(EnviroNews Idaho) — Boise — Until recently, Idaho had almost no oil or gas wells and didn’t need a regulatory Oil and Gas Commission, but new rules allowing for the use of fracking and other technology, while outlining key industry practices like waste water disposal and natural gas flaring, have industry eyeballing Idaho’s potential fossil fuel deposits like never before.
From the turn of the century through 1988, according to the Idaho Geologic Survey, a grand total of a meager 150 holes in the ground had ever been drilled in search of oil and gas in the state.
Besides a lot of dry holes, the result of that limited, historic and exploratory drilling experiment has been only one small patch of productivity in Payette, near the Oregon border, including a small handful of wells drilled recently.
Russet Potatoes, kayaking miles of white water, or trekking into hot-spring-loaded backcountry are what the ordinary American might envision when thinking about Idaho, but a battle presently rages in the state Government that will determine if another icon will be added to that list: oil and natural gas.
As of late, a dozen new gas wells have been drilled and four more active permits have been filed for consideration in Payette County, ground zero for oil and gas development in Idaho. Despite the aforementioned permitting and drilling activities, there is only one gas well currently in production in the entire state, also in Payette, so it is safe to say to this point, that hydrocarbons haven’t been just gushing out of the ground in potato country.
Like the oil and gas industry in the Gem State, the regulatory body that is supposed to oversee it, Idaho’s Oil and Gas Commission is new as well, having been formed in 2013 with five members appointed by the governor and approved by the state Legislature.
The Commission consists of members representing water and geological interests, landowners with and without mineral rights, and industry as well.
That burgeoning oil and gas industry was the business of the day on Tuesday, July 22, 2014, as the Idaho Oil and Gas Commission wrapped up its fourth and final negotiated rule-making session at the Capitol in Boise.
The meeting often grew heated as concerned citizens and landowners from around the state grilled Bobby Johnson, Idaho Department of Lands Oil and Gas Program Manager and Deputy Attorney for the Idaho Attorney General Tyson Nelson over contentious issues like fencing, inspections and forced-pooling. The Idaho Department of Lands is an administrative arm of the Commission and the Attorney General’s office provides legal support for it.
Like dozens of states before it, Idaho’s proposed rules include a forced-pooling policy that will benefit the oil and gas industry — a policy that will allow drillers access to minerals even if opposing minority landowners don’t approve of exploratory activities.
Many concerned citizens were in attendance for preemptive reasons, voicing concern even though oil and gas development isn’t yet in their backyards, although it may soon be.
Idaho law currently allows drill-rigs, work-over rigs, pump jacks, tank storage batteries and other surface equipment within a meager 200 feet of homes and other structures — an extremely small setback protection that many residents say isn’t protective at all.
Already, tens of thousands of mineral acres have been leased across the state and over 5,000 more are under consideration by the Bureau of Land Management (BLM) as businesses scurry around wildly in an effort to shape the regulatory terrain and enter the ground floor at every turn. One of these companies is Bakken Resources, Inc., that on July 9, entered into a 9,300-acre mineral lease spanning three counties.
A typical example of what could constitute a “section” might be 640 acres for gas and 40 acres for oil, as is currently the case in Idaho. Legalities and parameters vary on a state-by-state basis, but this type of provision, now all too common in America, allows for forced-pooling to occur if over a certain percentage of the “pool” of landowner parties in a section, votes to comply with exploratory plans.
Johnson said that since Idaho doesn’t yet have rules about integration, one of its choices was defaulting to North Dakota’s integration where just 1-2 percent of leaseholders within a drilling unit can petition the Commission for an integration order.
He said a 75 percent supermajority was considered, but integration rules for the state are now written so “at least 55 percent of owners in the spacing unit support the integration application by leasing or participating as working interest owners.”
New Plymouth resident and outspoken industry critic Tina Fisher said a supermajority would have been better.
Fisher, a member of the Idaho Residents Against Gas Extraction (IRAGE) said, “fifty-five percent is not enough.” In this area, several gas wells have already been drilled, including one a short distance from a public school.
However, 55 percent may be better than what is currently in statute explained John Peiserich, attorney for Alta Mesa Idaho and partner with Perkins, Peiserich, Greathouse, Morgan, Rankin of Little Rock, Arkansas.
Peiserich has lobbied for Halliburton before the Idaho legislature and said if Idaho law isn’t updated it would default to North Dakota’s model, as current statute language is similar.
