Spilman News Alert: Gov. Tomblin to Call Special Session to Address W.Va. Shale Gas Legislation    

 

Governor Tomblin has announced that he will issue a proclamation to call a Special Session of the West Virginia Legislature, beginning at 5 p.m. on December 11, 2011, which coincides with the scheduled legislative interim committee meetings. The sole item on the agenda will be legislation to govern and regulate the exploration and development of shale gas formations through wells drilled using horizontal drilling technologies and completed using hydraulic stimulation techniques.

 

The special session will be asked to consider a bill developed by the Governor's office with input from legislators, surface owners' interests, environmental representatives and the natural gas industry. Governor Tomblin is hopeful that adequate support exists to pass the proposed legislation, which will provide benefits to all West Virginians through protection of our state's water resources, surface owners' interests and environmental interests, while encouraging responsible development of our state's natural gas resources with the resulting economic benefits in the form of employment and tax revenues.

 

The primary provisions of the bill include:

 

1. increased funding for inspectors and related regulatory oversight of horizontal wells through increased permit fees of $10,000 for the first horizontal well and $5,000 for subsequent horizontal wells drilled on a single well pad;
2. new requirements for obtaining permits for horizontal wells, such as a water management plan, site construction plan certified by a registered professional engineer, well site safety plan, and identifying additives to be used in fracturing a well;
3. application and approval by the Department of Environmental Protection for large freshwater and wastewater impoundments and for regular inspection of large impoundments;
4. notice of horizontal well permit applications to owners of water wells within 1,500 feet of a well site;
5. requiring horizontal wells to be located as least 625 feet from an occupied dwelling or large cattle or poultry barn, and 100 feet from a perennial stream, lake, pond, reservoir or wetland;
6. increasing bond requirements to $50,000 for a single well and $250,000 for statewide bonds;
7. requiring reimbursement of real property taxes to surface owners of disturbed land in a one time amount of $2,500;
8. creating a presumption of liability of a gas well operator for contamination or deprivation of water supply located within 1,500 feet of a well site and providing for replacement of any such water supply;
9. assuring that gas well operators comply with road use regulations of the Division of Highways;
10. requiring DEP to develop a website to make available to the public information about well permit applications;
11. requiring DEP to evaluate the need for air quality and impoundment and pit safety regulations;
12. establishing certain horizontal well casing and cementing minimum standards and requiring DEP to develop regulations; and 
13. establishing horizontal well production damage compensation for surface owners and procedures for determining such damages.

Passage of legislation could help energize growth of the natural gas industry in West Virginia as well as make West Virginia more competitive in terms of a potential ethane cracker site location. At the same time, it could create important protections for the citizens of West Virginia and preservation of its other natural resources. However, further amendments may quickly turn the bill into a detriment to all interested in economic growth in West Virginia.