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Idaho Looks to Revamp Oil, NatGas Regulations, Preparing for Increased E&P

A proposal in the Idaho legislature (HB 232) that emerged Wednesday is aimed at rewriting the state's oil/natural gas code to accommodate expected increased exploration and production (E&P) activity in a state that has little historic production.

As part of the proposal authored by state Rep. Judy Boyle, a Republican from Midvale, ID, the state's Oil and Gas Conservation Commission (OGCC) would be reconfigured to include the governor, director of the Idaho Department of Lands, and two oil/gas experts.

This legislative action comes after a breakthrough year for the state in which it advanced natural gas production and completed assessments of its oil/gas regulatory framework to determine how it compares to other more mature natural resource-producing states. A state review did not find any "gaps" in Idaho's oil/gas regulatory scheme, according to the Interstate Oil & Gas Compact Commission.

Last year, Idaho completed its first full year of commercial natural gas production, making it the 31st state to produce hydrocarbons, an OGCC spokesperson said, adding that drilling activity will most likely continue through 2017 as small operators keep moving into Idaho's prospective counties.

For the fiscal year from July 1, 2015 to June 30, 2016, Idaho reported new data on five wells, bringing the statewide total to six producing wells, according to a report last fall from the Department of Lands. Natural gas production was 2.6 Bcf during that period, along with 81,000 bbls of condensate and 88,000 bbls of natural gas liquids (NGL).

Production was reported from two fields in Payette County the state officials said. Five of the wells producing both gas and NGLs are in the Willow Field, and the Hamilton, which is dry gas, has one producing well.

A unit of Houston-based Alta Mesa Holdings LP remains the state's principal operator, according to the OGCC spokesperson. NGI's Shale Dailysought out a Boise-based Alta Mesa spokesperson, but he did not respond to questions about the latest move in the state legislature, which would also add a requirement for metering wells so operators measure their production and make monthly reports to the state.

The state lands department recently received an assessment of the OGCC done by the State Oil and Gas Regulatory Exchange (SOGRE), which was also presented last month to the Senate Resources and Environment and House Resources and Conservation Committees. It was in the latter committee that Rep. Boyle introduced HB 232.

"The SOGRE team did not identify material substantive gaps in the implementing regulations [for oil and gas activity]," the report concluded.

SOGRE's review addressed six issues raised by the OGCC and another dozen that the reviewers raised. These included OGCC commission composition and levels of oil/gas expertise; well spacing and setback requirements; lack of jurisdiction over underground injection control wells; metering/reporting of production wells; and processing times for drilling permits.

"Idaho is becoming more standardized in its rules and regulations," Department of Lands Director Tom Schultz wrote in the agency's latest annual report. "We are bringing Idaho's oil/gas regulatory program in line with other states that have been actively regulating oil/gas development for decades."

While petroleum exploration in Idaho dates back to 1903, no commercial reserves were discovered until only recently, despite promising geology in the state's southeast and southwest corners, the U.S. Energy Information Administration (EIA) said last fall in an updated profile of the state's estimated energy resources. "Small amounts of crude oil and condensate were produced from wells drilled primarily for natural gas," EIA said, adding that the state has no refineries.

"Commercial natural gas production is being developed in southwestern Idaho, but output so far has been small," EIA said. "Idaho consumers receive nearly all of their natural gas supply by pipeline from Canada and from other western states." About 85% of the gas entering Idaho flows through the state to Washington, Oregon and Nevada through interstate pipelines.

From 1903 through the 1980s, operators drilled 152 oil and gas wells across Idaho with no commercial results. New oil and gas leasing resumed in 2006, and Bridge Resources Corp. began reprocessing older seismic data from the Western Idaho basin. Beginning in 2010, Bridge drilled 11 wells in two years with partner Paramax Resources Ltd.

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