Idaho enters ranks of hydrocarbon producing states

Feb. 6, 2017
Idaho completed its first full year of commercial natural gas production in 2016, making it the 31st US state to produce hydrocarbons. Drilling activity will most likely continue through 2017 as small operators keep moving into Idaho's prospective counties.

Tayvis Dunnahoe
Exploration Editor

Idaho completed its first full year of commercial natural gas production in 2016, making it the 31st US state to produce hydrocarbons. Drilling activity will most likely continue through 2017 as small operators keep moving into Idaho's prospective counties.

From 1903 through the 1980s, operators drilled 152 oil and gas wells across Idaho with no commercial results. New oil and gas leasing occurred in 2006 and Bridge Resources Corp. began reprocessing older seismic data from the Western Idaho basin.

Beginning in 2010, Bridge drilled 11 wells in 2 years with partner Paramax Resources Ltd. In April 2010, the companies reported their ML Investments 1-10 well in Payette County tested with a flow of 4.2 MMcfd plus condensate on 24/64-in. choke at 1,550 psi (OGJ Online, Apr. 29, 2010). The operator encountered gas in several Pliocene sands.

No wells entered production, and Bridge's holdings were acquired by Alta Mesa Holdings LP in 2012. The operator acquired one 2D survey and three 3D surveys between 2012 and 2015. It has drilled 17 exploration wells in Idaho since 2010 and eight of these are currently on production.

Learning curve

Beginning in 2007, Idaho Department of Lands (IDL) contracted with a retired IDL employee who had oil and gas experience to assist with permit reviews, inspections, and training. "By late 2010, IDL took over all permit reviews and inspections," said IDL Director Tom Schultz. "It was a natural transition as IDL had decades of experience administering mining regulations, which greatly helped with the administering of oil and gas rules," he said. IDL recognized the need for attaining highly specialized personnel with relevant oil and gas experience. The department hired an oil and gas program manager in 2013.

IDL continues to strengthen its 20-year old regulatory scheme. Since 2011, the state has passed 13 bills related to oil and gas development. The state also created in 2013 an Oil and Gas Conservation Commission separate from the Land Board to avoid conflicts of interest. "The Idaho Oil and Gas Conservation Commission voted to submit several bills to the Legislature which they will consider in 2017," Schultz said.

With no prior field information, IDL is still evaluating basic issues such as drainage and field extent. "Underground conditions are not fully identified, so cementing and completions are sometimes challenging," Schultz said.

Lay of the land

In October 2016, IDL auctioned 4,462 acres of state-owned mineral estates in 225 leases (Table 1, Fig. 1). Two standouts in the auction were Alta Mesa subsidiary, Alta Mesa Idaho LLC, which acquired 209 leases and Morris Creighton of Galveston, Tex., who paid $3,695.20 in bonus bids for 13 leases covering 91 acres.

Oil and gas leasing was once quite common in the state. The first lease sale of this century was in 2006, but several others have taken place since then. "Nominations are open to anyone, IDL evaluates all requests and sets up auctions," Schultz said. IDL can add additional tracts to an auction, and they must be public, advertised, and awarded based on an oral bonus bid/acre. Public lease size is restricted to all the state lands in one section, or about 640 acres.

Idaho is also subject to unregulated private leasing for which the IDL maintains no information. Seismic exploration or drilling requires IDL permits, but ownership can remain as a private contract. According to the Idaho Oil & Conservation Commission's 2016 annual report, 97% of the state's oil and gas production came from privately owned mineral interests.

IDL anticipates more auctions in the future, but none are currently scheduled. The full extent of the Western Idaho basin is unknown, and the current downturn may curtail additional exploration.

Southwestern play

Alta Mesa operates all of Idaho's producing wells, which limits the amount of publically available subsurface data (Fig. 2). In 2015 the Idaho Geological Survey (IGS) was awarded a reservoir characterization grant, enabling IGS to perform subsurface analysis using publically available petrophysical logs, well cuttings, and surficial data. "We hope to soon have a contract with Alta Mesa that allows us to perform geochemical analysis on wellhead gas, which will give some indication of the source of hydrocarbons," said IGS senior geologist Renee Breedlovestrout.

