An investigation by Idaho officials into a Texas-based oil company’s production reporting from nine natural gas and oil wells in southwestern Idaho has found what state officials describe as reasonable variances.
Idaho Department of Lands investigator Dave Schwarz told the Idaho Oil and Gas Conservation Commission on Wednesday that an error in a formula used by Alta Mesa appeared to account for differences between what the company allocated to wells and what was produced.
“We’re making progress on gathering data,” said Commissioner Jim Classen after the meeting. “Part of the process was incorrect, but that’s being rectified.”
The investigation going back to 2015 found the greatest discrepancy occurred at a well where some mineral interest owners have filed a lawsuit in state court challenging Alta Mesa’s method for determining royalty payments.
The investigation found a 28% difference in a particular product called condensate produced at what is called the Kaufmann well, the focus of the lawsuit.
The commissioners agreed with Schwarz that, based on the volumes produced at the wells, the variations discovered in the investigation were small.
“The differences are insignificant,” Commissioner Renee Love said, inquiring if the rest of the panel agreed and finding they did.
Still, the 28 percent difference in the amount of condensate reported at the Kaufmann well could add up to a significant dollar amount, though none was given at the meeting.
The next part of the investigation that could be presented to the commission in August involves tracking sales of products produced at the wells.
The accounting methods involved in such sales can figure into royalty payments, and the state lawsuit filed earlier this month in 3rd District Court in Payette specifically targets that aspect involving the Kaufmann well.
Alta Mesa is based in Houston. However, an independent company has since been formed called High Mesa, which now has ownership of operations in Idaho.