Idaho is starting its first ever audit of natural gas and oil wells on state lands to make sure the state is getting its fair cut of royalty payments, state officials say.
Idaho Department of Lands officials told Idaho Land Board members June 20 that the audit on three wells on state endowment lands will cost less than $100,000 and that results will be available this fall.
“I would like to see the results,” said Secretary of State Lawerence Denney, filling in as chairman for Gov. C.L. “Butch” Otter, who is on a trade mission in France. “We may find out everything is OK.”
Tom Schultz, director of the Idaho Department of Lands, said the state has put out requests for proposals but hasn’t hired anyone so far.
The audit follows sweeping changes to Idaho natural gas and oil laws at this year’s Legislative session amid complaints private mineral rights owners aren’t receiving their fair share of royalty payments from Houston, Texas,-based oil company Alta Mesa.
Republican Rep. Judy Boyle of Midvale, whose district is in the midst of Alta Mesa’s production area, pushed for the changes, she said, after concluding Alta Mesa wasn’t making the full royalty payments promised in leases to her constituents.
“We’re going to do our due diligence as a state on the state wells,” Schultz said. “I don’t have any concerns yet, but I’ll know more after we have an audit by a competent auditor.”
The five-member Idaho Land Board oversees 2.4 million acres of Idaho land to benefit state public schools, which in recent years has come to include natural gas and oil production.
“We look forward to working with the state through this process just as we would with any landowner or royalty owner involved in one of our projects,” Alta Mesa spokesman John Foster said.
Idaho has a long history of oil and gas exploration starting in the early 1900s, but it was Alta Mesa using new technologies that made Idaho an oil and gas producing state. The company has spent more than $160 million finding reserves to tap and building infrastructure. But questions about whether what they’ve been pulling from those reserves have bubbled up.
The new law pushed by Boyle also creates an Oil and Gas Division in the Idaho Department of Lands that includes three new full-time staff members dedicated to oil and gas. Those three spots have yet to be filled.
The law also revamps the Idaho Oil and Gas Conservation Commission by replacing mostly citizen commissioners with three industry experts, a county commissioner and the director of the Idaho Department of Lands.
Otter last month appointed Payette County Commissioner Marc Shigeta to the commission, meaning, along with Shultz, that two of the five spots are filled. Otter hasn’t so far announced appointing any other members to the commission, which is scheduled to hold its first meeting July 20.