By CASEY JUNKINS
MOUNDSVILLE - Gov. Earl Ray Tomblin believes leasing several miles worth of mineral rights located beneath the Ohio River for Marcellus and Utica shale drilling for at least a 20 percent share of the royalties will provide the state a financial windfall without disturbing the environment.
Photo by Casey Junkins
The West Virginia Division of Natural Resources wants a driller to pay at least 20 percent of production royalties for extracting minerals beneath the Ohio River.
A legal notice indicates the Division of Natural Resources - which is an arm of the Department of Commerce - is seeking bids for drilling into the oil and natural gas producing formations underlying the Ohio River in Marshall, Wetzel and Pleasants counties. Secretary of Commerce Keith Burdette is a member of Tomblin's cabinet.
"The proposed development is in the best economic interests of the state and will not unreasonably disrupt use and enjoyment of the Ohio River or the division's opportunities to develop other mineral interests in the area," Tomblin stated in a letter to DNR Director Frank Jezioro.
Drilling is prevalent in Marshall, Wetzel and Pleasants counties, where firms may bid for the mineral rights by the Sept. 11 application deadline. Officials will open the bids at 1 p.m. Sept. 26.
Tomblin's letter states he wants a driller to proceed without deducting production costs from the state's revenue. In many drilling contracts, the company is allowed to reduce payments to the property owner by making deductions for certain costs associated with getting wells online.
"The lessee shall be liable for royalty payments on mineral interests lost or wasted because of negligence or failure to comply with the lease or the law," Tomblin added.
In addition to the 20 percent royalty, state officials are seeking a per-acre lease payment, as the procurement document states the contract will go to the highest bidder.
Any potential driller would likely reach the minerals by horizontal drilling, as the company could set up a rig about one mile from the river. Contractors can drill more than one mile deep before turning the bit horizontally to reach the oil and natural gas beneath the river.