the last two - including the July sale, which the state held specially to meet demand for leases - but it still set a record.

Maurice Brown, of Cheyenne, bid $5,900 per acre for the right to drill on a section of state land in Converse County. The previous record, $3,200, was set at the May auction.

The excitement stems from speculation that horizontal drilling, hydraulic fracturing and other relatively new techniques could make a play out of the Niobrara Shale underlying eastern Wyoming, northern Colorado and western Nebraska.

The Niobrara Shale is similar to the Bakken Shale in North Dakota, a state that has weathered the economic downturn largely because of oil.

Wyoming has earned a total of $101 million since the May lease sale.

"It's kind of like hitting the lottery in a way, because it's very unexpected money," said state economist Jim Robinson.

Kemp said about $30 million from the lease sales will go into the state's general fund and most of the rest will benefit public schools.