Letters from the West

Former Idaho Sen. Craig asks regulators for stopgap rules on oil and gas metering

Will Idaho Allow Oil And Gas Competition?

Idaho is rewriting oil and gas rules and companies who want to come here to drill are trying to get the same opportunity the first operator, Alta Mesa Idaho has.(Rocky Barker)
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Idaho is rewriting oil and gas rules and companies who want to come here to drill are trying to get the same opportunity the first operator, Alta Mesa Idaho has.(Rocky Barker)

Former Idaho Republican Sen. Larry Craig told the Oil and Gas Conservation Commission Thursday to add rules for ensuring that meters on oil and gas wells are accurate.

Craig, representing Wyoming-based Lone Tree Petroleum, an exploration and development company, said the commission should “cut and paste” the rules that North Dakota uses to ensure meters accurately show how much oil, gas and other petroleum products each well produces.

Today neither the Idaho Department of Lands nor the Idaho Department of Agriculture’s Bureau of Weights and Measures checks the meters, which measure the production on which is calculated the 2.5 percent severance tax and royalties due mineral right holders.

In the interest of protecting the rights of landowners, the state and all mineral owners letting “another year or even one month to go by without proper metering should be simply unacceptable,” Craig said.

North Dakota’s commission requires oil and gas operators to hire a third party to test meters, upon the request of the mineral right owner. It also outlines meter requirements and third-party testing schedules. Idaho rules tell the operator only to calibrate meters once a year and to maintain calibration records for five years.

Day-to-day operations can cause small variances in the readings that can built up over time, Craig said.

Idaho Department of Lands Director Tom Schultz said most state regulators do not test meters themselves, adding that he doesn’t have the staff to do regular inspections. But CJ McDonald, a Lone Tree official, noted that North Dakota rules require only that the company hire a third-party testing company to checks the meters.

Idaho mineral right owner Randy Kauffman, on whose land Alta Mesa’s one oil well is located, said he agreed with Craig and said better enforcement is important to landowners.

Schultz said the Idaho commission has no auditing function, which would require checking meter data against production figures reporting by the driller. Of 21 oil and gas states he spoke with, he said, 19 did not have it. Utah and Arkansas have their commissions serve as arbiters of disputes between operators and mineral right owners and do have auditing authority.

Auditing currently can be done by the Idaho Tax Commission, Schultz said. Inspections take staff time.

“The staff you see before you is the staff we have today,” Schultz said of the two people attending Thursday’s session with him. “To work through dispute resolution takes time and effort.”

In many states (production) reporting is almost instantaneous.

Former Sen. Larry Craig

I think 30 days is long enough.

Idaho Department of Lands Director Tom Schultz

His staff had earlier suggested that meter calibration was handled by the Department of Agriculture’s Weight and Measures Bureau. But officials with that department said they have nothing to do with that calibration.

On another issue, the Department of Lands said it is beginning to draft a bill for the Legislature to clarify what production data must be made public and when. Current law requires production data be released to the public six months after the state gets it from the operator.

Idaho law also specifically requires well logs, but is silent on data such as when a well is completed for production or capped. The commission voted 3-0 to advance the legislation.

The Department of Lands rules seek to require the operator to release production data as soon as it can. The state would then release it to the public a year after production begins. Currently the production data remains secret from even the state for six months.

For the sake of transparency, former Sen. Craig said, the time production records should be kept from the public should be “continuously reduced.”

Rocky Barker: 208-377-6484, @RockyBarker

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