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DNR to offer lease rights at May 9 auction

Contact: Kim Venne, 517-335-3242 or Ed Golder, 517-335-3014
Agency: Natural Resources

May 6, 2013

The Department of Natural Resources will offer state-owned oil and gas lease rights to more than 37,000 acres in 17 Michigan counties at a May 9 auction in Lansing.

Oil and gas lease auctions have been held regularly in Michigan since the 1920s. Oral bids may be submitted by individuals 18 years old or older, or by a partnership, a corporation, or other legal entity qualified to do business in Michigan. The auction will be held at the Lansing Center, 333 E. Michigan Ave., Lansing. Registration of bidders will begin at 8 a.m. on Thursday, May 9, and continue throughout the auction.

Mary Uptigrove, manager for the DNR's Minerals Management Section (MMS), said the oil and gas lease auctions play a critical role in Michigan's natural resources-based economy.

"In fiscal year 2012, revenue received from DNR's oil and gas leasing program generated over $42.7 million for the State Parks Endowment Fund and the Game & Fish Protection Trust Fund," Uptigrove explained. "These funds help cover such costs as operations, maintenance and capital improvements for state parks, and similarly related costs for promoting, maintaining and improving wildlife and fisheries programs."

The DNR said prospective bidders will be required to submit a valid government-issued photo identification card during the registration process. Additionally, if a person is not on the "authorized bidder" list, he or she will be required to submit a security deposit in order to register. The security deposit must be a cashier's check or money order in the amount of $5,000 made payable to "State of Michigan." The security deposits and identification will be returned to registered bidders when their bidder cards are returned and all successful bids are paid in full.

To be added to the authorized bidder list, interested parties must contact Kim Venne, DNR property analyst, at 517-335-3242 or vennek@michigan.gov before close of business on Wednesday, May 8, 2013, to confirm they have been a successful bidder at a previous state of Michigan oil and gas lease auction; have no outstanding balance owed; and are not on the DNR's "hold action" list.

The total bonus for all lease rights that receive successful bids must be paid at the time of check-out. Lessees pay "bonus bids" at the time of the auction to win the lease rights. 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 from a bank - with the MMS.

Bidders are legally and financially responsible for any successful bids, regardless of whether they represent themselves or are acting for another party. Failure to pay for a successful bid is considered intent to defraud and the bidder may be subject to prosecution. The DNR stresses that while a lessee might win lease rights at the auction, it does not mean they will be allowed to drill a well on the leased parcel.

The Department of Environmental Quality's (DEQ) Office of Oil, Gas and Minerals regulates the drilling and operation 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 operating wells.

Detailed information regarding location of the nominated parcels available for lease can be found by visiting www.michigan.gov/minerals and clicking on "Oil and Gas Lease Auction Information" or by calling 517-373-7663.

The Michigan Department of Natural Resources is committed to the conservation, protection, management, use and enjoyment of the state's natural and cultural resources for current and future generations. For more information, go to www.michigan.gov/dnr.

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