- Associated Press - Thursday, December 17, 2015

BOISE, Idaho (AP) - State officials on Thursday appointed a hearing officer in what will be the first use of a new Idaho law that allows unwilling mineral rights owners to be included in a company’s plan to drill for natural gas and oil.

The Idaho Oil and Gas Conservation Commission on a 5-0 vote appointed the hearing officer for two areas in Payette County in western Idaho that a Texas oil company believes have profitable reserves. Houston-based Alta Mesa is already active in the region with more than a dozen wells producing natural gas.

The law approved earlier this year involves a process called integration that applies to specified areas, typically 640 acres. When 55 percent of mineral rights owners want drilling to go forward, they can ask the state to integrate the other 45 percent.

“We’re trying to set up a precedent for future integration as they may need to be performed,” said Commissioner Jim Classen, an exploration geologist, after the meeting. “We’re trying to do it in the fairest fashion for the benefit of the mineral interest owners as well as the exploration companies.”

John Foster, a spokesman for Alta Mesa, said the state should handle the integration much more quickly through an administrative process rather than going through the commission and a hearing officer with hearings that have yet to be scheduled.

“This is a standard process that takes 30 to 60 days in most states,” Foster said. “It’s very straightforward.”

If integration is ordered, reluctant mineral interest owners will have three options. They can choose to lease rights to Alta Mesa, they can become a working interest owner by sharing the costs, or they can become a nonconsenting working interest owner. The nonconsenting option avoids costs but results in having to pay a much larger portion of profits compared with working interest owners.

Essentially, the law prevents a minority of mineral rights holders from stopping production in a given area. The law is also intended to make sure all mineral rights holders receive their fair share of revenue.

“The idea of integration is to protect everybody’s rights,” said Commissioner Ken Smith, a retired energy company executive, after the meeting. Appointing a hearing officer and holding hearings “gives the chance for every party to voice their point, have it done in an orderly fashion and then a good summary for the commission.”

The commission has only existed since 2013 when it became clear that Idaho was going to become an oil- and gas-producing state because of new technologies that allow the pinpointing of profitable reserves.

“I think a lot of this right now is (the commission) afraid to make mistakes,” said Commissioner Sid Cellan, who represents landowners without mineral rights. “It’s brand new for the state.”

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