Idaho’s vision to build a viable oil industry and a natural gas business tied to the nation’s third largest dairy industry have been waylaid by low prices and limited infrastructure, clouding the vision for the future.
“Idaho gas consumers continue to benefit from low prices and plentiful supply,” said analyst Kevin Keyt, writing for the Idaho Public Utilities Commission in its latest annual report. Keyt told NGI that Idaho’s growing dairy industry and “lucrative incentives” for renewable natural gas (RNG) as a transportation fuel could be a boon for dairy operators.
State officials are seeing “more interest in developing dairy digesters to produce pipeline quality gas, and digesters previously used to create electricity are shifting to pipeline quality RNG production,” he said.
“RNG is still very new here… there is one operational RNG facility working with a dairy farm here, and there are many more that are in development right now,” said policy analyst Marde Mensinger, who works in Gov. Brad Little’s Office of Energy and Mineral Resources. “The technology is still very new, but there is a lot of interest in it.”
However, finding operators willing to begin new developments with low commodity prices is an issue, even though the Idaho legislature has passed numerous bills to help the oil and gas industry over the past few years.
Houston-based Alta Mesa Holdings LP in January sold its Idaho portfolio to Snake River Oil and Gas Group, giving it controlling interest in six wells and processing facilities. As of March, the six gas wells in Payette County were shut-in, according to administrator Mick Thomas of the Idaho Oil and Gas Conservation Commission. The shut-ins are attributed to low prices, limited infrastructure and high water disposal costs.
Eventually Snake River wants to resume producing wet gas but not now, he said.
“Snake River evaluated the cost of operations and water disposal and compared what they could get for the natural gas and condensate and determined the numbers were not profitable, so they shut-in the field,” Thomas said.
Since then there has been no production in the Willow field of Payette County. “The field is not a resource play basically,” Thomas said.
“There is a little bit of gas trapped in sand pockets out in west Idaho and that’s it.” Snake River intends to move forward if it can overcome added transmission infrastructure. Wellsite injection is banned, and disposing produced water costs about $11 per barrel.
There also hasn’t been any meaningful oil production since 2018, Thomas said. “The field is primarily a wet associated gas field,” he said.
Since 2015 when exploration and production began in the state, Idaho has produced 108,000 bbl of oil, 341,000 bbl of condensate and 1.2 Bcf of gas. It also has produced 185,000 barrels of wastewater from operations, which in Idaho cannot be re-injected.
Overall gas consumption from three distribution utilities decreased 1.8% last year as all segments went down from 2018 except for power generation, which increased by 8.5%. Demand for the region is forecast at 1.1%, with power generation, residential and commercial being higher and industrial forecast to be flat, according to the Northwest Gas Association.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |