Southwestern Energy, Ohio County Jostle Over Fire Service Fee
Trending
WHEELING -- Accidents at Marcellus and Utica shale drilling pads can put a strain on the small volunteer fire departments assigned to cover the countryside.
Although Ohio County has seen no large-scale problems at its several well sites, its Commission and Fire Board in 2015 voted to impose an annual fire service fee of $5,000 per well pad, regardless of how many wells are on the pad in question. Therefore, the county sent a $145,000 bill to Southwestern Energy Co. -- the only company with active horizontal drilling and fracking operations in the county -- for 2016.
Instead of paying the bill, however, Southwestern officials hired legal counsel to challenge the county's right to impose such a fee. The Houston, Texas-based firm is questioning whether the county met the state-imposed threshold for the required number of signatures to impose the fee, while also calling the fee "arbitrary and excessive."
The legal battle is now set in Ohio County Circuit Court, although there have not yet been any hearings scheduled.
"Southwestern Energy supports local first responders. We place a tremendous value on the work they do to protect our communities. We are supportive of an equitable and reasonable fire fee, but as it is written, natural gas producers are not being treated fairly," company spokeswoman Christina Fowler said. "The industry has been singled out and charged an arbitrary and excessive fee.
"We look forward to achieving a fair resolution," she added.
In 2014, Southwestern paid $5 billion to acquire the West Virginia assets of Chesapeake Energy. County officials in 2010 signed a lease agreement for several hundred acres in the vicinity of The Highlands with Chesapeake, while the Wheeling Park Commission and city of Wheeling also leased the mineral rights under Oglebay Park to Chesapeake.
According to Southwestern's complaint, signed by attorney Sharon Potter of Spilman, Thomas & Battle, the county's fire service fee ordinance violates West Virginia law on procedural, substantive and constitutional grounds."
According to state code, 10 percent of qualified voters must present a petition signed by them in their own handwriting before any such fire service fee can take effect.
"The Ohio County Fire Board properly promulgated a legal way to charge the oil and gas industry a proper fire service fee for their well pads," Ohio County Solicitor Donald Tennant said. "The fire board collected way more than the necessary signatures, pursuant to West Virginia Code."
Fees and Procedural Dispute
Ohio County originally adopted a fire service fee in 1990, but officials never envisioned how the Marcellus and Utica shale would impact the county some two decades later.
In 2015, the fire board and commission decided to proceed with a fire fee for the drilling pads and compressor stations in the county. Compressor stations, such as the one located east of The Highlands at the former Windmill Truckers site and the one farther south on Dallas Pike Road, are located at certain intervals along a pipeline system to help propel the natural gas through the lines.
In 2015, after collecting signatures -- with the litigants now disputing the number collected and/or the manner in which they were collected -- the county implemented the fee. Ohio County charges an annual $50 fire fee for residential property, regardless of the square footage. For commercial, industrial or non-residential property, the fee is based on the amount of square footage, ranging from $313.50 to $1,250. The charge is $625 for communications towers.
According to court documents, the county charges a flat $5,000 rate for a compressor station or a well site. The fee is not adjusted for the number of wells on the particular pad in question, but drillers using modern techniques can create at least six wells on each pad.
"They did voice complaints to the fire board about it," Tennant said of Southwestern. However, he said the driller did not mount any official opposition to the ordinance before it took effect.
Need For Fire Protection
In June 2010, drillers working just south of Moundsville struck a pocket of methane, leading to a large explosion. The blast injured seven workers and created a fire that burned for five days.
In April 2013, firefighters from several Brooke County and western Pennsylvania departments responded to a report of four trucks catching fire at a drilling pad. In December 2014, a well site in Monroe County spewed methane into the air in a geyser-like fashion for 10 straight days after pressure caused the wellhead to fail.
Although none of these incidents took place in Ohio County, Tennant said officials believe they need to prepare for similar events.
"The truth of the matter is that our volunteer fire services have the potential to be called to these sites. They are woefully underfunded to deal with these types of situations," Tennant said.
Fowler said Southwestern appreciates the work of volunteer firefighters, while acknowledging how challenging their task is.
"We coordinate closely with first responders on our on-site drills and ensure they have the important information they need about our operations to develop appropriate response plans," she said. "Situations that are unique to the oil and gas industry would be handled by well control professionals with industry-specific equipment and training."
The private well fire companies who have worked in the region in recent years include Wild Well Control and Boots and Coots.
Southwestern In West Virginia
In 2015, Southwestern President and CEO Bill Way said the company planned to invest $24 billion to produce oil and natural gas in West Virginia over the next two decades. The company is now producing from the Utica Shale in Marshall County, which is deeper in the earth than the Marcellus formation, so it requires more time, pipe, sand, water and chemicals.
Fowler said Southwestern has drilled 19 more wells in Ohio County since acquiring the Chesapeake assets two and a half years ago.
"It also important to note that for the 2016 tax year, Southwestern Energy paid $17 million property tax alone in West Virginia. Of that, $7 million in property taxes were paid to Ohio County," Fowler added.
Nevertheless, Tennant said the county still believes it is proper to collect the fire service fee. In addition to the original $145,000, Tennant said Southwestern will be billed the same amount for the new fiscal year.