Letters from the West

Oil and gas exec says House bill would discourage investment in Idaho industry

A partner in the only oil and gas company producing petroleum in Idaho has told state officials he will reconsider his investment in the state if a comprehensive bill to reform the state’s regulations of the industry passes.

Richard Brown is CEO of Snake River Oil and Gas, which owns 25 percent of AM Idaho’s operations, and he acts as a consultant for the Houston-based operator Alta Mesa. He said he was shocked by the scope of the 46-page bill introduced by Midvale Republican Judy Boyle last week.

“I think this bill as is absolutely a deal killer,” Brown said.

Brown, who lives in Houston and Sun Valley, brought Alta Mesa to Idaho in 2012, taking over the operations of Bridge Resources, the company that discovered natural gas in Payette County in 2010. Today Alta Mesa has eight Idaho wells after investing $160 million, but because of the downturn in oil and gas prices has recovered only a fraction of that investment.

Brown said he had talked to Boyle throughout 2016 and knew she was working on legislation. He did not know the bill was, as she described it, “a complete rewrite of the oil and gas code.”

Boyles’s bill, House bill 232, has the support of her two District 9 Republican lawmakers, Ryan Kerby of New Plymouth and Abby Lee of Fruitland. All three are Republicans. The bill 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.

Brown acknowledged the company “needs to do more” to address what he said are misconceptions about the company’s production.

Brown and Alta Mesa CEO Hal Chappelle met with Idaho Gov. Butch Otter and other state officials March 2 to explain to them how oil and gas flows from wells through their pipelines and processing facilities and eventually to markets by rail. Company officials sought to assure the state officials that the company is paying royalty owners and the state tax commission what it owes.

Boyle’s 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 encourage competition, it also requires the Idaho Department of Lands to post the records on its website and release them without requiring a public records request.

C.J. McDonald, CEO of Lonetree Petroleum, which is seeking to begin drilling on land it has leased in Idaho, said the transparency provisions will attract more competition and better prices for mineral right owners. Brown disputes that.

“Based on current prices and the stifling regulatory environment, we will be lucky to ever see profit,” Brown said. “That is what stifles competition.”

Harry Soulen, of Weiser, one of the landowners who pushed for the landowner protection portions of the legislation, said he believes the transparency sections of the bill are good for all sides because they will build trust in the industry.

Brown said there is still a chance to bring the sides together.

“If there is going to be a bill, industry needs a seat at the table,” Brown said.

Rocky Barker: 208-377-6484, @RockyBarker