Letters from the West

Idaho updates rules for oil and gas leasing

Trendwell West, Inc.well in Canyon County in 2014.
Trendwell West, Inc.well in Canyon County in 2014. kgreen@idahostatesman.com

Oil and gas leases on state lands would be auctioned online under a new rule proposed by the Idaho Department of Lands.

The leasing rules have not been updated since 1988, said Lands Director Tom Schultz. Live auctions on line bring three to four times the bidders and increase the price for the leases which go into the endowment for schools and other state services.

The new rules also would increase the fees for nominating land for bidding from $25 to $250.

"We are actually cheaper than the Bureau of Land Management," Schultz said.

The proposed rules also would allow the state to reduce the length of the lease from 10 years to five.

"Private land is leased for three years in most states," Schultz said.

The rules also add specific language making it clear drillers must pay royalties on natural gas liquids, which are the main revenue generator from most of the wells in Idaho. One well is producing oil.

Current rules require the drillers to provide " a sworn monthly report on all production for each lease." But Lands has proposed deleting the requirement because it says it is a regulatory function and should be in the other rules. Critics said this is just another way to reduce public information on the volume of production in the hands of the state or the public.

In a separate rule-making Lands is considering reducing the current six months drillers have to keep their production secret to a combination of 60 to 90 days. The public doesn’t get access to the data for six months after the department under the state law.

Idaho has eight producing wells with three on state lands. The rules not only cover state leases but private and split estate leases.

Under state rules and law the Idaho Oil and Gas Conservation Commission is the body where mineral right holders can go when they believe their mineral rights aren't protected by the oil and gas drillers. Critics at the first rulemaking last week suggested private leases should be written with the same protections in state leases.

The next session is scheduled for Wednesday at 9.m. in the Lincoln Auditorium at the Idaho Capitol.

Rocky Barker: 208-377-6484, @RockyBarker