Thousands of acres in the Little Willow Creek region went up for lease for oil and gas use Thursday.
The acreage included five parcels made up of 997 acres of U.S. Bureau of Land Management-administered lands and 5,352 acres of split estate lands. The parcels sold for a total of $3.87 million dollars, according to BLM geologist Karen Porter.
The BLM owns subsurface minerals in split estate property. Anything above ground is privately owned.
Spokesman John Foster, speaking for the Houston-based oil and gas company Alta Mesa, told the Independent-Enterprise on May 15 that it intended on participating in the lease sale.
However, the company never registered, said Porter.
Instead, four parcels went to Reagan Smith Energy Solutions, an Oklahoma-based oil and gas consulting company. The other parcel went to Thana Kauffman of Payette.
When asked if Alta Mesa is related to Reagan Smith Energy Solutions, Foster said, “The auction was great for Idaho. The state and its citizens will receive substantial financial benefits from this lease sale and from any future royalties.”
He said that would be the company’s only comment.
Meanwhile, Kauffman said she purchased the land for herself and her husband, Randy, as a personal investment. She does not plan on partnering with Alta Mesa on her newly leased land, nor does she know if she will eventually drill on it. Alta Mesa currently has a lease agreement with the Kauffmans and owns two wells on their property.
Alta Mesa has a total of eight wells drilled in the Little Willow Creek area and one pending application to drill, according to the Idaho Oil and Gas Conservation Commission website. The wells are not active since the company is waiting for a pipeline to go online.
The pipeline will begin use once the company’s gas processing facility on U.S. 30 in Payette County is up and running.
On May 1, Foster said Alta Mesa is in its final stages of commissioning the processing facility.
The gas company has been looking to drill into a 615-acre square unit in Little Willow Creek since early 2014.
Since the unit contained 187 acres of BLM split estates, Alta Mesa needed to lease those lands so it could pay government royalties on any minerals extracted.
BLM was unable to lease the property at the time since it needed to conduct an environmental assessment.
Instead of waiting for the assessment, Alta Mesa made two requests to the Idaho Oil and Gas Commission to omit the BLM properties from its drilling unit. The commission denied its first request in September 2014. When Alta Mesa made its second request that October, the commission voted to table its decision on the grounds that Alta Mesa provide more information about the gas entrapment it wished to tap.
At the October meeting, Alta Mesa general consul and vice president John Peiserich said it was impossible to know the exact size and shape of a gas entrapment without first drilling.
BLM has since completed its environmental assessment, which was published in December. It concluded that the lands could be offered with no surface occupancy and no subsurface occupancy until BLM completes its environmental impact statement.
That means the lessees cannot drill into the five leased parcels, nor can they slant drill from a nearby property.
Porter said it could take another year for the BLM’s Four Rivers office to complete the impact statement.
“By doing that, we are meeting our purpose and need, which is to prevent uncompensated drainage of the federal minerals on those lands,” she said.
Depending on the impact statement’s conclusions, Reagan Smith Energy Solutions or Kauffman can ask the BLM for permission to drill once it is completed.