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Natural Gas Legislation Falls Short

April 14, 2013
By CASEY JUNKINS Staff Writer , The Intelligencer / Wheeling News-Register

CHARLESTON - Although state lawmakers introduced several bills intended to impact the natural gas industry, none of them gained enough support to pass the West Virginia Legislature, which adjourned Saturday.

Senate President Jeff Kessler, D-Marshall, proposed the West Virginia Future Fund, a measure that would have allowed all residents to benefit from the large quantities of oil and natural gas that drillers such as Chesapeake Energy are extracting from Northern Panhandle wells.

Kessler and Sen. Rocky Fitzsimmons, D-Ohio, sponsored the bill that would have created a fund to hold 25 percent of the increased revenue the state receives from severance taxes to be appropriated by the Legislature at a later time.

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As natural gas drilling continues in West Virginia, the state Legislature did not pass several bills this year that would have impacted the activity.

This is the third consecutive year that this concept has failed to gain enough support. Kessler has said the object of the program would be similar to one in Alaska that allows residents to benefit from drilling.

In Alaska, government officials are required by constitutional amendment to set aside tax dollars generated by oil production in a separate fund that cannot easily be touched by lawmakers.

The Future Fund bill failed to gain enough support in the Senate Economic Development and Finance committees to make it to the Senate floor for a full vote.

A similar fund in North Dakota, where drilling for oil also is growing at a fevered pitch, has brought in nearly $1 billion since September 2011. That state's Legacy Fund gets 30 percent of the oil tax collections. None of the money can be spent until 2017, and even then it takes a two-thirds vote of the Legislature to dip into it, according to the Associated Press.

Lawmakers introduced a number of other natural-gas related bills this session. The bills described below did not even have enough support to get on a committee agenda.

- A bill introduced by Delegate Mike Manypenny, D-Taylor, would have required monitoring of seismic activity near both production well and wastewater injection well sites for possible earthquakes. This is similar to action taken in Ohio following an earthquake near a Youngstown injection well last year.

- Another bill introduced by Manypenny would have required "landmen" - those who sign contracts with mineral owners - to meet specific requirements before working in West Virginia. Unless these individuals are members of the American Association of Professional Landmen, the legislation would compel them to have at least two years experience in contracting before being allowed to sign Marcellus Shale leases in the Mountain State. It also requires the landmen to complete an ethics class.

"Most new landmen are challenged by the fact that they have to be an analyst, manager, salesman and negotiator all at the same time," the bill stated.

- A bill sponsored by Delegates Mike Ferro, D-Marshall; Dave Pethtel, D-Wetzel; Ryan Ferns, D-Ohio; Randy Swartzmiller, D-Hancock; and Erikka Storch, R-Ohio, would have helped fund infrastructure projects in counties that produce Marcellus and Utica shale gas. Ten percent of everything the state would collect from oil and gas drilling - more than the $64.8 million baseline - would benefit the counties and cities directly impacted by drilling and fracking. The remaining 90 percent would have been placed into the new Marcellus Development Account for later infrastructure projects.

- Manypenny and Delegate Barbara Evans Fleischauer, D-Monongalia, sponsored a bill to require "cradle to grave" monitoring of water withdrawals from the state's water resources. This would have required monitoring systems to "include the use of hydrants with a backflow preventer to protect the state's streams and rivers from contamination from truck wastewater backflow."

- The bill that would have allowed some pooling of land for drilling - specifically land for which the owner could not be found - failed to pass in the Senate. Corky Demarco, executive director of the West Virginia Oil and Natural Gas Association, insisted the measure was not "forced pooling."

"There is a lot of misunderstanding in the public about this," he said. "That is something we have got to work on."

- One matter that did not come up for discussion at the Legislature this year was the state's severance tax on oil and natural gas. According to the National Conference of State Legislatures, West Virginia charges a 5 percent severance tax on the gross value for all oil and natural gas produced. By comparison, neighboring Pennsylvania has no severance tax on oil and gas. Ohio applies a severance tax of 10 cents per barrel of oil - and 2.5 cents for every 1,000 cubic feet of natural gas.

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