Biden administration oil, gas auctions kick off with thin industry response

June 29 (Reuters) - The Biden administration's first sale of oil and gas drilling rights on federal land garnered thin industry interest on Wednesday while environmental groups filed two separate lawsuits seeking to invalidate the results.

The sales, which will continue on Thursday and cover eight states, were viewed as a test of oil industry demand for federal acreage amid soaring fuel prices and calls from President Joe Biden to increase domestic output.

The first day of bidding on 120,000 acres in Wyoming wrapped up with no bids on more than a third of the 105 parcels offered, according to online auction platform EnergyNet. Of the $12.5 million in high bids generated on Wednesday, $8.9 million was for a single 1,480-acre parcel in Converse County.

An additional 17 parcels in Wyoming will be put up for sale on Thursday. Names of the bidders have not yet been released.

A drilling industry group blamed the limited interest on policies that have made oil and gas development on federal lands more difficult, such as higher royalties on production and Biden administration efforts to stop new leasing.

Biden's Interior Department had attempted to suspend the federal oil and gas leasing program to study its environmental and climate impacts but was blocked by a federal judge.

"After observing new obstacles to federal development, including the leasing ban and litigation, companies may have decided it’s just not worth the additional time, cost, and risk," Kathleen Sgamma, president of the Western Energy Alliance, said in an emailed statement.

The Interior Department's planned sales this week will resume on Thursday. More than 90% of the acreage is in Wyoming, a major oil producing state, while the rest are sprinkled across Colorado, Montana, Nevada, New Mexico, North Dakota, Oklahoma and Utah.

A coalition of environmental groups, including the Sierra Club and the Center for Biological Diversity, sought to invalidate the sales by suing the Biden administration as the Wyoming lease sale started on Wednesday.

The lawsuit, filed in federal court in Washington D.C., alleges that Interior's Bureau of Land Management (BLM) violated the law by failing to adequately analyze the sales' impact on climate change.

"BLM continues to recklessly lease large swaths of the western United States to oil and gas development without comprehensively reviewing these connected actions and analyzing the severity of the resulting climate impacts from the addition of thousands of tons of (greenhouse gas) emissions into the atmosphere," the groups said in the complaint.

A second lawsuit was filed by Earthjustice on behalf of Friends of the Earth and the Wilderness Society in a case specific to the Wyoming sale.

Interior has said it was proceeding with the sales because of the previous court order blocking its attempted suspension, but with sharply diminished acreage and steeper royalties than auctions held by previous administrations.

Western Energy Alliance said the latest lawsuits were baseless because federal law "specifies that oil and natural gas is one of the primary uses of public lands."

Reporting by Nichola Groom in Los Angeles Editing by Matthew Lewis and Aurora Ellis

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