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Idaho Lawmakers Pursuing Oil, Gas Rules

An Idaho House committee Tuesday approved pre-oil and natural gas drilling rules, including one involving mineral rights owners now bidding for development. The provision is being pushed by the state’s Department of Lands (DOL).

The new rules also address water quality protections and increased setback distances between drilling areas, and production facilities and structures.

As approved by the Idaho House Resources and Conservation Committee, 55% of the mineral interest owners in a given area would need to support a proposed drilling project before it could be permitted. DOL Director Tom Schultz said that authority already exists, but the proposed legislation with a so-called "integration" provision would clarify it.

Integration involves mineral rights owners in an area of land where there could be oil and gas production. Once integration is ordered, the mineral rights owners in a given area would have three options, based on the legislative proposal:

?       Lease their rights to an exploration and production (E&P) company;

?       Become a working interest owner by sharing the cost of the development; or

?       Become a nonconsenting working interest owner to defray costs.

The state Senate Resources and Environment Committee was scheduled to begin considering the new integration rules on  Wednesday.

Idaho three years ago established E&P rules and a petroleum engineer was hired to oversee seismic testing in the western part of the state (see Shale DailyJuly 13, 2012).

One E&P keeping an eye on the legislation is Alta Mesa Holdings LP, a Houston-based privately held company with stakes in Payette, Washington and Gem counties. It supports the new rules as an offshoot of a negotiated settlement already approved by the Idaho Oil and Gas Conservation Commission (IOGCC).

Alta Mesa this spring expects to finish an 11-mile natural gas pipeline in southwestern Idaho to transport production from more than a dozen wells.

IOGCC rejected a request from Alta Mesa last year to exclude Bureau of Land Management (BLM) acreage from its 615-acre drilling area when BLM argued that the company was attempting to extract gas without paying royalties (see Daily GPISept. 8, 2014). IOGCC has held up issuing Alta Mesa permits, noting that its plans could shortchange BLM’s royalty rights.

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