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West Virginia Streamlines Drilling Permits Process For Acquisitions

West Virginia Gov. Earl Ray Tomblin has signed a bill into law that will allow the simple transfer of oil and natural gas drilling permits to any company acquiring acreage in the state in a move that is expected to help save both time and money.

SB 280 eliminates the reapplication process and authorizes the transfer of existing permits with approval from the West Virginia Department of Environmental Protection to companies acquiring assets from existing operations in the state.

"This bill streamlines the transfer process of well work permits, not only supporting ongoing business operations and major investments, but to secure opportunities for hardworking West Virginians to find good paying jobs in this growing industry," said Tomblin, a Democrat who signed the legislation earlier this month.

Although any company can now transfer permits under the new law, the legislation was prompted by Southwestern Energy Co., which acquired 413,000 net acres of natural gas assets in northern West Virginia and southern Pennsylvania last year for nearly $5 billion from Chesapeake Energy Corp. (see Shale Daily, Dec. 24, 2014; Oct. 16, 2014).

The bulk of the acreage Southwestern purchased was located in West Virginia, giving it access to the state for the first time. The company was faced with the enormous task of re-applying for permits in the state in addition to transferring lease documents at courthouses in counties across northern West Virginia.

Included in the purchase from Chesapeake were 1,500 wells and a large portion of acreage either held by production or with lease commitments through 2018. Along with another 30,000 Marcellus Shale acres the company purchased in December from Statoil ASA, it said it would spend $625 million to develop the new assets and drill up to 70 wells this year (see Shale Daily, Dec. 30, 2014; Dec. 23, 2014).

Republican state Senate President Bill Cole, the legislation's lead sponsor, hailed it not only as a bill geared toward economic development, but said it was a prime example of bipartisanship. At a signing ceremony, Southwestern management officials noted that 80 employees it hired from Chesapeake with a knowledge of the acreage were from West Virginia. The bill passed the state legislature unanimously within two weeks of its introduction.

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