Letters from the West

New oil and gas rules improve transparency and oversight but critics say more needed

Alta Mesa Idaho's natural gas dehydration plant near New Plymouth, Idaho, a part of the only oil and gas producer in the state’s $150 million of infrastructure in the state.
Alta Mesa Idaho's natural gas dehydration plant near New Plymouth, Idaho, a part of the only oil and gas producer in the state’s $150 million of infrastructure in the state. kgreen@idahostatesman.com

Oil and gas drillers would have to have their meters calibrated quarterly by a third party under a new set of rules for regulating Idaho's relatively young oil and gas industry approved Thursday by the Idaho Oil and Gas Conservation Commission.

The new rules, which also would shorten from six months to 90 days the period of time production data from active wells would be hidden even from state regulators, now go to the Idaho Legislature for final approval in January.

Idaho produces oil, gas, condensate, and liquid natural gas from seven producing wells in Payette County.

The rules are intended to protect private property rights, create transparency and provide fair and consistent rules that promote competition. The rules have been through an eight-month negotiation process that left some industry critics and one commissioner unhappy with spacing rules that set a drilling unit at 640 acres along section lines.

Commissioner Jim Claussen, a geologist, pushed for 160-acre spacing for gas wells along with former U.S. Sen. Larry Craig representing Lonetree Petroleum, a company that holds leases in the state but has not drilled. Idaho Department of Lands Director Tom Schultz told the commission companies can reduce the size of a spacing unit to reflect data that shows how much area actually holds natural gas underground.

He said it was easier to reduce the size of a spacing unit than to increase. But Classen remained unconvinced.

"Up here in Idaho we don't have any data these wells are going to drain 640 acres," he said.

Craig told commissioners without real-time access to metering data to validate production and sales mineral right owners and the state can't unsure accurate data.

"The minerals do not belong to the operator," Craig said. "They belong to the mineral right owner and we should regulate with that in mind."

From July 1, 2015, through June 30, 2016 Alta Mesa Idaho, the only company producing oil, gas, condensate and liquid natural gas in Idaho, reported just over $70,000 in gross severance tax (2.5 percent). So far this year in only four months the company reported $99,882 in taxes paid from the same wells.

Rocky Barker: 208-377-6484, @RockyBarker

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