Exploration

EPA Takes Over Waste Waterwater Regulation and Gives Alta Mesa New Hope In Idaho

Idaho Oil Well

There is no denying that the oil & gas industry has struggled in recent years with varying opinions on the effects of wastewater disposal.  From earthquakes to contamination concerns the industry has certainly been navigating disposal obstacles in recent years.

Wastewater disposal wells are becoming a common sight on the horizon in the drilling regions of Oklahoma and Texas as the water-intensive practice of hydraulic fracturing, or fracking, continues to spread.  In the fracking process, several million gallons of water, combined with sand and chemicals, are sent down a well to break up rock and retrieve oil and gas. Some of the fluid comes back up, along with additional underground water.  Most of this wastewater is trucked to disposal wells and injected thousands of feet underground for permanent storage. But lately, those wells have caused concern about earthquakes, truck traffic, accidents and the possibility for spills and groundwater contamination.

Recently this discussion and litany of concerns has shown its head in what some would think is an unlikely location, Idaho.  As of Monday federal government has taken over regulating underground injection wells in Idaho in a move that could boost the state’s oil and natural gas production by making it cheaper to dispose of wastewater.  The U.S. Environmental Protection Agency on Monday issued a final rule transferring a portion of the state’s Underground Injection Control program.

The Idaho Department of Water Resources in August 2017 requested the change after failed attempts by the state to get approval from the EPA to regulate what are called class II injection wells.  “We think it’s good because it has the potential for growth of the industry,” said Mick Thomas, head of the Idaho Department of Lands’ oil and gas division. Generally, increased production means more royalties for mineral rights owners and more tax revenue for the state.  Texas-based Alta Mesa has said its production of natural gas and oil in Idaho dropped because of the high cost of trucking the wastewater to evaporation ponds south of the Boise Airport.  Thomas estimated the cost of trucking the wastewater to be $9 per barrel. He said an injection well could lower the cost to $2 per barrel.

If disposal costs are pushed to roughly one-third of the cost of trucking the water one could conclude that Idaho will most likely see an uptick in production on existing wells, but will Idaho see a run on new development and the economic benefit of new activity? 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. enough Alta Mesa Idaho is currently the only company producing oil and gas in Idaho.  Ideally, the company would like to use deep injection wells to return the water to the ground it came from, a common industry practice.

Alta Mesa 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.

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.”

Only time will tell if new opportunities will surface now that disposal regulation is in new hands, and I think its safe to say that many of us around the industry will be watching.

 

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