Members of newly formed Idaho Petroleum Council present to interim Energy, Environment and Technology Committee

Council members include representatives from oil and gas companies, Bridge Energy and others who cite Idaho, with its geographic landscape, as a state with potential to be an important part of solving our nation's energy challenges.

Members noted that concerns about aquifer contamination don’t take into consideration the fact the seismic data that show the shallowest gas reservoir is at 1650 feet. The clay sands at the top (the deepest of which is 216 feet) hold the aquifer. There is further protection for the aquifer from surface casing used in the well drilling process, which extends a concrete and steel barrier down to 700'.

While some fracturing processes are designed to create reservoirs out of shale, the process proposed by Bridge Energy, representatives say, is more akin to “cleaning lint out of the dryer, allowing gas to flow,” with the amount of fluid injected equaling about the same as one and a half back yard swimming pools.

Representative Wendy Jaquet noted a Public Television program in which someone said that the ingredients in the injection fluid were proprietary information and did not need to be made public. Current rules of the state of Idaho would seem to be counter to that sort of secrecy.

Bridge Energy representative Kim Parsons noted that her company has maintained complete transparency as to injection materials.

The council presentation focused on three specific areas:

The Importance of Consistent Regulatory Framework – Such framework ensures good compliance, takes advantage of well understood programs administered nationally, and helps operators understand expectations. Idaho state statute is based on IOGCC Model Statutes and regulatory issues that govern hydraulic fracturing including acts focusing on air and water quality, the National Environmental Policy Act, OSHA, Emergency Planning and Community Right-to-know Act, and the National Pipeline Safety Act.

Economics - Arkansas commissioned a study in 2005 and 2009 as to the economic benefits in Arkansas and Council representatives have developed some estimates for Idaho based upon direct activities, extraction, production and supply chain. Industry employees are paid more than twice the average compensation in Arkansas. In 2007, the combined direct economic impact was $1.7 billion and 3776 jobs, indirect sources accounted for another 4,000 jobs and $400 million and state taxes of $54 million. The oil and gas industry is the only industry that receives no federal subsidies. Comparing these figures to Idaho specifics, this would equate to combined state and local taxes of $206 million, and additional revenues from severance taxes and royalties.

Environmental Considerations – With regard to protecting Idaho's water, council representatives cite physical and regulatory mechanisms already in place, including the design of the well with multiple layers of cement and steel in the bore hole, mechanical integrity testing, annual pressure monitoring and adherence to substantial federal and state rules and regulations.

Idaho fracturing process proposed on a smaller scale than North Eastern states

In two fields near Payette and New Plymouth, a total of seven gas-producing wells can access reservoirs of natural gas in deposits of sandstone between layers of impermeable shale. The reservoirs are between 2,000 and 7,000 feet below the surface and accessible, industry experts say, through a reduced scale fracturing process.

The interim legislative Energy, Environment and Technology Committee heard presentations regarding the fracturing process last week.

Fracturing injects fluid and sand into a formation under pressure to restore or create pathways for gas to flow into a well bore. Energy company Bridge Energy is proposing to utilize the process at a level they say is much smaller than the process that has received attention in the cases of large scale fracturing in the eastern United States.

The process proposed for Southwestern Idaho wells requires about 700 barrels of fluid injected at a rate of 1,000 to 2,400 pounds per square inch over a fracture radius of 150’. Larger scale efforts to create pathways for gas and oil to flow through shale have a radius of 5,000’ and inject 25,000 barrels of fluid at 10,000 psi.

This spring negotiated rulemaking efforts have focused on protecting groundwater aquifers from the injection fluids, which officials note include non toxic ingredients such as guar gum (from legumes), potassium hydroxide, soap, detergent enzymes, boron and acidic acid (vinegar) in water.

Other rule changes include revisions proponents say are necessary because the rules are 30 years out of date for things like minimum bond rates and requirements with regard to environmental protection.

Statutory changes proposed during the next legislative session include increasing application fees, limiting confidentiality of drill logs to one year, changes to severance tax collection process, updating definitions, and addressing class II injection wells. Representative Wendy Jaquet asked about including value statements in proposed statutes about maximizing the resource while protecting the public interest.

Eric Wilson with the Idaho Department of Lands noted that there is a definition of "fresh waters" in the rules regarding conservation of oil and gas. Specifics in this area will be left up to legislators to determine, he said.

Not all law makers in attendance were convinced this answer was adequate.“Everything in the (proposed) statute is about the best use and conservation of the resource,” said Senator Elliot Werk. “The bottom line is that health and safety is secondary to the conservation of the resource … that may not be the best priority setting.”

Although Werk conceded that the fracturing process described is minor, “what’s to say the rule won’t apply to a developer of a major fracturing operation in hard rock?” he asked.

Williams noted that geologists don't know of any shale gas or oil, and therefore there is no reason for a large scale fracturing operation, in Idaho.

“This is a tough area for oil or gas because of the vulcanization of the rock that tends to drive out oil and gas,” he said.

Wind, Water and the Problem with Too Much Energy

Bonneville Power Administration's John Williams briefed the Energy, Environment and Technology interim legislative committee last week on the challenges presented by over generation caused by high water and wind energy integration.

High water years such as this one create a need for environmental redispatch, or the release of excess energy in a way that is sensitive to environmental objectives. When system conditions trigger environmental redispatch to reduce the load, Williams said, BPA prioritizes energy production reliability, fish protection, mitigating increased costs to BPA customers, and supporting integration of renewable energy sources such as wind power.

Williams noted that, for some, the current over generation situation raises the question of the relevance of the four lower Snake River dams. Replacing these energy sources, he says, is a question of replacing the generation of power valued at half a billion dollars in load peak demand support and transmission support as we take power from other states and move it to the load centers.

If the lower Snake River dams were to be removed, Williams said, natural gas would be the most likely solution for replacing the power they generate.

BPA has created a wind integration team to find and develop creative solutions to integrating and supporting wind development in the region. Transmission plays a huge role in wind integration, and BPA is looking toward improving transmission throughout the Northwest, Williams said.

While integration of wind power has contributed to the need for environmental redispatch recently, Williams said excess generation from water conditions alone has created the same situation in the past.

High water years, in short, produce problems. Water must be moved through turbines rather than spilled over dams to reduce harm to fish. Spill produces a higher quantity of Total Dissolved Gas (TDG) in the water, which harms fish. Still, reduction of wind power for environmental redispatch is a last resort after TDG caps are reached and thermal power is reduced.

Williams stressed the need to reach some type of balance with all interested parties including other energy suppliers, users, and elected officials. The general public is becoming more aware of issues and is questioning - and sometimes criticizing - the reduction in wind power due to over generation.

Idaho does not have a renewable portfolio standard (RPS)like other states have. The renewable portfolio standards are driving wind development in the Northwest. Economics are a big part of why states went to mandatory renewable energy portfolios. There is a cost for increasing wind power. For example, in the case of redispatch, compensating wind generators for losses would increase costs to BPA customers, and be an incentive for other energy producers to seek compensation for reducing their generation.

In the past, BPA was able to sell its excess power to California, resulting in cost savings to its customers. As wind power has increased, secondary revenue sources like this have dried up. Wind developers are also purchasing transmission rights, which decreases BPA's ability to transmit power to other states.

Williams noted that wind power has far exceeded initial analyses of integration needs. Compared to hydro power, wind generation load is still one fifth to one fourth as much generation, with a lower level of consistency.