Trump administration abruptly postpones New Mexico oil and gas auction

FILE PHOTO: Drilling rigs operate in the Permian Basin oil and natural gas production area in Lea County, New Mexico, U.S., February 10, 2019. REUTERS/Nick Oxford/File Photo

(Reuters) - The Trump administration abruptly postponed an auction of oil and gas leases in New Mexico that had been scheduled to begin on Wednesday morning without providing a reason for the move.

Bureau of Land Management (BLM) spokeswoman Allison Sandoval confirmed the delay, which was first announced on a government website. She said the agency “will provide further information at a future date.”

The parcels that were scheduled for sale are in New Mexico’s southeast corner, overlaying part of the sprawling Permian Basin, the world’s biggest oil field. It would have been the first government oil and gas auction since U.S. crude oil futures briefly plunged below zero for the first time in history a month ago due to fallout from the coronavirus pandemic.

BLM had been scheduled to offer 94 parcels on more than 45,000 acres (18,211 hectares) in New Mexico and Texas via an online auction on Wednesday and Thursday.

Earlier this week, a U.S. government forecast projected here that crude production from seven major shale formations, including the Permian, would fall to a two-year low in June. Producers have throttled back production since March as prices crashed due to oversupply and a sharp drop in demand.

Environmental groups including WildEarth Guardians had filed a formal protest of the sale to the BLM, arguing the coronavirus outbreak reduced opportunities for public comment on the auction.

BLM has not yet responded to that protest, according to Rebecca Fischer of WildEarth Guardians, which protests most BLM oil and gas lease sales.

Groups protested other sales this year too, saying low oil prices are weakening demand and resulting in poor returns for public coffers. The government declined to postpone those sales.

Reporting by Nichola Groom; Editing by Peter Cooney and Bill Berkrot