The Minnesota State Legislature authorized the DNR to lease state-owned mineral interests for oil and gas exploration and development in 2024 (Sec. 93.516 MN Statutes).
Focus on non-hydrocarbon gases
The enabling legislation allows DNR to “enter into leases for gas or oil exploration and production,” with the term “Gas” including both hydrocarbon and non-hydrocarbon gases. Private exploration companies are currently focusing on Minnesota’s potential helium and natural hydrogen resources. Minnesota’s geology is unfavorable for crude oil accumulations and there is currently no interest in exploring for crude oil resources in the state. In addition, the DNR and other applicable state agencies are focusing only on creating a regulatory framework for the development of gas resources.
Although focusing on rules for permitting and regulating gas production means that oil production will effectively be prohibited, the 2024 legislation does not ban oil exploration activities. And while it’s highly unlikely that crude oil will ever be discovered in Minnesota, legal issues would arise if DNR issued separate leases (one for gas, one for oil) that covered the same area of state-owned minerals. As a result, DNR will issue leases that cover exploration and development of both oil and gas resources.
Application process
The DNR has Application Instructions for state-issued gas leases that identify application fees, eligibility requirements, and other required information.
Lease terms and conditions
The DNR issues gas leases on a case-by-case basis, taking into account the unique geological and environmental aspects of each proposal, applicant control of adjacent lands or mineral interests, and the best interests of the State. Lease terms are negotiated with each applicant and reflect statutory standards for the length of each lease and minimum bonus considerations, rental payments, and royalty payments.
Executive Council approval
All DNR-issued gas leases must be approved by the Minnesota Executive Council before they go into effect.
No active state gas leases
There are currently no active state-issued gas leases in Minnesota. Private exploration companies are targeting both helium and natural hydrogen and gathering geological and geophysical data on state lands under Regional Geological Reconnaissance Authorizations (RGRAs).
For more information, please contact:
Don Elsenheimer
Gas Production Regulatory Manager
651 259-5433, [email protected]