Letters from the West

Senate votes to give oil and gas reform bill final approval

An Alta Mesa employee stands next to a gas well that serves Intermountain Gas customers in New Plymouth.
An Alta Mesa employee stands next to a gas well that serves Intermountain Gas customers in New Plymouth. Idaho Statesman

The Idaho Senate sent to Gov. Butch Otter’s desk Thursday, a bill that protects landowners, provides transparency and promotes competition in the oil and gas industry.

The bill passed 35-0, getting the same unanimous vote it received in the House, 68-0, after amendments that satisfied Alta Mesa, the only company producing oil and gas in Idaho.

The main amendment eliminated the requirement that in leases with landowners, an oil company must pay the entire costs of marketing, transporting and processing oil, gas or natural gas plant liquids unless other arrangements are made. It also removes the requirement for contracts with landowners who are forced to sell their oil and gas by the state through a process called “forced pooling.”

The bill changes the makeup of the Idaho Oil and Gas Conservation Commission, putting three petroleum industry experts, the Department of Lands director and a county commissioner from an oil producing county on the commission.

The bill would open up to public review records that had been closed to the public and, for six months to a year, the state. Now the public will have access to production records 45 days after production begins.

To help other drillers compete, it would require the Idaho Department of Lands to post the records on its website and release them without first requiring a public records request.

The new bill also would allow operators to use default spacing for gas wells of one in 640 acres or one in 160 acres. The unit spacing can be changed and shaped to ensure that gas reservoirs are developed to best conserve the resource and ensure mineral rights holders are properly compensated. Alta Mesa wanted to keep the 640 acre spacing that’s in current law.

The bill would require operators to show that it has 67 percent of the royalty owners in a spacing unit in support of its application to force all owners in the pool to allow drilling. But after a period of time, that requirement could drop to 55 percent of royalty owners.

The bill authorizes the Department of Lands to share information with the Tax Commission. It also provides information for royalty owners about the price their resource was sold for.