Tue., May 1, 2018
Idahoans taking oil, gas protections into their own hands
Here's an article from the Idaho Statesman via the Associated Press:
By Rocky Barker
BOISE, Idaho (AP) — Julie and Duke Fugate turned down repeated attempts by an oil company to lease the mineral rights to their 1-acre property here, where they moved from Oregon to retire.
Then last September, Julie Fugate got a packet from the Idaho Department of Lands. It said Alta Mesa Idaho — the only company producing oil and gas in the state — wanted to force her and her neighbors to lease their mineral rights. The company would use a process designed to allow it to drill if it could get approval from at least 55 percent of the area's mineral-right holders.
Fugate, a retired speech therapist, started going door-to-door, visiting 60 of her neighbors. She convinced many of them to file letters of objection. When the forced pooling hearing came, Alta Mesa had other issues and decided to withdraw its application.
Fugate joined Citizens Allied for Integrity and Accountability, an Idaho group organized to push health, safety and property-rights issues raised by oil and gas development. She and other members then went to the Fruitland City Council to press for an ordinance to protect residents and property values.
In February, the council approved an ordinance creating a 1,200-foot setback for oil drilling from residents, churches, water sources and canals. It requires oil and gas companies to get conditional-use permits for their post-extraction facilities, and limits those structures to the city's industrial areas.
Now, Fugate is working with Eagle residents seeking an even stronger ordinance in that city. Alta Mesa has leased mineral rights in that area, but said it has no immediate plans to drill.
"I didn't plan on this for retirement," said Fugate, crediting other volunteers and CAIA for the recent successes. She has two wells within a mile of her home. One is close enough for her to see the flaring of natural gas.
"We're at ground zero here," she said.
Eight years after natural gas was discovered in commercial quantities in Payette County, the size and scope of Idaho's oil and gas resources remain uncertain. Alta Mesa has 18 wells, with seven actively producing oil, gas, condensate and other natural gas liquids.
The company has been quiet since the Idaho Legislature passed a sweeping reform measure in 2017 designed to protect mineral-right holders and other property owners. It reconfigured the state Oil and Gas Conservation Commission and required transparency comparable to other oil- and gas-producing states.
Since then, Alta Mesa and its partners have drilled three wells — one in the Willow Creek area of Payette County, near most of its other wells, and two in and around Fruitland. None of the new wells are producing yet, and Alta Mesa has not yet indicated its plans. But James Thum, Idaho Department of Lands oil and gas program manager, said not to expect anything soon from the Fruitland wells.
"There will be a significant delay before they come online," Thum said.
Richard Brown is CEO of Snake River Oil and Gas, which has partnered with Alta Mesa and convinced that company to come to Idaho. He said he can't talk for Alta Mesa, but he had hoped to know more about the size of the oil and gas field by now.
"After seven years, we still haven't figured out if it has a long-term future or not," Brown said. "I wish we did."
Production dropped sharply in 2017 as the only producing oil well was closed — because, Alta Mesa said, the cost of disposing of wastewater was so high.
Ideally, the company would like to use deep injection wells to return the water to the ground it came from, a common industry practice. Idaho has asked the Environmental Protection Agency to take over regulating such wells, to speed up getting a regulatory framework in place. That has brought widespread protests from southwest Idaho residents who worry the solution could contaminate groundwater. The EPA is expected to decide on the request later this year.
Regardless, the oil well began pumping again this year. That's good not only for the company and Idaho taxpayers, but also for the mineral right owners of the well, Randy and Thana Kauffman, whose farm lies in the Willow Creek area at the center of Alta Mesa's oil and gas operations.
They negotiated their lease with Brown in their living room in 2012, and believed their royalties would be unaffected by the expenses of getting gas into a pipeline, marketed, transported and processed. Since then, they've told the commission they believe they have been unfairly charged expenses and have not been paid what they were owed. They asked the commission to intercede under the authority of the new law.
The commission several months ago appointed Boise attorney Jason Risch as a hearing officer to examine the Kauffmans' case. But at a commission meeting April 11, Mick Thomas, who heads the Idaho Department of Lands' oil and gas division, said he had nothing new on the matter to report.
Production of gas and condensate also dropped sharply in 2017, by a respective 45 percent and 55 percent from the year before. Thum, the Lands oil and gas manager, said gas and oil wells go through a natural life, and all eventually decline or end production.
"There have been no new wells (in production) in two years," Thum said, accounting for the drop.
The new state law required production records to be public 45 days after production begins, and the same for drilling records after six months. At least one competitor — C.J. McDonald, CEO of Lone Tree Petroleum in Wyoming — hoped the law would give him the data to validate what's underground in Idaho so he can convince investors to back him.
McDonald has bought leases and tried to raise capital to finance drilling plans here. He said the Idaho oil and gas field has far more potential than Alta Mesa has suggested.
A year later, the state has a new website. But McDonald insists it does not have the data he needs, and that Alta Mesa was supposed to provide.
"(The state is) more interested in counting page clicks than providing the data that will encourage people to come to Idaho and spend money," McDonald said.
The commission has asked Alta Mesa to provide the state with records so it can compare them to its own. The company has agreed to turn them over, said Thomas, the Lands division head, though he gave no timetable.
Combined, the lack of a hearing for the Kauffmans, the questions over public information, an uncompleted audit of state lease royalties and a lack of coordination between the commission and the Idaho Tax Commission have left Midvale Republican Rep. Judy Boyle disappointed. The 2017 law she sponsored "has not been fully implemented," she said.
But Jim Classen, a Boise geologist and the lone commission member to serve both before and after the overhaul, praised Thomas and said the state "is making progress."
Boyle said she doubts the Fruitland oil and gas ordinance is legal, saying it appears to overstep state authority. But, she said, Alta Mesa treated residents poorly during leasing and forced pooling talks, "poking Fruitland with a sharp stick."
"So this is the result," Boyle said.
State law says counties and cities cannot pass ordinances "prohibiting the extraction of oil and gas." But it says drillers "may be subject to reasonable local ordinance provisions" to "protect public health, public safety, public order or which prevent harm to public infrastructure or degradation of the value, use and enjoyment of private property."
Shelly Brock, a CAIA board member from Eagle, worked with Fugate on the Fruitland ordinance and has pressed Eagle to pass an even more restrictive version. She became alarmed in 2011 when she saw oil and gas companies leasing mineral rights in Eagle, and seismic exploration nearby.
Brock has been organizing regionally, lobbying at the Capitol and working to elect Eagle council members who would support an oil and gas ordinance protecting health and safety, property values and water quality.
On Monday, Eagle's planning and zoning commission sent a version on to the City Council that Brock said is very good.
"The safety of people and property rights should come first," Brock said. "If the oil companies can then make a profit, so be it."
Miranda Gold is one of three new City Council members elected in November with a mandate from the voters on oil and gas.
"From my perspective, people were wanting to see their local elected officials take a strong stand on behalf of the city," Gold said.