OAR 141-070-0050: General Leasing Conditions

(1) The Division of State Lands may conduct an auction of oil and gas rights upon receipt of applications nominating state-owned lands. The minimum acreage required for an auction to be conducted shall be determined by the Director. The Division may also nominate state-owned lands for auction. (2) Nomination of oil and gas rights for auction shall be submitted on an application form provided by the Division pursuant to OAR 141-070-0060 below and will be considered an offer to lease and pay the minimum advance rental amounts for all lands nominated. (3) State-owned oil and gas rights may be leased by oral bid auction or sealed bid auction, at the discretion of the Director. Under special circumstances, certain oil and gas rights may be leased through negotiation without an auction. (See section (6) of this rule.) (4) All applications shall be presumed to be requests to lease state lands by the oral lease auction procedure. If the Director elects to lease the nominated lands by sealed bid procedure, all processing fees shall be refunded if applicants do not wish to participate. (5) The legal descriptions of all lands nominated for auction shall be forwarded to affected government agencies, surface rights owners and other interested parties for review and comment. This notice is given pursuant to the Land Conservation and Development Commission governmental action coordination plan. (6) The Director will determine which lands are available for auction or lease following consideration of comments received from government agencies and interested parties. Prior to holding an auction or offering parcels for lease, the Director may hold a public hearing to obtain public input on the desirability of leasing state lands for oil and gas production. The hearing will be an informational hearing only, to aid the Division in its leasing decision. (7) The Division will not auction oil and gas leases for tracts of land that contain less than 40 acres, except in the case of isolated parcels, or where the Division determines that the public interest will best be served by waiving the minimum acreage requirement. (8) A written request for a negotiated lease of less than 40 acres of state lands without an auction will be considered if the parcel is within a designated drilling unit and a drilling permit has been issued or other sufficient evidence is provided to assure that drilling for oil or gas will be accomplished within a reasonable period of time. The terms of any negotiated lease will include a royalty of not more than 3/8 and an advance rental bonus based on the lease term and parcel size.