Gas analysis will also help identify the migration and maturation histories of Idaho's gas reserves. Historic well data and cuttings will provide "a more regional picture of Idaho's subsurface," Breedlovestrout said. IGS recently digitized 25 historic well logs as part of its grant work, but lacks funding for its own 2D or 3D seismic data acquisition. Three 3D surveys were conducted in Idaho's Payette and Gem Counties in August 2012 and January-October 2014.

Payette basin reservoir rocks are Miocene (~15-6 million years) in age. "These rocks were deposited in a river system that persisted in western Idaho until about 12 million years ago," Breedlovestrout explained. The Payette formation and the ancient Lake Idaho (Chalk Hills and Glenns Ferry) formations were developed from 10-6 and 5-2 million years ago, respectively.

Large volcanic deposits, known as the Columbia River basalts, are deposited beneath the Payette basin.

"The three 3D seismic surveys have been acquired in the field area, but these can only image the upper sedimentary rocks and not the Columbia River basalts," Breedlovestrout said.

Two fields are in production near New Plymouth in southwestern Idaho. The Willow field to the north contains three hydrocarbon target intervals at about 3,000, 3,600, and 4,100 ft. To the south, Hamilton field has two prospective intervals at 1,600 and 2,000 ft. Pay zones have been reported to be 100-200 ft thick.

Idaho drilling has been conventional. Directional drilling has been minimal and done to mitigate surface location considerations, but most wells are vertical with no hydraulic fracturing. Reservoirs are typically sand layers surrounded by shale with structural traps present in some pools. The sand may be deltaic or fluvial with good permeability.

"Wells have been drilled to depths of 6,500 ft. so other potential targets above that depth may be present locally," Breedlovestrout said. The play is producing natural gas and condensate with a minor amount of oil from Alta Mesa's Kauffman 1-9 LT, drilled and tested in 2014.

Eastern Idaho potential

Bonneville County in eastern Idaho is being explored by CPC Minerals LLC. In 2007, CPC Minerals drilled a dry hole near Grays Lake. The operator completed a 2D seismic survey in 2014 to better understand the local geology. In March 2016, CPC received a permit to drill the Udy 18-1 to 7,000 ft, but drilling has yet to begin. According to Schultz, permits for the Federal 18-2 and Federal 20-3 have been approved and these wells may be drilled next year.

In eastern Idaho, subsurface rocks are Mesozoic in age from the Cretaceous (Gannett group) to the Triassic (Ankareh formation). "These rocks were deposited in shallow marine to near-shore environments adjacent to the western interior seaway present during the Mesozoic," Breedlovestrout said.

Target intervals in eastern Idaho are 6,500-7,000 ft in the Upper Jurassic Preuss and Stump formations and drilling typically reaches 9,500 ft. The subsurface is complex because the field is within the fold and thrust belt of southeastern Idaho.

The Stump and Preuss sandstones are highly silicified and 'tight,' meaning that stimulation may be necessary to increase permeability. The IGS doesn't know if operators plan to deploy hydraulic fracturing in eastern Idaho. So far no wells have produced hydrocarbons in this part of the state, but exploration is ongoing.

Cassia and Twin Falls counties have potential for discoveries similar to those in northern Nevada (OGJ, June 2, 2014, pg. 42). Operators have not conducted drilling or coring in these two counties. Schultz noted that 34,595 acres were nominated for lease in Twin Falls and Owyhee Counties in 2015, but were withdrawn in February 2016.

Hydrocarbon production

Idaho produced 2.6 bcf of natural gas in the past year. Well data were made public in October with production numbers from July 1, 2015, through June 30, 2016 (Table 2). Idaho law requires the state release production data 6 months after the data have been submitted by the operator, in this case Alta Mesa.

Data from three producing wells, ML Investments 1-3, ML Investments 2-3, and Kauffman 1-9 LT-the sole oil producer-will be unavailable until March 2017. Willow field has provided the bulk of Idaho's production, with five wells generating 7.5 MMcfd and 242 b/d of condensate.

Hamilton field has a single well that produced 7.7 MMcf for the entire 12-month period.