Snake River Oil and Gas is testing three of its gas wells in Payette County. Gas left over from the testing is flared off.
While 2012 was a year of acquisition and information gathering for Snake River Oil and Gas, 2013 is poised to be a year of drilling for natural gas in southwestern Idaho.
“We will probably start drilling in the spring,” said Richard Brown, CEO of Snake River Oil and Gas. His company has close to 130,000 acres of gas and oil leases in Payette and Washington counties as well as seven productive wells. Snake River bought the wells last year from Bridge Resources, which initially drilled the productive wells.
Along with buying the wells and negotiating leases with landowners, Snake River spent $14 million last year exploring its new holdings, using large, earth-shaking trucks and high tech sensors in the ground to get three-dimensional data on how natural gas is situated underground. That data is still being analyzed. It looks promising, according to company officials. Now the company is testing three of its seven wells to learn more about the gas reservoir underneath the wells. After that could come drilling to extract that gas.
If all goes well, the next step for the drillers would be building a pipeline to connect the wells. They are close to the multi-state gas pipeline as well as Idaho Power’s new Langley Gulch gas-fired power plant near New Plymouth. Brown speculates that pipeline work could start in the summer.
Supporters say that successful oil and gas development could make Idaho more energy independent and would help the economy.
“This is a gift that falls into your lap,” said Suzanne Budge, executive director of the Idaho Petroleum Council. She said that the states that weathered the recent recession the best all had energy resources. State lawmakers last year approved new regulations for oil and gas, which gave broader oversight to the state’s Oil and Gas Conservation Commission and limited authority of local governments.
The petroleum council supported those efforts. Budge said that 2013 could be a quiet session for oil and gas issues, since the council does not have major legislation that it is backing.
“They are not asking for a thing but a regulatory framework that is consistent with how they do business everywhere else,” she said.
John Foster, a spokesman for Snake River Oil and Gas and the council, said that the added resources could lead to continued low-cost energy, which would help manufacturers interested in far southwestern Idaho.
Dan Kirschner, executive director of the Northwest Gas Council in Portland, Oregon, said that the added natural gas helps the region’s gas users, since it would reduce the amount of gas needed to flow in on a pipeline from Canada or Wyoming.
“The benefit of having something like this right in the middle of your system is that now those molecules are not as far away from the market,” he said.
While natural gas production is relatively new to Idaho, the companies involved have histories in the industry. Snake River is a subsidiary of Weiser-Brown, an Arkansas-based gas company active in six southern states. Alta Mesa Holdings, another oil and gas company based in Houston, acquired the Bridge resources along with Weiser-Brown.
Richard Brown said that Weiser-Brown has a good track record of developing new gas projects, but expanding to a new state has brought challenges. While the seismic trucks or drilling rigs may be a phone call away in Arkansas or Texas, they are much harder to get to Idaho.
“This is a big deal for us, in terms of time and getting infrastructure here,” Brown said.
As the gas play in Payette develops, Brown said that he may end up moving to Idaho. He said that his parents honeymooned in Sun Valley and that his father, one of the leaders of Weiser-Brown, had wanted to start a gas industry in Idaho.
The nascent oil and gas industry is now operating under new state laws and rules put in place with the industry’s input. There could also be new regulators. The Idaho Oil and Gas Conservation Commission has the same makeup as the state’s Land Board, which is composed of Idaho Governor C.L. “Butch” Otter and other statewide elected officials.
The Department of Lands, the administrative arm of the commission, has proposed changing the makeup of the board, with the five members now being appointed by the governor. The five would include experts in geology, water, and oil and gas as well as two landowners, one of whom owns mineral rights in a county with gas activity. The current gas commission unanimously approved the change in December, though it next requires legislative approval.
Even just in the seismic testing phase, the gas play led to significant employment. Snake River Oil and Gas had more than a hundred employees during the summer for the testing and still employs geologists studying the testing results, engineers looking at a potential pipeline, and leasing agents who work with landowners.
The gas exploration does have some critics concerned about how drilling could affect the surrounding environment.
“Our primary concern is that what they are doing is going to have a negative impact on local groundwater,” said Justin Hayes, program director with the Idaho Conservation League. He said that he has some concerns over potential hydraulic fracturing, or “fracking,” a process of using fluids that include water and some chemicals to break up subsurface rocks to help wells reach gas.
Snake River Oil and Gas’ drilling will not use fracking, Foster said, but rather conventional drilling, similar to drilling a water well, only deeper and with more steel casings.
Hayes said that the state rules on fracking worry him. Gas well operators like Snake River Oil and Gas must tell the Department of Lands which chemicals and materials they use for hydraulic fracturing, though Hayes said that could include potentially dangerous chemicals.
“If this goes forward, we want it to go well for the local communities and local environment,” Hayes said. Hayes also said that he does not like that the governor will get to pick all the members of the potential new gas commission, but many other state commissions have similar selection policies.
Foster said that Snake River Oil and Gas’ plans are safe and scientifically sound. Opponents of fracking say that the practice can lead to gas and chemicals contaminating water. Several cities, as well as the state of Vermont, have bans on fracking, though the practice has also led to a dramatic increase in the domestic production of natural gas.
“It is unfortunate that a handful of anti-industry activists have managed to create such a furor around fracking,” Foster said. “While it is controversial and some environmental groups oppose it, it is without question one of the reasons that our economy has remained as stable as it has.”
(By Brad Iverson-Long, Idaho Business Review)
Please see the Rebuttal to Snake River Oil and Gas Could Start Drilling in Payette County this Spring by Alma Hasse of Idaho Residents Against Gas Extraction (IRAGE).