West Virginia Oil and Gas Drillers Seeking State Help on Regulations
CHARLESTON — Some of the state’s outdated laws and regulations need to be updated to allow the natural gas industry to grow and prosper in the Mountain State, said two industry officials.
Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association and Brett Loflin, vice president, regulatory affairs for Northeast Natural Energy and Independent Oil and Gas Association Board of Directors, spoke to the West Virginia Press Association’s Legislative Breakfast about the state of the natural gas industry in West Virginia on Thursday.
“It is a very exciting time for the oil and gas industry right now in the state,” Blankenship said.
“We are sitting on so much oil and gas that is just waiting to be developed. I believe this industry is a key component to the future of this state.”
One of the purposes of the West Virginia Oil and Natural Gas Association is to bring more oil and gas companies into the state to create more jobs and spur the economy.
To do that, they need policies on the state level which will allow for that growth, Blankenship said.
“One of those is the development of a mineral efficiency legal framework to develop and promote the oil and gas we are sitting on top of,” she said.
Currently, for oil and gas to be produced in West Virginia, a person must have 100 percent of the mineral interest owners’ agreement to proceed.
The association is supporting legislation that would change that to a simple majority, 51 percent, of the mineral interest owners to be able to develop oil and natural gas on a piece of property.
“Right now, if you have one percent of those interest owners in disagreement, it holds up the process,” Blankenship said. “It puts us out-of-step with our surrounding states.”
West Virginia is only one of three states nationwide that doesn’t have the framework to address this issue. The others being Ohio, which does have a pooling statute, and Wisconsin.
“We are pushing for legislation that is all about creating jobs and promoting oil and gas development in this state,” Blankenship said. “Our outdated laws are really preventing that from happening.”
If the proposed legislation was already in place, developers could put in another 80 wells right now, including four rig lines and 400 jobs per rig, she said.
“We don’t think it is fair for a very small percentage of owners to inhibit the majority of interest owners in a tract,” Blankenship said.
They are also looking to allow joint development on contiguous and adjacent tracts of land by the same producer.
“It will maximize the efficiency of a development and support multiple wells on a single wellpad, as opposed to drilling multiple wells over those surface tracts,” Blankenship said.
Pipelines is another issue in transporting the gas to where it can be processed.
“There are a number of pipeline projects being proposed in the state,” Blankenship said. “They represent some of the largest private infrastructure investments the state has seen, representing more than $5 billion in economic impact, tens of thousands of jobs which leads to tax receipts for local government in the state. Once these lines are constructed they will represent incentive for more gas development in West Virginia.”
Loflin said the state is in a low price environment for natural gas.
“Companies are struggling,” he said.
In 2016, the natural gas markets saw improvements.
“There are 61 gas rigs running in the Northeast, but that is still down from 130 rigs running in January of 2015,” Loflin said.
The proposed pipeline projects in development will allow their gas to reach other markets, he said.
“It will encourage oil and gas companies to invest in our state,” Loflin said. “It will provide more jobs and attract more manufacturing industries.”
He said laws need to be updated to reflect modern drilling methods and allow for a majority of mineral right holders to move forward with development. The state must eliminate duplicative, costly and unnecessary regulations regarding above ground storage tanks, he said.
“We are finding it difficult to attract investment because of our mineral efficiency laws,” Loflin said. “We do need regulation. However, the Above Ground Storage Tank Act and its rules apply to a one size fits all approach to regulation.”
There are already a number of regulations in place, he said.
The additional regulations are cost prohibitive to many operators that they have forced companies to lay people off, eliminate new investment and force smaller companies into bankruptcy, Loflin said.
“Even large companies with a high inventory of traditional wells will be forced to lay off workers if those wells become uneconomical because of misguided regulations,” Loflin said. “The (reason) for all of our initiatives is job creation and economic development.”