Letters from the West

Otter, Bedke seek to let competing oil and gas companies explore in Idaho

Senate Minority Leader Michelle Stennett, D-Ketchum, joins a conversation with Gov. Butch Otter between sessions at a legislative preview for reporters at the Capitol Friday. Both said they want to see Idaho oil and gas regulations ensure fairness, transparency and competition.
Senate Minority Leader Michelle Stennett, D-Ketchum, joins a conversation with Gov. Butch Otter between sessions at a legislative preview for reporters at the Capitol Friday. Both said they want to see Idaho oil and gas regulations ensure fairness, transparency and competition. kjones@idahostatesman.com

Idaho Gov. Butch Otter said he’s working with legislative leaders to make Idaho’s oil and gas industry open to competing companies.

And House Speaker Scott Bedke said lawmakers want to make the industry more competitive and want to examine the severance tax structure and issues of transparency and how wells are distributed within drilling units to ensure that Idaho is working within national industry standards.

“It’s incumbent on us to ensure the state receives a fair return,” said Bedke, R-Oakley, at a pre-Legislature press briefing Friday.

Otter, who has experience drilling oil wells from when he worked at the J.R. Simplot Co., said Idaho developed rules to protect proprietary information for exploration by Alta Mesa Idaho, the company that has eight producing wells in Payette County and which has spent millions to obtain 3-D seismic geophysical exploration data.

Those rules and laws keep production data secret even from regulators for six months and from the public for one year after the beginning of production.

But rules that protect companies when they’re exploring are different than rules for continuing oil production, and the state needs to look at changes.

“Now, when it comes to a producing well, that’s different,” Otter said.

He said he wants to see a regulatory environment that allows other companies to compete in the Idaho market.

“We’re prepared to see what we can do to invite the other folks in, so they see a reason to come to Idaho and explore,” Otter said.

Bedke said Idaho is experiencing growing pains as it transitions from being a new oil- and gas-producing state to a state with a mature oil and gas industry.

In addition to ensuring competition and that the state gets its fair share of oil and gas revenues, Bedke also said lawmakers are looking at ways to protect the private property rights of landowners. Well spacing is an important issue because it determines how units are established for paying royalties to mineral right owners.

Idaho sets the default unit size at 640 acres for gas wells and 40 acres for oil wells.

Bedke wants to follow the lead of other states that have figured out these issues. “This wheel has already been invented,” he said.

“We’re trying to learn from the successes of other states,” said Senate President Brent Hill, R-Rexburg

Senate Minority Leader Michelle Stennett, D-Ketchum, said lawmakers need to consider stronger protections for mineral rights owners who, through the process of “forced pooling,” can be made to accept leasing terms that aren’t fair and can even threaten their mortgages.

“Some would argue that it’s very lenient toward the industry and more egregious toward the landowner,” Stennett said.

Both she and Bedke said it’s the state’s responsibility to protect the rights of the people who own the oil and gas, and not just protect and promote the petroleum industry.

“There’s a lot of education we need to do with the public so they know their rights in this, not just the industry,” Stennett said.

Rocky Barker: 208-377-6484, @RockyBarker

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