CHEYENNE — The Office of State Lands and Investments held an oil and gas lease auction last Friday in response to demand from energy companies looking to snap up leasing rights in the booming eastern Wyoming region.

Updated by Staff

It was a wise move for the state as a near-record $42 million worth of bids came in for the right to drill on state land, some as high as $3,200 an acre.

The special auction compares favorably with the regularly scheduled state lease auction last May which generated a record $45.6 million for Wyoming.

“Those who’ve wanted to be involved in this play have been out there. They’re grabbing up as much acreage as they can,” Harold Kemp, head of state minerals leasing, said on Monday.

The deep Niobrara formation underlying northern Colorado, western Nebraska and eastern Wyoming is where the oil rush is taking hold, with highly productive wells being tapped in Colorado, just south of the Wyoming line. Horizontal drilling and other newer drilling technologies are being applied to the Niobrara formation, which is geologically similar to the North Dakota’s Bakken play.

Last week’s special sale may be the high water mark because nearly all of the state leases in the region could be a high point in the recent speculation because nearly all state leases in southeast Wyoming have been bought up, according to Kemp. But the majority of acreage in the Niobrara has yet to be tapped.

Bruce Hinchey, president of the Petroleum Association of Wyoming commented to AP, saying he “certainly hope it is as good as what everyone thinks it is. If it is, that will be good for them, because they won’t have spent all that money for nothing,”

The biggest spender at the auction by far was Texas-based Big Bear Oil & Gas, which purchased 29 total leases, including six for $1 million or more.