Currently, Idaho law does not distinguish a minimum percentage of complying leaseholders in a unit that would be required to force-pool the other non-complying leaseholders. The only requirement presently in place is having an interest in the drilling unit, the same as North Dakota.
Percentages aside, Gem County activist Joe Morton said he didn’t think a mineral right holder’s correlative rights were being protected in the case where they don’t want drilling and are strong-armed into participating via forced-pooling.
Johnson countered by saying forced-pooling would “protect the correlative rights of everyone in the unit.”
“That’s how you’re going to protect their correlative rights? — By force-pooling them?” Morton said, adding that some landowners may want to hold onto their minerals for their grandkids, or when gas prices are higher.
After an integration order has been given, the rules allow participation in the unit in three ways. The first is as an “owner” and full working-interest partner in the well. This includes participating in proportionate drilling and operational expenses in the well, while reaping proportionate royalties if the well is to become productive. Naturally, the participating party looses any investment if the oil company drills a dry hole, has a blowout, or encounters any other circumstance in which the well cannot be produced.
The second way to participate is as a compliant lessor of mineral rights, which guarantees the mineral rights owner a royalty without any penalties.
Lastly, participation in a well can occur as a non-compliant and forced-pooled mineral lessor. This type of party is still entitled to their mineral royalties after paying a 300 percent penalty. This class of owner can still have drilling occur on their property, and associated infrastructure can be placed there as well. This common policy style has historically left many landowners feeling enraged and helpless across the country.
Expanding fresh water protections for irrigation water and well treatments was also on the radar at the fourth and final rules meeting.
With Idaho being a top ten producing state of several products, from mint to dry beans and dairy, protecting water for its agricultural sector, posting a record $7.82 billion in cash receipts last year, is hugely important.
Idaho Conservation League Executive Director Justin Hayes said that the rules as proposed would not “require setback from irrigation infrastructure” while Nelson indicated that that area of the rules be looked at again.
Although concerned citizens attempted to discuss the importance of keeping Idaho’s aquifers, rivers, lakes, stream beds and other waters free from drilling contamination, that conversation was curtailed as it did not specifically address the rules on that day’s meeting agenda. Several times participants were told to submit comments and concerns outside the scope of the day’s agenda to the Commission, or to take additional concerns to their state representative.
Of course, citizens raised other environmental concerns as well during the meeting. Idaho, unlike many oil and gas producing states, requires fencing around the well site to “maintain safe working conditions, secure safe working conditions, secure the well site, and prevent access by wildlife and livestock,” according to the proposed rules.
Additionally, the proposed rules state that “the fence design must be acceptable to both the landowner and owner or operator.”
Boise resident William Fowkes said he hopes the fencing requirements will take birds into account as well, not just pedestrian wildlife as defined by the state.
Alma Hasse, Payette resident and IRAGE member, had concerns about landowner rights in regards to fencing. She is both a land and mineral right owner and expressed frustration over not having an answer about whether landowners in her situation could be mandated by the state to have infrastructure that they don’t want, forced onto their properties, especially in a situation when they are force-pooled into participation with drilling and fracking.
“If you’re going to force someone to have stuff on their property when they own their mineral rights, then they need to have a lot more say so over what happens there,” Hasse said.
Surprisingly, inspections were one topic where barbs didn’t fly. While Idaho Department of Lands and citizens agreed that quarterly inspections would be best, biannual inspections will be pushed for instead.
A trusted EnviroNews USA oil and gas correspondent told us that even biannual inspections would be a lofty goal if Idaho were to eventually end up with thousands upon thousands of wells. In some states with densely spaced oil patches, wells are even known to go for years or decades without being looked at by anyone from any regulatory agency whatsoever, as was recently discovered to be the case in Utah with its antiquated wells on BLM land. The agencies in charge usually say they don’t have the budget to perform such widespread inspections.
The rules negotiated in last week’s meeting are open to public comment until August 1 and will be reviewed by the commission for approval. If approved, the rules are then sent to the legislature for review, where they can later be implemented into administrative code.
For more information on the proposed rules and submitting comment visit: http://www.idl.idaho.gov/oil-gas/commission/rulemaking/index.html
The IOGC will hold its next meeting is 9 a.m., August 5 in the Lincoln Auditorium in the State Capitol located at 700 West Jefferson Street, Boise.