A comprehensive bill that would give the state sweeping powers to protect oil and gas property owners, open the state up to competition and provide transparency was introduced Wednesday in the House Health and Welfare Committee.
Republican Rep. Judy Boyle introduced a 46-page bill that came after complaints from property owners and suspicions that the only company producing gas and oil in the state was not paying its fair share.
“This is a complete rewrite of the oil and gas code,” Boyle said.
The bill opens up to public review records that had been closed to the public and even the state for six months to a year. To help competitors, it also requires the Idaho Department of Lands to post the records on its website and release them without requiring a public records request.
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The bill changes the makeup of the Oil and Gas Conservation Commission to include the governor; the director of the Department of Lands; a county commissioner from an oil-producing county; and two oil and gas experts.
The bill would let the commission stop an operator from pumping oil and gas from a well if the company violates law, and even would let the state set the price, based on published rates, if it questions the rates that operators are paying in royalty and taxes.
The bill also changes the default spacing of gas wells from one in 640 acres to one in 160 acres. The default spacing can be changed and shaped to ensure that gas reservoirs are developed to best conserve the resource and ensure that the mineral rights holders are properly compensated.
The bill would require the operator to show that it has 67 percent of the royalty owner property in a spacing unit supporting its application to force all owners in the pool to allow drilling, instead of the current 55 percent. That would set the bar higher for what is known as “forced pooling,” which critics say takes away reluctant owners’ property rights.
Forced pooling and the payments to property right owners have been controversial in Fruitland. An appeal of one forced-pooling decision there was denied after a hearing Wednesday.
Boyle said the bill is based on a report assessing Idaho oil and gas regulations done by officials of other oil and gas states, including Utah. She said she also worked closely with Otter, Department of Lands Director Tom Schultz, and other lawmakers and landowners.
New Plymouth Republican Rep. Ryan Kerby, a supporter, called it “a District 9 bill,” referring to the legislative district he shares with Boyle and Fruitland Republican Sen. Abby Lee.
Lee said the bill incorporates some of the reforms she has in her Senate bill “and then further expands protections for surface owner and mineral owner protections.”
Schultz said his board has not voted on the bill, but he does not oppose it at this time.
Boyle said she also took suggestions from Alta Mesa Idaho, the only company producing gas and oil in Idaho. John Foster, a lobbyist for the company, said he had not seen the bill and could not comment.
Alta Mesa CEO Hal Chappelle is scheduled to meet with lawmakers Thursday.
C.J. McDonald, CEO of Lonetree Petroleum, which is seeking to begin drilling in Idaho on land it has leased, said the bill does a good job for landowners and for his company.
“It puts Idaho in tune with other states and gives us a level playing field,” McDonald said.
Eagle resident Shelly Brock, a board member for Citizens Allied for Integrity and Accountability, has been a critic of Alta Mesa and the state’s oversight. She said that even though the bill does not change setbacks for drilling equipment and does not include higher bonds, she likes the transparency and raising the bar for forced pooling.
Boyle said the bill puts the setbacks at 300 feet for water wells and occupied structures and increases the surface bond from $5,000 to $6,000.
Other proposed changes:
▪ Extensive regulations for metering, which is measuring the amount and kind of resources coming from a well.
▪ The Department of Lands inspects and reports all active well sites, and also reports the volume of materials leaving all facilities.
▪ Operators must file monthly reports with the Department of Lands on production, sales and transfers. The Department of Lands and the Idaho Tax Commission would be allowed to share data, but must keep confidential information private.
▪ The Department of Lands also may share information with the Department of Environmental Quality, the Department of Water Resources and the Idaho Geological Survey.
▪ All production reports, well data, logs and metering information would be made public without a public records request. It would set limits on what an operator can keep confidential as a trade secret.
▪ The oil and gas commission would have the power to set the pay rate based on regional and other published rates if it determines it’s necessary.
▪ Specific reporting to royalty owners of production and sales would be required monthly.