West Virginia Senate committees advance three oil and gas bills

West Virginia

WVNews — A trio of bills relevant to West Virginia’s oil and gas industry were advanced by Senate committees on Thursday.

The Senate Energy Industry and Mining Committee voted to pass Senate Bill 554, known as the Lease Cancellation Bill, and House Bill 4091, allowing for expedited oil and gas well permitting. The Senate Government Organization Committee passed Senate Bill 316, which amends the requirements for members of the West Virginia Oil and Gas Conservation Commission.

While industry stakeholders indicated during Tuesday’s meeting of the Energy Industry and Mining Committee that they had concerns with elements of SB 554’s language, no amendments were made to the bill Thursday, and it passed without any discussion.

The bill would require oil and gas lessees to execute and deliver to the lessor, within a 30-day period and without cost, a recordable release for terminated, expired or canceled oil or natural gas leases, according to the text of the measure.

If the lessee fails to properly notify the lessor within the given time period, the lessor may file a claim seeking the termination of the contract, according to the text of the bill.

HB 4091 would allow producers to pay the West Virginia Department of Environmental Protection to speed up the permitting process for horizontal wells.

Current permitting fees are $10,000 for the first well on a pad and $5,000 for each additional well on the pad. There is currently no cost for permit modifications.

Under the expedited rules, producers could opt to pay $20,000 for the initial well and $10,000 for each additional well on the pad.

The modification fee would be $5,000 per well.

Permits would have to be issued within 45 days of the application submission, or the DEP would be required to refund the applicant a daily, pro-rated amount of the expedited fee through the 60th day.

Half of the funds, capped at $1 million annually, would be used by the DEP to process the expedited applications. The other half, and any funds collected beyond the cap, would be deposited in the Oil and Gas Reclamation Fund and would be used to plug orphaned and abandoned wells around the state.

Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association, said her organization is glad to see the bill pass another important hurdle.

“This bill in concept is a great idea for the industry as it would help give certainty to those who want to pay an expedited permit fee,” she said.

However, WVONGA believes the high cost of the fees will stop some producers from utilizing the process, Blankenship said.

“We’re disappointed that the fees aren’t lower — we think it could be used more,” she said.

Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, said his organization also thinks the fees are steep.

“We thought that a lowering of the feeds would populate the funds quicker and produce the revenues for the (DEP’s) Office of Oil and Gas and the revenues for the plugging fund,” he said. “But I guess we’re going to find out. The industry will decide whether or not those fees are too high.”

SB 316 would make a slight change to qualifications for two of the members of the Oil and Gas Conservation Commission, the five-member body responsible for regulating the drilling of deep wells in the state.

Three of the OGCC’s members are appointed by the governor. Currently, of those appointments, one must be an independent producer, one must be a “member of the public” and one must have a degree in petroleum engineering or geology and must be a registered professional engineer.

The original language of SB 316 only removed the word “petroleum” from the third appointee’s requirements, meaning the person could have any sort of engineering degree to qualify.

Sen. Randy Smith, R-Tucker, proposed an amendment that also added a change for the public member, requiring them to have “never been employed by or been a consultant to” the oil and gas industry and requiring them to own land within the state.

According to David McMahon, founder of the West Virginia Surface Owners Rights Organization, the amendment is in response to the OGCC’s current public member, Michael McCown.

“The public member they appointed is a former president of IOGA, the Independent Oil and Gas Association (of West Virginia), former president of the West Virginia Oil and Natural Gas Association, the 2014 Oil and Gas Man of the Year; (he’s) currently retired but serves as an expert witness for the industry,” he said.

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