Marcellus Shale regulations inch closer to completion

By westvirginia on November 14, 2011
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By Steven Allen Adams | West Virginia Watchdog

CHARLESTON — Lawmakers passed the last remaining amendments to a draft bill that will provide greater regulation of Marcellus Shale natural gas drilling.

Members of the Joint Select Committee on Marcellus Shale passed the last six amendments to a draft bill, using S.B. 424 – a Marcellus Shale regulation bill passed by the State Senate during the 2011 general session, but died in the House of Delegates – as a template.

Committee co-chairman Tim Manchin (D-Marion) said the committee plans to pass a complete bill out of committee.

“I’m pleased that we that we’ve been able to report out a bill,” Manchin said. “I think there are still some areas of concern that some of the members of the committee have and we’ll probably endeavor to have some discussions about some of those concerns between now and Wednesday. Perhaps we’ll take some of those issues up on Wednesday. Senator Facemier and I expect to vote a bill out here on Wednesday.”

Gov. Earl Ray Tomblin has said he would call a special session to pass permanent Marcellus Shale regulations if all sides agree. Manchin said they would ask for for a special session, but it would be up to Gov. Tomblin if there would be one.

“That’s up to the Governor, but we will request a special session based upon the work that we’ve done,” Manchin said.

Committee members passed an amendment creating minimum qualifications for gas inspectors. The amendment requires inspectors to have three years of experience in the oil and gas industry, Candidates with an associates or bachelor’s degree in a related field. Salaries were also set, with supervisors receiving $40,000 a year and inspectors receiving $35,000 a year.

Another amendment would give the Department of Environmental Protection the authority to increase permit fees in the future with approval from the Legislature’s Rule-making Committee. An amendment to the bill pass last summer set permit fees at $10,000 for the first well and $5,000 for each additional well. Another amendment gives greater flexibility to DEP to approve drilling permits.

One amendment that sparked debate concerned agreements between surface owners and drillers. The amendment requires operators to compensate surface owners for damages to property. Operators must give surface owners 30 days notice of their operation plans before enter a surface owners property, which includes a surface use and compensation agreement.

Surface owners would then have 20 days to accept the agreement, or reject the agreement and enter into negotiations. Surface owners must give operators 30 days notice before filing the lawsuit. If the operator provided notice and made an offer of compensation, attorney fee could be awarded if the court awards damages that exceed 20 percent of the last offer made by the operator. If the operator did not provide notice, attorney fees would then be awarded if the court awards damages greater than the last offer made by the operator.

David McMahon, co-founder of the West Virginia Surface Owners’ Rights Organization, said his organization wasn’t happy with the amendment, but was hopeful it could be amended down the road.

“They’re not the kind of incentives that we were looking for,” McMahon said. “We’re certainly disappointed that it says the operator may show you their plans…but they don’t have to. It’s baby steps, but different incentives would work even better.”

Natural gas companies have been rushing to the state to tap the vast natural gas reserves trapped in the Marcellus Shale, stretching from New York to Tennessee, which holds pockets of natural gas. The shale is over 100-feet thick in Barbour, Monongalia, and Preston counties. Drilling companies use a combination of horizontal drilling and hydraulic fracturing – using a mixture of water, sand, and chemicals – to break natural gas out of the shale formations.

The committee will meet again Wednesday.

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