May 20, 2020 / 11:03 AM / 16 days ago

Trump administration tests drilling demand with big New Mexico lease sale

May 20 (Reuters) - The Trump administration will hold a two-day oil and gas lease sale in New Mexico beginning on Wednesday, bucking criticism from conservation groups that say the auction should be postponed due to the public health and economic crises caused by the coronavirus pandemic.

The Bureau of Land Management is offering 93 parcels on more than 45,000 acres (18,211 hectares) in New Mexico via an online auction, the first such sale since U.S. crude oil futures briefly plunged below zero for the first time in history a month ago due to the fallout from the health crisis.

New Mexico is the nation’s third-biggest state for oil production, according to the U.S. Energy Information Administration.

Drilling on federal lands is a crucial part of President Donald Trump’s “energy dominance” agenda to maximize domestic production of fossil fuels. But the industry is in crisis as world governments have issued unprecedented stay-at-home orders to contain the coronavirus pandemic, curbing demand for transport fuels such as gasoline and jet fuel.

The parcels for sale are in New Mexico’s southeast corner, overlaying part of the sprawling Permian Basin, the world’s biggest oil field. Five parcels are near Carlsbad Caverns National Park. The sale also includes a small parcel in Texas.

WildEarth Guardians and seven other environmental groups filed a formal protest to the BLM against the sale, arguing the coronavirus outbreak reduced opportunities for public comment on the auction.

Groups have protested other sales this year too, arguing low oil prices are weakening demand and resulting in poor returns for public coffers. U.S. oil prices are down more than 40% since mid-February to about $31 a barrel, forcing many drillers to wind down operations.

BLM, a division of the Interior Department, did not respond to a request for comment on the sale. (Reporting by Nichola Groom; Editing by Peter Cooney)

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