Maximize Benefits From Natural Gas Development
West Virginia’s natural gas industry made tremendous strides in 2017. Natural gas production increased, interstate gas pipelines were approved, progress was made toward developing a regional gas liquids storage and trading hub and, incredibly, China Energy proposes to invest billions of dollars in the state’s energy, chemical and manufacturing industries.
This is all great news and tremendously beneficial for West Virginia’s long-term economic and job prospects. However, the missing component necessary to truly maximize the opportunities the gas industry offers — and to compete with our surrounding states — is the passage of co-tenancy legislation.
Typically, numerous parcels of land form a unit to develop a horizontal well. Most often, mineral interests beneath each parcel of land consist of anywhere between one and, literally, hundreds of individuals who own the mineral rights. These mineral owners are co-owners, or co-tenants.
Under current law, a gas company must get 100 percent approval from all owners in a tract of land before development can take place. As you might imagine, it is very difficult, and sometimes impossible, to obtain leases with 100 percent of the mineral owners. In many instances there are mineral owners who are unknown and/or unlocatable. This is a case when an extreme minority can deprive the majority of their property rights.
House Bill 4268, the Co-Tenancy and Majority Protection Act, is making its way through the legislative process. This bill, which has the support of Governor Justice and legislative leadership, would establish a co-tenancy law allowing development to begin when 75 percent of the interests in each parcel of a development unit are under lease. It’s simple majority rules development. If a 75 percent majority of mineral interest owners want to develop their minerals, the project proceeds.
Under this bill, every mineral owner in the unit would be compensated in proportion to their ownership interest. There’s nothing in HB 4268 that pools property or integrates leases together. And, the 75 percent super-majority threshold is the highest bar among all oil and natural gas producing states in the country.
It’s time to modernize our antiquated oil and natural gas regulations to bring them in line with current drilling technology. The Co-Tenancy and Majority Protection Act will do just that while creating revenue and jobs that will benefit all involved: mineral and property owners, local communities and the state as a whole.
On Wednesday, Feb. 21, energy industry workers from across the state will rally on the Capitol steps to show their support for the Co-Tenancy and Majority Protection Act and for the tens of thousands of hard-working men and women who contribute to the state’s oil and gas economy. Legislators will hear first-hand how the industry is transforming the state’s economy and creating new, career-sustaining opportunities.
It’s time for policy makers to act decisively and demonstrate their support for West Virginia’s economic revival by passing the Co-Tenancy and Majority Protection Act.
Blankenship is executive director of the West Virginia Oil & Natural Gas Association. Burd is executive director, Independent Oil & Gas Association of West Virginia.