The Register-Herald, Beckley, West Virginia

January 11, 2011

Lawmakers advance Marcellus drilling bill

By Lawrence Messina
Associated Press

CHARLESTON — Reflecting the tough debate that likely lays ahead, a House-Senate subcommittee opted not to endorse the legislative proposal it advanced Monday that would set new rules and licensing fees for drilling into West Virginia’s Marcellus shale natural gas field.

The interim study panel also removed provisions from its draft that address pooling. That process would require drillers to compensate people for draining gas reserves they own by drilling nearby, but would force those owners to yield their rights in the process.

With those provisions likely destined for a separate bill, the subcommittee sent its amended draft measure to the full joint Judiciary Committee for review. The interim study meetings end today, in advance of the 60-day regular legislative session that starts Wednesday.

“It gives us a vehicle to keep the parties at the table,” said House Majority Whip Mike Caputo, D-Marion and a subcommittee co-chair. “We’re moving in some type of direction, I believe, to satisfy the needs of our constituents.”

The state Department of Environmental Protection is also drafting its own version of proposed regulations for drilling into Marcellus shale. The vast, mile-deep natural gas reserve stretches beneath most of West Virginia, Pennsylvania, New York and portions of Ohio.

The industry believes it hold trillions of cubic feet of gas. But extracting it from the rock requires horizontal drilling and hydraulic fracturing, or fracking. That method employs a mix of chemicals and high volumes of water.

With such drilling already underway, environmentalists and property owners warn of fracking-polluted drinking supplies, erosion, truck-ravaged secondary roads and other concerns.

Drawn somewhat from rules that govern coalbed methane operations, the subcommittee proposal would require planning by drillers to manage their water use, ward off erosion and restore the well site afterward. Besides lining frackwater storage pits, drillers would disclose the chemicals involved and replace contaminated water.

Drillers would post bonds to cover potential damages. With trucks ferrying water and gear to and from wells, the Division of Highways would have to sign off whenever a driller applies for a permit.

The proposal would also increase permit fees, which are $400 or $650 depending on the type of well. A driller would pay $15,000 to apply for a permit, $10,000 to modify it and $5,000 to renew it annually. The revenues would help DEP hire new inspectors, which now has 12 people assigned to 59,000 gas wells statewide.

Two subcommittee members involved in the gas industry but who were not re-elected for the upcoming regular session led the opposition to the draft proposal during Monday’s meeting.

One, Delegate Mike Ross cited crowded restaurants and motels around such key drilling areas as Marshall and Wetzel counties as evidence of the economic benefits to the state. Pricey permit fees and overreaching regulations will stifle that, the Randolph County Democrat said.

“You ought to give the companies a chance, that are coming in here and making the investments,” said Ross, who did not seek another term. “The companies are doing a lot to police themselves and to do a better job. No doubt there’s been some damage to some of the roads, but you have to look at what it’s added to the economy in the state.”

The other, Sen. Frank Deem, R-Wood, lost in the May primary. While critical of the overall bill, he successfully amended it to remove the pooling provisions.

“Fracturing of these wells is the lifeblood of the oil and gas industry today,” Deem said. “I’m very concerned that a bill of this magnitude will have a very detrimental impact on the development oil and gas in this state, and therefore cost a lot of employment, a lot of jobs and a lot of money.”